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NEWS BULLETIN

October 26, 2004 --- Vol. 10, No. 94October 2004

Shell drops Kuparuk leases, still interested in Alaska

Shell recently dropped its oil and gas leases on Alaska’s North Slope, but asked Petroleum News to stress it is still very interested in Alaska.

According to Mapmakers Alaska, Shell recently surrendered 10 central North Slope leases picked up in a 2002 state oil and gas lease sale for $2.4 million.

“Rents were coming due” on the 56,000 acre parcel south of the Kuparuk River unit. The acreage was “relinquished” by Shell “after a routine internal assessment of the area,” Shell EP Americas spokeswoman Kelly op de Weegh told Petroleum News Oct. 25.

“We felt that the potential of the area did not meet our investment criteria and the rentals have not been paid. But I want to stress, our decision to surrender what we consider to be a small, non-material leasehold does not affect our goal to continue evaluating investment opportunities in Alaska,” op de Weegh said.

“That specific area” of the North Slope does not interest Shell, she said, asking that Petroleum News “stress that we do not view this as an exit from Alaska. We are spending a lot of effort on evaluating Alaska.”

Op de Weegh’s assertion that Shell is still interested in Alaska coincides with remarks by Shell’s global exploration director, Matthias Bichsel, on Sept. 22 (see the Sept. 26 issue of Petroleum News).

Bichsel said Shell “wants to develop a bigger exploration position in Alaska, which it sees — alongside North Africa, the Russian Arctic and the global deepwater — as one of the key areas of upstream potential for the international oil and gas industry.

“We’re clearly interested in trying to get a foothold there,” he said.

Bichsel said that the 10 leases south of Kuparuk were picked up by the local operating unit “on a purely opportunistic basis.” He said Shell has enough information in place after the “thorough evaluation” of the last 18 months to “go after a focused and targeted approach in the future.”

Shell, he said, was interested in the “western part” of Alaska, onshore and offshore.

Editor’s note: See story in Oct. 31 issue of Petroleum News.

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