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Providing coverage of Alaska and northern Canada's oil and gas industry
August 2004

Vol. 9, No. 34 Week of August 22, 2004

Oil Patch Insider: North Fork development, gaslines get green light; Alberta on right side of multi-billion dollar slip

NorthStar Energy Group President Barry Foote told Petroleum News Aug. 19 that Alliance Energy of Tulsa, Okla. has agreed under a farmout agreement to fully fund development of the North Fork unit on Alaska’s southern Kenai Peninsula, including 'fast-tracking' a pipeline north to connect the gas field with the Kenai Kachemak Pipeline.

Development of the North Fork field will include permitting and drilling a second well, No. 41-36, 'as soon as January 2005,' Foote said. The lion’s share of the North Fork field is held by field operator Gas-Pro, which is owned by NorthStar.

Foote also said the Regulatory Commission of Alaska issued final approval last month of a gas sales agreement between Enstar Natural Gas Co. and NorthStar that will bring natural gas to the community of Homer from the North Fork field. (See related article in the April 11 edition of Petroleum News.)

There is a single well at the North Fork field, drilled in 1965. RCA’s approval was contingent on NorthStar drilling at least one additional well to raise proved reserves at the field from 12 billion cubic feet to 14.5 bcf.

Alliance has engaged Wilbros Pipeline Engineers and ENSR 'to permit and build the pipeline north' to connect with the KKPL, Foote said.

(See the full story in next week’s Petroleum News.)

Alberta getting on the right side of a multi-billion dollar slip

There’s nothing like under-promising and over-delivering to make legislators look good.

And the Alberta government has mastered that art in recent years by low-balling their oil and natural gas price forecasts, after previously taking a political hammering when they aimed too high.

In the latest response to a year of breathtaking commodity prices, Energy Minister Murray Smith said Aug. 13 that the province is now expected to harvest more than C$8 billion in royalty revenues this fiscal year, more than double the C$3.9 billion estimated in the March budget.

But he said the government is not yet ready to raise the bar above the record C$10.28 billion it collected in 2001.

Smith said the bulk of the C$8 billion has already been earmarked for services and the prized target of wiping out Alberta’s remaining C$3.7 billion debt in 2005, the province’s centennial year.

The 2004-05 budget was based on West Texas Intermediate oil prices of US$26 a barrel and gas prices of C$4.20 per thousand cubic feet. WTI oil has averaged US$37.78 since January and gas on the New York Mercantile Exchange has averaged US$5.94, or about C$7.70.

Evergreen, BP win Colorado coalbed methane awards

Evergreen Resources and BP recently received awards from Colorado industry regulators for 'outstanding operations' last year in coalbed methane operations.

Denver-based Evergreen, which is in the process of being acquired by Pioneer Natural Resources and which has been testing Alaska coal beds for possible methane gas production, received a 'visual and noise impact mitigation award' from the Colorado Oil and Gas Conservation Commission for going beyond state rules to address landowner concerns in Las Animas County.

BP received an award for fine-tuning the use of directional wells to more effectively tap coalbed methane resources in the San Juan Basin.

Go to www.oil-gas.state.co.us for more information.

ArrowHealth earns recognition

ArrowHealth Corp.’s Anchorage office has been recognized by the Drug & Alcohol Testing Industry Association as being 'Nationally Accredited for Administration of Drug and Alcohol Testing Programs,' the Virginia-based company recently announced.

“This accreditation means that their facility, operations and personnel meet the highest standards in areas such as regulatory compliance, client confidentiality, accountability, company service standards, operational practices, business ethics and professional competency for drug and alcohol, testing program management,” ArrowHealth said in a press release.

Still room for railroad dreamers

The days of steel wheels on steel rails may still have a place in the 21st Century.

While Canadian and U.S. authorities explore the feasibility of a rail link from Alaska to British Columbia, a study will be released this month that is expected to make a case for a customized railroad to carry heavy industrial equipment to northern Alberta’s oil sands region.

The C$2.5 million government-industry report is likely to propose moving to the next phase of building a C$1.8 billion, 265-mile railroad from Edmonton to north of Fort McMurray, with a completion date of 2009.

Jim Gray, chairman of the Athabasca Oil Sands Transportation Corp. and former president of Canadian Hunter Exploration (swallowed by Burlington Resources in 2000), believes the project is urgently needed to handle a doubling of oil sands production over the next eight years to 2 million barrels per day.

He said a railroad is vital before truck traffic through Fort McMurray doubles from the current 500 vehicles per day.

Gray said the trucks not only contribute to air pollution, but their weight is causing roads to crumble.

Upgrading the transportation system is vital to controlling the costs of oil sands mega-projects at a time when the future of Canada’s production is heavily dependent on the vast resource in the Fort McMurray region, he said.

Over the past year, Gray has held meetings with leaders of government, railways and the oil sands.

He said there is unanimous agreement that building a rail line would not need highly skilled labor and would not cut into the already-stretched ranks of workers on oil sands projects.

People moves, appointments

• Arctic Slope Technical Services said July 15 that it has hired Michael McCrum, an environmental scientist with an M.S. in geology and 18 years of project management and technical experience in environmental studies, investigations, remedial action and developing groundwater-based supply systems. He will be based in Anchorage.

Arctic Slope Technical Services, a Small Business Administration-certified 8(a) company and a subsidiary of Arctic Slope Regional Corp., is a New Mexico-based engineering, architectural and technical service consulting firm with offices in Anchorage, Denver and Seattle.

• Northern Air Cargo recently hired Dorothy Diamond for their statewide sales and marketing team.

NAC is a 48-year old, Alaskan-owned and operated all cargo airline with bases in Anchorage and Fairbanks, as well as stations throughout rural Alaska.

Diamond will be responsible for account management in a variety of NAC’s cargo hub destinations, as well as sales and marketing with the firm’s government clients.

Her career has been spent primarily in city and state government, sales and management in Anchorage and Ketchikan.






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