THE EXPLORERS 2006 - British gas major invests in North Slope

Kay Cashman

Petroleum News

In the fall of 2005, Glenn McNamara said BG Group would not only become involved in gas exploration and production in Canada, but that the international gas major’s frontier strategy would eventually extend from the Northwest Territories to Alaska.

McNamara, the president of Calgary-based BG Canada Exploration and Production, was right.

London-based BG Group, a 1986 spin-off from the privatization of the British government-owned gas monopoly British Gas, entered Alaska on Jan. 26, 2006, when its Brooks Range Foothills “participation agreement” with Anadarko Petroleum and Petro-Canada went into effect.

Its foothills deal in Alaska, formally announced Feb. 7, 2006, gave BG Group’s new Alaska subsidiary BG Alaska E&P Inc. a “33.33 percent equity share in 2.1 million acres of land in the Foothills area of the Alaskan North Slope.”

Under the terms of the agreement, each partner owned a one-third working interest in the acreage with Anadarko continuing to serve as operator.

Other investments followed, including a move north of the gas-prone Brooks Range Foothills into the eastern North Slope with the company’s May 15, 2006, announcement of an exploration agreement with Anadarko to acquire a 40 percent equity share in 208,000 acres of land. This includes a piece of an oil prospect called Jacob’s Ladder and a swath of tracts south of BP’s Badami unit.

Again, Anadarko would remain operator of the leases.

The third partner in the Jacob’s Ladder unit was Arctic Slope Regional Corp.

“BG Group is focused on growing its presence in Alaska as part of our long-term plan to meet the increasing U.S. energy demand through the production of new natural gas supplies from Alaska and Canada,” Martin Houston said after the May 15 announcement. Houston is BG Group’s executive vice president and managing director for North America, the Caribbean and global LNG.

“This agreement with Anadarko is an ideal partnership between two companies with the knowledge, technology and experience to be successful and fits nicely into our strategy of being a long-term reliable supplier of clean burning natural gas to the world’s largest gas market,” he said, pointing out that the leases in the new partnership deal were immediately southeast of the giant Prudhoe Bay field “with its known natural gas reserves of about 24 trillion cubic feet” and “southwest of the 8 tcf Point Thomson gas and condensate field.”

BG also began bidding in Alaska lease sales with Anadarko and Petro-Canada in May 2006.

Alaska assets managed in Calgary

The company has already made its mark in northern and western Canada, spending more than C$100 million on exploration there in 2005, and engaging in a more ambitious program in 2006, along with establishing a foothold in the Northwest Territories.

McNamara, former president of ExxonMobil’s operations in Western Canada, including the company’s Mackenzie Delta assets, told the Financial Post in 2005 that BG is in North America for the long haul and wants to be a material player in the continental market.

The company also has oil and gas properties in British Columbia and Alberta.

BG Group is a publicly listed company on the London and New York Stock exchanges and has operations in 20 countries.

The company has four key business sectors — exploration and production, liquefied natural gas, transmission and distribution, and power generation — with most of its profits coming from the E&P sector, David Keane, vice president of policy and corporate affairs in Houston for BG North America, told Petroleum News Feb. 7, 2006.

Open to other Alaska investments

With respect to offshore properties, he said, BG has “a lot of offshore operations around the world. … As for Alaska offshore, we wouldn’t rule anything out. … Right now we’re real excited about working with our new partners in Alaska.”