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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2006

Vol. 11, No. 38 Week of September 17, 2006

Oil Patch Insider

Canadian drillers count on hot winter; oil sands land costly prize

Canada is ready to enter the prime winter drilling season flush with rigs and support equipment and anticipating a lively pace of activity.

The rig fleet in Western Canada stands at 810, up 148 from just four years ago and expected to grow by another 20 before year’s end — 80 percent of the equipment based in Alberta.

Although well completions for the year have been scaled back to 23,410 from 25,290 in 2005, the drilling sector is not unhappy because of the switch to deeper natural gas prospects that take longer to drill.

After reaching heady levels toward the end of 2005, gas prices have softened this year, but contractors are counting on a recovery based on the demand that has contractors like Trinidad Drilling’s new rigs booked solid for the next three years.

The drilling sector is also noticing that the traditional summer downturn is fading.

The active rig count for the final week of August showed 553 rigs were at work, exceeding the average for the first eight months of 528 working units or 67 percent utilization rate, the highest since 1997 and 11 percent ahead of last year’s 476 active rigs.

Shallow capacity rigs reflected the drop in gas prices, with only 57 percent of the 249 rigs capable of drilling to about 6,000 feet or less at work, compared with a 75 percent utilization rate a year earlier.

—Gary Park

Don’t forget Southcentral Alaska energy forum

Don’t forget to attend the Alaska Oil and Gas Conservation Commission’s Southcentral Alaska energy forum Sept. 20 and 21 at the Egan Center in Anchorage. The Municipality of Anchorage, the Kenai Peninsula Borough and the Matanuska-Susitna Borough are also sponsors.

The forum, which does not cost anything to attend except the price of lunch, will address the long-range energy needs of Southcentral Alaska.

Topics include opportunities for new exploration, extending production from existing fields, Cook Inlet oil and gas infrastructure, other energy alternatives and assessment of anticipated utility and industrial user energy needs.

The forum agenda is available on the commission’s Web page: www.state.ak.us/admin/ogc/homeogc.shtml.

Please RSVP to the commission’s special assistant, Jody Colombie, at (907) 793-1221 or by e-mail at [email protected].

Prince William Sound RCAC meets in Homer

The Prince William Sound Regional Citizens’ Advisory Council is holding a board meeting at the Land’s End Resort in Homer Sept. 18-19. There will be a community reception at the Alaska Islands and Oceans Visitors Center Sept. 18 at 5:30 p.m.

Reports on the agenda include: status of the tanker escort system in Prince William Sound; council’s efforts to secure reductions in release of hazardous air pollution from the tanker terminal; and reports on corrosion issues at Alyeska Pipeline Service Co.’s Valdez tanker terminal.

The full agenda is available on the council’s Web site at www.pwsrcac.org.

Oil sands land a costly prize

There are all kinds of yardsticks to reinforce the staggering dimensions of Alberta’s oil sands development — reserves, capital spending, production outlook.

Add to that list the cost of acquiring leases in government land sales.

In the space of two years, the per-acre average at the bi-monthly auctions has rocketed from about C$100 an acre to almost C$7,000, explaining why the oil sands make up the bulk of year-to-date returns.

The government has collected a total of C$2.63 billion from the disposal of conventional and unconventional properties — beating the record tally for all of 2005 by about C$370 million, with the oil sands contributing two-thirds of the returns.

The bitumen properties snapped up this year total about 3,238 square miles, which raises a concern about how much is left and explains why buyers are venturing into untested regions, where the geology is more challenging and the prospects are largely unknown.

In such a cut-throat environment, brokers such as Greg Scott, president of Scott Land & Lease, find companies are willing to extend the geographical and geological boundaries in the hope that technological advances will turn once marginal properties into economic plays.

Adding to the intensity, the government also introduced online bidding this year, opening the door to registered parties anywhere in the world.

—Gary Park

AAEP meeting Sept. 20

On Sept. 20 the Alaska Association of Environmental Professionals is kicking off a new season of brown bag lunch meetings with a talk by Marty Brewer on the Alaska Department of Environmental Conservation draft guidance on developing conceptual site models. Brewer is an environmental program specialist with ADEC.

Doors open at 11:30 a.m. and the meeting will run from 11:45 a.m. to 12:30 p.m. at the BP Energy Center, off the Seward Highway between 36th Avenue and Benson Boulevard, in Anchorage. There is no entrance charge but scholarship donations are accepted.

For further information contact Denise at (907) 562-8738.






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