|
Chevron relinquishes 41 White Hills O&G leases Dropped leases lie in southern end of prospect in Brooks Range foothills, but company plans to retain leases around recent exploration wells in the north Eric Lidji For Petroleum News
Chevron is narrowing its focus at its White Hills prospect on the North Slope.
According to state land records, the state terminated 41 leases in White Hills on Feb. 1 because Chevron, through its subsidiary Union Oil Company of California, decided to stop paying rental fees on the acreage. The leases would have expired in January 2014.
Chevron, through Union Oil, picked up all 41 leases in a March 2006 lease sale.
The White Hills prospect is in the foothills of the Brooks Range 25 miles southwest of Prudhoe Bay. The relinquished leases represent only a portion of Chevron’s land holdings at White Hills, comprising roughly the southern two thirds of the prospect.
Those leases include at least seven proposed well locations and surround at least another five proposed well locations on land not currently leased by Chevron or Union Oil.
The leases Chevron is retaining in the northern end of the prospect include two wells Chevron is believed to have drilled in early 2008, Muskoxen 36-7-8 and Bluebuck 6-7-9.
That suggests Chevron isn’t so much pulling out of While Hills as refining its focus toward the northern end of the prospect. That aligns with Chevron’s activity at White Hills in recent winters. The company drilled three wells across the prospect in early 2008, but at the end of that year proposed four new well locations clustered in the north.
“Chevron has completed a two-year exploration program in the White Hills area of the North Slope,” Roxanne Sinz, public affairs manager for Chevron in Alaska, told Petroleum News by e-mail on March 9. “We have dropped a portion of our White Hills acreage position. The analysis of the remainder of our acreage position continues.”
A return to northern Alaska White Hills marked Chevron’s return to North Slope exploration after more than a decade focused primarily on the Cook Inlet basin. As Union Oil, Chevron spent nearly $7 million on 48 tracts in the region at the March 2006 North Slope areawide sale. That acreage added to 20 White Hills leases Union Oil picked up in 2001, before being acquired by Chevron.
Chevron didn’t waste time, picking up some 2-D seismic of the area, commissioning a special lightweight drilling rig from Nabors Alaska and permitting well locations across the prospect, but from the start the company proved to be shy with the program details.
Calling White Hills a “tight” venture, Chevron gave out little to no information about the targets and results of its drilling campaign. Public records suggest the company drilled three exploration wells at White Hills in early 2008 and two more in early 2009, but the company permitted many more wells that it may or may not have eventually drilled.
Before the 2007-08 winter drilling season, Chevron permitted 15 potential well locations in White Hills, and by the end of 2008 the company permitted four more potential well locations, mostly focused toward the northern end of the prospect.
Reports from the oil patch last spring suggested that Chevron would suspend work at White Hills and not drill in the 2009-10 winter season. The company did not substantiate those claims. Chevron may have suspended drilling, or may have simply finished its workload on a two-season program.
In March 2008, Chevron sold a 30 percent interest in its White Hills leases to Total E&P USA Inc., a subsidiary of the Paris-based Total S.A.
In September 2009, Union Oil dropped 11 leases in the Foothills picked up during lease sales in 2001 and 2002, and located near, but not in the White Hills area. Although White Hills is referred to as a Foothills prospect, it’s included in the North Slope areawide sales.
What are they looking for? One of the biggest questions about White Hills is whether it is gas or oil prone.
North Slope exploration is almost exclusively limited to the search for oil, because currently no infrastructure exists to bring northern natural gas to market. In recent years, though, Anadarko Petroleum began looking specifically for natural gas, opening the door to companies searching for gas to take advantage of a pipeline sometime in the future.
In the past, Chevron has said it was looking for both oil and gas at White Hills. Several previous wells drilled by other operators in the region have had oil shows, but Chevron planned several “relatively shallow” wells, which could signify a natural gas target.
In 2006, former Alaska Division of Oil and Gas Director Mark Myers pointed to oil shows at the unsuccessful Susie well Richfield drilled in the White Hills region in 1966, just before the discovery of Prudhoe Bay. Around the same time, state Division of Oil and Gas geologist Paul Decker told Petroleum News that several previous wells drilled on or near Chevron’s acreage in the White Hills encountered good oil and gas shows.
The state apparently expanded its view by late 2008. “This is probably mostly gas, but it is an area where they could also find oil,” Marty Rutherford, deputy commissioner of the Department of Natural Resources, said at the “Energy in Alaska” conference hosted by Law Seminars International in Anchorage.
| 