Oil Patch Insider

Talisman CEO Buckee says Libyan exploration rights ‘uneconomic’

While Occidental Petroleum is leading the return of U.S. oil companies to Libya and a host of other majors are jostling for strategic investments in the former pariah state, one Canadian independent thinks its peers are overpaying for exploration rights in the North African country.

Talisman Energy Chief Executive Officer Jim Buckee, while sorry that his company was unable to secure licenses, doubts the winning bidders will ever make money on their investments.

He told a conference call he was “shocked by the level of bids that were put in” earlier this year for 15 onshore and offshore blocks, 10 of which were awarded to international companies who committed 80 percent or more of any production to Libya’s state-owned National Oil Co.

Buckee believes many of the bids are “uneconomic under any circumstance.”

A year ago, Buckee, attracted by improving relations between Libya and the West, played host in Calgary to visiting Libyan energy officials.

“Whatever they’ve done in the past, they’ve now opened Libya up,” he said at the time.

The National Oil Co. has set a target of almost doubling Libyan oil output to 3 million barrels per day by 2010 at a projected cost of $30 billion and is eager to develop its natural gas resources, especially new liquefied natural gas capacity to service lucrative markets in Europe and the United States.

The exploration permit program attracted interest from 122 companies, 63 of whom got a green light to bid in the January round.

Talisman, no stranger to operating in volatile regions, notably Sudan, got shut out along with Petro-Canada (which is already producing oil in Libya) and Nexen.

But Oxy is eagerly seeking contract agreements with the National Oil Co. for the nine exploration blocks it secured, some of which it shares with Liwa Energy of the United Arab Emirates, Woodside Petroleum of Australia, Marathon Oil, Amerada Hess (which is counting on production from Libya this year of 20,000-25,000 bpd) and ConocoPhillips.

Although preliminary work is under way on 46,000 square miles, all of the partners are waiting for Libya to ratify the terms of the re-entry by U.S. companies after an absence of 20 years.

Meanwhile, companies such as BP and Shell have been jostling to land partnerships with National Oil Co. with an eye on major strategic investments with a heavy emphasis on gas liquefaction, pipeline and field development projects.

—Gary Park

Rush of ANWR visitors expected; find the ‘Christmas tree’ contest in order?

When the 19 million acre refuge was established by Congress in 1980, 1.5 million acres was set aside along the coast for investigation of its oil and gas potential, although exploration was never allowed. This northern slice of ANWR is called the 1002 area or coastal plain since it is adjacent to the Beaufort Sea.

“We’re expecting to see some increases in visitation” because tourist interest in the Arctic refuge has climbed each time drilling appeared imminent, assistant refuge manager Joanna Fox told Reuters, noting there was an increase in visitors after George W. Bush was elected president in 2000.

According to the U.S. Fish and Wildlife Service, which manages U.S. wildlife refuges, about 1,000 people have visited ANWR since 2001, most staying for at least a week.

Alaska “guide Wade Willis said many people who book tours with his company say they want to see the wildlife refuge before the landscape is dotted with roads, pipeline and lodging facilities,” Reuters reported.

Perhaps someone should hold a contest for the hiker who can find evidence of oil and gas exploration the summer after the first winter drilling season? The rigs and camps will be gone, the ice roads melted, and, of course, pipelines won’t exist for many years and only if commercial quantities of oil are found. Even then, they might be buried. All that will be left after an exploration season will be little “Christmas trees” (see North Slope summer photo).

—Kay Cashman

Aronson gets MMS hot seat in California

Joan Barminski has been selected as Aronson’s deputy manager.

Aronson has 27 years experience working in the Interior Department’s Outer Continental Shelf oil and gas program, having held both staff and management positions in the Pacific Region and in Washington, D.C. Most recently, she held the position of MMS Pacific Region Deputy Manager. Much of her work has been in the areas of developing regulatory policy and evaluating opportunities to affect a balance between resource development, public interest, and environmental protection.

Aronson began her federal career as a planner for the U.S. Nuclear Regulatory Commission in 1976.

Barminski is a geologist with 27 years of experience in petroleum geology and offshore oil and gas regulation. She previously served as chief of the MMS Pacific Region’s Office of Reservoir Evaluation and Production.

In this position, she was responsible for ensuring compliance with established policies for activities on OCS leases and units and ensuring that the public receives fair returns on energy development from offshore federal lands.

The MMS Pacific Region office employs approximately 50 people.