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April 2011

Vol. 16, No. 14 Week of April 03, 2011

ExxonMobil in Alaska: Exxon sees hope for Alaska exploration

On Aug. 3, 1993, the New York Times ran a short piece in its company news section that basically said:

Exxon Corporation has modest plans to seek new oil on Alaska’s North Slope, the company’s Alaska manager said yesterday. “Alaska clearly is a place where there’s hope of additional discoveries and production, so we remain vitally interested in participating here,” Michael Smith, head of Exxon USA’s Alaska office, told the Anchorage Chamber of Commerce.

Last winter, Exxon drilled its first exploratory well in Alaska since 1986, at Thetis Island, a state-owned site. A second exploratory well is planned by 1995 at Thetis Island, Mr. Smith said.

The 1993 well, Thetis Island No.1, was drilled in partnership with Anadarko Petroleum and Japex, and was certified by the State of Alaska as capable of producing in paying quantities.

It was the last exploration well Exxon ever drilled in Alaska.

Exxon’s working interest in the lease, ADL 379301, was sold to Anadarko. The lease is currently part of Pioneer Natural Resources’ Oooguruk unit.

Exxon stops exploring

Exxon’s Alaska-Pacific Division’s exit from exploration in Alaska was, in part, connected to the 1989 oil spill in Prince William Sound.

As negative feelings toward the company grew in the years following the spill, company executives were reportedly concerned about the difficulties if permitting wells in Alaska.

Despite Smith’s positive comments about exploration, local officials were told by headquarters that the 1993 well couldn’t be drilled without 30 percent of the costs being carried by new partners — hence Anadarko and Japex — which was unusual for the cash-rich Exxon.

There was a lot of dissatisfaction in the company, too, about the most recent exploration well it had drilled in late 1985 in the federal waters of Alaska’s Beaufort Sea, 20 miles northwest of BP’s disastrous Mukluk well. The Orion well, one of Exxon’s Alaska-Pacific Division geologists claimed, would have 400 feet of pay. It turned out to be a complete bust with 44 feet of pay. Not something company leadership was pleased with after conducting an internal technical audit.

All that plus the $385 million cost of the CIDS unit (see page 60) drove Exxon’s decision to halt exploration in Alaska.

—Kay Cashman






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