State defers contraction of Badami leases

Based on planned development and exploration activities, the Alaska Division of Oil and Gas has deferred the contraction of Badami unit leases not in a participating area until November. Badami is the farthest east producing field on the North Slope.

Contraction was deferred from Aug. 1, 2008, to Nov. 15, 2010, contingent on successful completion of BP Exploration (Alaska)’s exploration and development contract with Savant Alaska LLC and drilling commitments, and deferred again until Feb. 15 so that the division could meet with the companies and evaluate information they provided.

The field, developed by BP, was brought back into production Nov. 5 by Savant. Savant and Arctic Slope Regional Corp. began working with BP in 2008 to bring the field back into production; it had been shut down in 2007 after producing intermittently since BP brought the field online in 1998.

BP transferred four Badami leases to Savant and ASRC late last year, keeping an overriding royalty interest.

The current deferral is until Nov. 15 and is subject to BP and Savant providing the division with a briefing on the results of winter 2010-11 exploration and development activities by Sept. 1.

The companies plan to produce the B1-18A well to determine the economic viability of the Badami sands interval and to produce from the B1-38 and B1-36 wells, and re-analyze seismic data in the western unit area to identify additional drilling prospects in the deferred area.

—Kristen Nelson