|
TG World opposes Beechey Point unit Calgary independent says proposed unit shortchanges its interests, has multiple operating agreements that invite waste, inequity By Wesley Loy For Petroleum News
TG World Energy Inc. is objecting to the proposed formation of the Beechey Point unit on the North Slope, saying its partners submitted faulty information that denies the Calgary-based independent oil and gas company’s interest in leases.
“Despite expending hundreds of thousands of dollars in acquiring lease interests and even more in preparatory expenses for the unit, over half of TG’s interests in the proposed unit are not reflected in the application,” lawyers for TG World wrote in comments submitted to the Alaska Division of Oil and Gas on June 8.
Brooks Range Petroleum Corp. of Anchorage applied for formation of the Beechey Point unit on April 27. The unit encompasses 25 state leases totaling 52,877 acres, and is situated in the Gwydyr Bay region adjacent to the Prudhoe Bay and Northstar units.
Brooks Range is operator for the unit. Its parent company, AVCG of Kansas, is a partner with TG World and two other companies in a North Slope oil and gas exploration and development joint venture.
But relations are strained between Brooks Range and TG World, which have sued one another in Alaska Superior Court alleging contract breaches.
TG World did not sign the Beechey Point unit application. Its lawyers say the company is not opposed to the state approving the unit formation, but it first wants a few problems to be cured.
Three objections First, TG World contends the application incorrectly shows AVCG as 100 percent working interest owner in 12 leases listed on the unit application “when in fact TG paid to acquire a 35 percent interest in those leases.” In its filing to the state, TG World cites payments of at least $293,950 to secure the lease interests.
Second, TG World says the Brooks Range unit application lacks “a single signed unit operating agreement covering the entire unit area.” Rather, the company contends Brooks Range has submitted four separate operating agreements covering the Beechey Point unit.
“Importantly, the separate operating agreements do not apply to different geologic regions or formations with the proposed unit,” TG World told the state. “Rather, two of the operating agreements overlap completely and attempt to cover the same area under different terms and conditions, while the remaining two attempt simultaneously to cover one of the leases within the proposed unit.”
Such an unwieldy situation with the multiple operating agreements could result in waste of unit resources, and unfairly favor the interests of some partners over others.
TG World’s third objection concerns access to certain documentation backing up the unit application. The company says AVCG and Brooks Range have withheld critical information including a two-volume “Geological, Geophysical and Engineering Submittal” for which TG World had paid its share.
In its comments to the state, TG World says it has paid a 35 percent share of predevelopment costs for the Beechey Point unit, or $687,190 between 2007 and 2008.
The company said it “supports the efficient, fair and equitable formation” of the unit, but asks that the state natural resources commissioner “hold the application in abeyance” until the problems are fixed.
With its filing, TG World supplied the state a June 4 letter signed by James Winegarner, vice president of land and external affairs for Brooks Range, partially addressing some of TG World’s complaints.
The letter says the 12 leases in which TG World claims part interest “will not be assigned to TG” until the court litigation is resolved.
| 