Oil Patch Insider

PN sources say Eni buying Anadarko out of Nikaitchuq; Milan approved development after successful production test; Canada told to forget Arctic claims

Petroleum News sources said Feb. 22 that Eni has purchased Anadarko Petroleum’s 70 percent interest in the Nikaitchuq prospect, making Eni 100 percent owner in the Alaska Beaufort Sea unit.

State of Alaska oil and gas lease records show that an assignment of 20 leases encompassing both the Nikaitchuq unit and adjacent Tuvaaq unit from Anadarko to Eni was approved Feb. 14. Percentages vary but in each case 100 percent of Anadarko’s interest was bought out by Eni.

Sources also said that Milan, Eni headquarters, has approved development of Nikaitchuq. PN sources said this sale was not any indication Anadarko was pulling out of Alaska.

Recent production tests at Nikaitchuq reportedly yielded more than 2,000 barrels of oil per day at 19.2 percent gravity.

Nikaitchuq was one of the prospects identified by Armstrong Alaska, which brought Kerr-McGee to Alaska as a majority partner in late 2004 in Nikaitchuq (and Tuvaaq) to explore the acreage. Last year Anadarko bought out Kerr-McGee, and Armstrong sold its North Slope interests to Eni in mid-2005.

Kerr-McGee said in 2006 that Nikaitchuq’s gross estimated resource range was 100 million to 200 million barrels of oil equivalent. The company said Nikaitchuq facilities would be built to handle a flow of 60,000 barrels per day.

Mega-major Eni is drilling its first exploration wells in Alaska this winter.

—Kay Cashman

Canada told to forget Arctic claims

James Kraska, oceans policy advisor to the U.S. Joint Chiefs of Staff, said in an article that the Law of the Sea does not support Canada’s assertion that it has jurisdiction over the Northwest Passage.

He said working through the International maritime Organization would enable Canada to achieve its most important policy goals for the passage and gain widespread compliance with Canadian regulations for “enhanced safety, security and environmental protection.”

A copy of the article, published by the Ottawa Citizen, said the European Union endorses the U.S. view that Canada does not have sovereignty over the Northwest Passage.

He predicted, despite a hard-line stance by Prime Minister Stephen Harper and other Canadian politicians, that the issue is “unlikely to cause significant friction” between Ottawa and Washington because both countries are partners in NATO and share a mutual respect for the rule of law.

However, the Harper government restated Canada’s long-held claim to the Northwest Passage, making that a key element of its election campaign a year ago, and has pledged to buy icebreakers to patrol the Arctic and to establish deepwater ports in the north.

As one example of how the issue could be resolved, Kraska said Malaysia, Singapore and Indonesia agreed in 2005 along with 31 other countries to settle a 20-year dispute over the Strait of Malacca through a “multilateral” approach, working through the International Maritime Organization.

—Gary Park

Alberta calm and in control

The message was distributed internally within the al-Qaeda Organization in the Arabian Peninsula, an arm of Osama bin Laden’s network, and was intercepted by the SITE Institute, a non-profit US group that tracks terrorist websites.

It had radio stations foaming at the mouth and produced a headline across the Calgary Herald’s front page: “Oilpatch on alert over terror threat.”

The posting also caused the Alberta Counter-Terrorism Management Plan, an office in the Solicitor-General’s Department, and the Alberta Energy and Utilities Board to put the petroleum industry on “heightened alert.”

But the authorities also refrained from raising Alberta’s threat level from “low,” where it has been since the scale — which ranges from no threat, to low, medium, high and imminent — was introduced after Sept. 11, 2001.

AEUB spokesman Darin Barter told Petroleum News that the assessment did not warrant action beyond “reinforcing the need to be vigilant,” noting that the posted threat did not meet any of the specific criteria needed to elevate the threat level.

He said warnings targeting the Canadian oil and gas industry occur “intermittently” and are “neither on the increase nor the decrease.”

Barter said emergency plans have been audited by the AEUB and all companies are “in compliance” with the regulator’s requirements.

David Sands, in the office of Premier Ed Stelmach, said “no alarm bells are going off here. We are fully confident in the information we have.”

Stelmach, in office less than three months, reacted calmly, doubting that bin Laden “even knows where I am.”

However, he said the Alberta infrastructure was a critical concern and that’s what the government would be protecting. However, one industry veteran observed that, other than taking sensible precautions to tighten security, Alberta remained as vulnerable to terrorists as any part of the world.

“If someone decided to drop a bomb from a small plane over the Edmonton refinery district there’s nothing anyone could do,” he said.

Kinder Morgan Canada Vice President of Operations Hugh Harden echoed that thought, saying it was “difficult to take action as there is no specific threat.”

Others contended that the fact information was being shared among producers and pipeline companies was at least proof that security programs were working.

Martin Rudner, director of Carleton University’s Canadian Center of Intelligence and Security Studies, described the al-Qaeda posting as “very serious,” given al-Qaeda’s attack a year ago on the world’s largest oil processing facility at Abqaiq in Saudi Arabia.

He said a successful attack against Canadian oil and gas supplies and the disruption to North American markets would be of both economic and symbolic significance to al-Qaeda.

—Gary Park