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Pioneer steals show Last winter’s successful explorer takes big block south of Prudhoe Bay Kristen Nelson Petroleum News Editor-in-Chief
Dallas-based Pioneer Natural Resources came to Alaska a year ago when it acquired 70 percent interest in 10 Armstrong Resources’ Beaufort Sea leases and took over as operator at the Northwest Kuparuk prospect (now Oooguruk unit) between the Kuparuk River unit and Thetis Island. It drilled three exploration wells last winter and discovered oil.
Pioneer made another big move this month at the state’s areawide North Slope and Beaufort Sea lease sales where it was high bidder on a huge block of acreage south of Prudhoe and Kuparuk and on some very pricey Beaufort Sea tracts north of Prudhoe.
In its first appearance at Alaska lease sales, Pioneer dominated both the North Slope and Beaufort Sea sales held Oct. 29 in Anchorage, with its high bids totaling almost $3.9 million, or two-thirds of the total $5.8 million in high bids at the sales.
It’s no wonder that Jim Hansen, the Division of Oil and Gas leasing manager, concluded the sale with: “I’d like to thank you for your interest in the leasing program and participating here today — especially Pioneer Natural Resources.” Bids took a big jump over 2002 This year’s sales took a big jump over 2002.
In last year’s Beaufort Sea sale the state sold 15 tracts for $506,404.80, an average bid of $26.34 an acre for 19,226 acres, compared to almost $2 million this year and almost 50,000 acres — and an average per acre bid of more than $40.
Last year’s North Slope sale was reported by bid type — sliding scale royalty versus fixed royalty. The state sold 12 North Slope leases for a combined value of $579,727.75, with the fixed royalty bids averaging $11.32 an acre for 29,451 acres, and the sliding scale royalty bids averaging $86.06 an acre for 2,864 acres. That compares to almost $4 million this year and some 220,000 acres and an average per acre bid of more than $17. Pioneer has highest per-acre bid Pioneer was high bidder on 12 of 20 tracts sold in the Beaufort Sea sale, and on 41 of 75 tracts sold in the North Slope sale.
The state received 26 bids on 20 tracts in the Beaufort Sea sale, 48,640 acres. High bonus bids totaled $1,975,883.60, with an average high bonus bid of $40.62 an acre. Pioneer had the highest bid, $87.71 an acre, for tracts 260, 276 and 293 in the Beaufort sale.
Its 12 leases from that sale are in two blocks, one north of Prudhoe Bay and east of Northstar and the other north of Prudhoe Bay and south of Northstar. These tracts appear to be acreage formerly held by BP Exploration (Alaska), which sold or dropped its exploration acreage earlier in the year.
Bill Van Dyke, petroleum manager at the Division of Oil and Gas, said after the sale that some of this interest got started when BP put its exploration acreage up for sale when it decided to focus on in-field development drilling.
“BP certainly facilitated some of this activity, made it happen sooner rather than later,” Van Dyke said, because of the exploration acreage the company offered for sale and the data the company offered on that acreage.
Companies interested in BP’s prospects looked at its data, Van Dyke said, “and then BP offered to sell seismic packages that it controlled … for really good prices.” AVCG also takes Beaufort block In addition to Pioneer, the Beaufort Sea sale drew another substantial set of bids from a smaller independent, AVCG, which took six leases, spending $241,920.
Van Dyke said AVCG “had that play before” in the Gwydyr Bay area and never was able to drill a well, “so they came back and picked up a lot of acreage in that same play.”
Ultrastar Exploration took one lease (at $44.88 an acre) on which Pioneer and AVCG also bid, on the edge of the Pioneer block south of Northstar.
Armstrong took a lease (at $57.35 an acre), offshore north of Kuparuk. Pioneer takes 41 North Slope tracts The state received 79 bids on 75 tracts in the North Slope sale, 220,800 acres, with total high bonus bids of $3,832,793.60 and an average high bid per acre of $17.36.
Pioneer took 41 tracts, all of those it bid on in the onshore sale, paying $2,335,385.60. In addition to the large block of tracts south of Kuparuk and Prudhoe, Pioneer also took three tracts on the western edge of Kuparuk
Anadarko Petroleum took 16 tracts, all it bid on, paying $856,665.60.
AVCG took nine onshore tracts, bidding on 11, and paying $325,120, for areas from south of Badami in the east to adjacent to the Colville River unit in the west.
ConocoPhillips took four of the five tracts on which it bid, paying $160,102.40. These tracts are adjacent to the Kuparuk River unit on the west and south.
Keith Forsgren took the four tracts he bid on just west of Kuparuk for $116,428.80.
Armstrong Alaska bid on two tracts and took one, for $39,091.20. Establishing a land position Chris Cheatwood, Pioneer’s executive vice president for worldwide exploration, told Petroleum News after the sale that the company bid on some 167,000 acres, and expects to come away from the sale with about 155,000 acres. In addition to the one tract it bid on but didn’t get, acreage totals will drop once the state finalizes the title work and provides exact acreage for each tract.
The large onshore block Pioneer took is between Prudhoe and Kuparuk, just south of established field infrastructure and just west of the trans-Alaska pipeline and the Dalton Highway.
Cheatwood said Pioneer had no immediate plans for the acreage.
“You’ve got to get established first,” he told Petroleum News after the sale, “so we just needed to look at a variety of different opportunities up here and establish a land position.”
Acquiring more seismic is the next step he said, before the company and “put some plans together and see what we can do on those lands.”
“Our company is working to build a portfolio of opportunities in Alaska,” said Ken Sheffield, head of Pioneer’s Canada and Alaska operations, who was also in Anchorage for the sale.
Van Dyke said the large onshore block is likely an oil play in shallower, younger sands. There are “stratigraphic-type plays down through that area,” he said, and Texaco and Conoco drilled in the area in the past.
As for the size of the block Pioneer picked up, Van Dyke said that when you’re looking “at some of those shallower sands and they’re stratigraphic plays … you have to pick up a big block of acreage” to be sure “you can eventually cover the whole prospect. … seismically they’re kind of difficult to map.”
Anadarko looking for partner “We’re basically completing our acreage block,” Diane Kerr, Anadarko Petroleum’s Alaska/Canada frontier exploration manager said after the sale.
Van Dyke said Anadarko has been collecting acreage, “so they’re filling in around the edges.” Anadarko took leases on both the eastern and western edges of a large block running east-southeast from the southern edge of the Prudhoe Bay unit.
John Bridges, Anadarko’s land supervisor, said the company has “consolidated our acreage position on a prospect and we’re currently looking for a partner or partners.”
The company is interested in drilling on the prospect, he said, and could drill as early as 2005.
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