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Arctic Directory: Banks: Still vast resources in Alaska North Slope source rock play draws $8 million from Great Bear; Cook Inlet basin attracts investment dollars from Armstrong, Apache Kevin Banks Director, State of Alaska’s Division of Oil and Gas
For all the talk about peak oil and Alaska’s aging fields, there is plenty of evidence that Alaska still holds vast and potentially profitable undeveloped oil and gas resources. Industry is still actively acquiring rights to develop our lands, and new players are still entering Alaska with new ideas and technology in their back pockets.
Last year in this publication we predicted a great year for leasing in Alaska and, sure enough, that prediction came true. Great Bear Petroleum starred in the North Slope areawide sale, bidding more than $8 million for 500,000 acres of land. Great Bear’s bids were based on a source rock reservoir oil play concept not yet tried in Alaska, but which has led to a major resurgence of oil production elsewhere in the U.S. The era of “easy” oil may be drawing to a close, but if commercially successful, the resource play concept may lead to major development of unconventional oil resources on the North Slope.
New Cook Inlet investment Cook Inlet continues to attract new industry investment after more than 50 years of industry activity. For example, on the Kenai Peninsula, Armstrong this winter constructed a 7-mile gas pipeline between North Fork and Anchor Point. The pipeline is expected to be ready for operation in February, with first gas sales from the field expected in March. Apache Corp., a world-recognized leader in deploying cutting-edge technology to breathe new life into mature basins, acquired nearly 250,000 acres in the second half of 2010 alone. Apache’s immediate exploration plans call for testing 2-D seismic acquisition parameters in preparation for continuous, year-round 3-D seismic acquisition across much of the Cook Inlet basin. Cook Inlet Energy has restarted for oil wells to bring the West McArthur River unit back into production. The company is in the process of permitting three Stingray prospect exploration wells for this winter in the West Foreland area onshore, targeting Beluga Formation gas.
On the east side of Cook Inlet, Buccaneer is permitting three wells on private land for their Kenai Loop project and Nordaq energy has spudded their Shadura 1 well on CIRI land west of Swanson River to test Beluga and Tyonek prospects.
And north of Anchorage, Linc Energy has acquired 117,000 acres of previously leased state acreage and announced a gas discovery at their LEA 1 well.
Division wants responsible development We want to see responsible resource developers succeed in Alaska, because when industry is successful, so are we.
The Alaska Department of Natural Resources’ Division of Oil and Gas manages the state’s oil and gas resources with a staff of 95 technical experts with hundreds of years of combined industry experience. The Division works in asset teams, consisting of diverse groups of professionals using their unique and complementary areas of expertise to manage the wide array of functions assigned to each team.
The Division’s mission is to “manage lands for oil, gas, and geothermal exploration and development in a fair and transparent manner to maximize prudent use of resources for the greatest benefit of all Alaskans.” This means not only maximizing the economic and physical recovery of resources and achieving the best economic benefits of oil and gas resource development. We strive to maximize competition among explorers and developers. We are also called on to make maximum use of Alaska’s human resources, as well as inspect and control the use of lands under our jurisdiction.
The Resource Evaluation section is just one example of the highly qualified staff we’re proud to call ours. Our team of petroleum geoscientists and engineers works in both regulatory and research capacities, and has the experience and integrity to work with potential industry investors, providing technical briefings and sharing their knowledge and interpretations of non-confidential data.
Throughout the Division are individuals with experience in oil and gas trading and marketing, marine transportation, land law, conservation, accounting, audit, resource management and economics. This staff is assembled to support any responsible company that shares our mission.
At last count, our staff had over 300 years of combined professional experience, with over 170 years of combined previous experience working for petroleum companies.
Annual lease sales held The Division of Oil and Gas strives to provide the predictability we know our industry partners need. That is why we hold annual lease sales for all available tracts in five areas with known petroleum potential — our Areawide Lease Sales. The lease sales are held in May (for the Alaska Peninsula and Cook Inlet) and October (for the Beaufort Sea, North Slope, and North Slope Foothills).
When our lease sales take place, the environmental challenges of potential oil and gas development have already been considered. For each of these areas, a Best Interest Finding is developed every 10 years, and reviewed annually to ensure that the proposed leasing is, in fact, in the best interest of the state taking into account the input from regional and local stakeholders. In the Finding, the Division provides measures to mitigate any reasonably expected negative impact. The past two years of lease sales on the North Slope successfully leased over a million acres1.
The Division also issues exploration licenses to allow for exploration in parts of Alaska not encompassed by annual areawide lease sales. The Division accepts exploration license applications every year during the month of April. When a license application is received, the Division starts its fact-finding process to determine whether awarding the exploration license is in the best interest of the state. A preliminary Best Interest Finding, subject to a public comment period and due consideration of those comments, is followed by a Final Finding of the Director, determining whether the license should be awarded.
Learn more about the Alaska Division of Oil and Gas from our website: www.dog.dnr.state.ak.us/oil/
Or contact us at our offices in Anchorage: 550 W. 7th Avenue, Suites 800 & 1100; Anchorage, Alaska 99504. Phone: 907-269-8800
Note: Preliminary numbers for October 2010 lease sale for Beaufort Sea, North Slope, and North Slope Foothills included.
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