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British gas major partners with Anadarko, Petro-Canada on Alaska’s North Slope
Last fall Glenn McNamara said BG Group would not only become involved in gas exploration and production in Canada, but that the international gas major’s frontier strategy would eventually extend from the Northwest Territories to Alaska (see Petroleum News’ Oct. 16 issue, Oil Patch Insider column).
McNamara, the president of Calgary-based BG Canada Exploration and Production, was right.
London-based BG Group plc, a spin-off 20 years ago from the privatization of the British government-owned gas monopoly British Gas, entered Alaska on Jan. 26 when its Brooks Range Foothills “participation agreement” with Anadarko Petroleum and Petro-Canada went into effect.
Formally announced Feb. 7, the deal gives BG Group’s new Alaska subsidiary, BG Alaska E&P Inc., a “33.33 percent equity share in 2.1 million acres of land in the Foothills area of the Alaskan North Slope,” also referred to as the Brooks Range Foothills.
Each partner now owns a one-third working interest in the acreage. Anadarko will continue to serve as operator. Alaska assets managed in Calgary BG’s Alaska subsidiary will be managed by McNamara in Calgary, “leveraging the technical capabilities we have developed since we commenced our operations there,” Martin Houston, BG executive vice president and managing director, North America, Caribbean and Global LNG, said in the company’s Feb. 7 release.
“This agreement builds on our existing North American E&P business in Canada and creates the potential for increasing BG’s natural gas supply position into the U.S. gas market, which is underpinned by our LNG importation business,” Houston said.
BG has already made its mark in northern and western Canada, spending more than C$100 million on exploration there in 2005, and planning a more ambitious program in 2006, along with establishing a foothold in the Northwest Territories.
According to the Oct. 16 report in Petroleum News, the company sent out strong signals of its northern intentions in early 2005 when it took a 75 percent share in a C$16.5 million purchase of 275,000 acres of exploration rights on two leases in the Colville Hills area of the Mackenzie Valley, with International Frontier Resources as a 25 percent partner.
BG is hoping the Mackenzie Gas Project will proceed and aboriginal regions will become more confident in their dealings with the industry, allowing more exploration land to become available. McNamara former Exxon exec McNamara, former president of ExxonMobil’s operations in Western Canada, including the Mackenzie Delta assets, told the Financial Post in 2005 that BG is in North America for the long haul and wants to be a material player in the continental market.
The company also has oil and gas properties in British Columbia and Alberta.
BG Group is a publicly listed company on the London and New York Stock Exchanges and has operations in 20 countries.
The company has four key business sectors — exploration and production, liquefied natural gas, transmission and distribution, and power generation — with most of its profits coming from the E&P sector, David Keane, vice president of policy and corporate affairs in Houston for BG North America, told Petroleum News Feb. 7.
Open to other Alaska investments
When asked if BG was looking for more oil and gas properties in Alaska, Keane said, “We’re always looking at opportunities to expand our reserve base; as long as it made economic sense and was do-able we would probably welcome other opportunities in Alaska.”
In respect to offshore properties, he said, BG has “a lot of offshore operations around the world. … As for Alaska offshore, we wouldn’t rule anything out. … Right now we’re real excited about working with our new partners in Alaska.” Drilling in Foothills possible soon Mark Hanley, Anadarko’s spokesman in Alaska, is also upbeat about the Foothills partnership.
“It can only be seen as a positive — for the state of Alaska, for our partners and for us,” he told Petroleum News Feb. 7.
“Frontier exploration tends to be riskier and we’ve always said we preferred having a third partner for the Foothills acreage,” he said, referring to two partners that have walked away from the Foothills consortium in past years for reasons not connected to it.
“So we’re back to where we wanted to be all along with three good companies in the partnership. Each brings a little something to the table, but our motivations are all in the same place and we’re technically aligned, so I think this is a good partnership,” Hanley said.
The inclusion of BG in the Foothills acreage, he said, could mean Anadarko will “consider some exploration drilling in the Foothills in the near feature. …”
“It was hard to move forward before even if we wanted to until we had (a three-way) partnership worked out … but we’re going to talk to our partners because we’d like to drill in the near future — at least look at that as a possibility.”
But how much drilling will, in part, be dependent on whether or not Anadarko and its partners can get fair access to the proposed gas pipeline from the North Slope, Hanley said.
—Kay Cashman
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