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Vol. 13, No. 24 Week of June 15, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Seeking balance at Teshekpuk Lake

Area north and east of NPR-A lake off the table – for now – but proximity to Barrow Arch explains industry’s strong interest

Alan Bailey

Petroleum News

In its supplemental final plan for the Northeast National Petroleum Reserve-Alaska, announced May 16, the U.S. Bureau of Land Management elected to defer leasing for 10 years in the environmentally sensitive area north and east of Teshekpuk Lake, believed to have the potential for discovery of as much as 2 billion barrels of oil and 3.5 trillion cubic feet of natural gas. (See story in May 25 edition of Petroleum News.)

But a look through the public comments on BLM’s draft plan reveals why the oil industry is anxious to explore the area.

In public testimony about the plan submitted in October Richard Garrard, geosciences manager for Talisman Energy subsidiary FEX in Alaska, explained his company’s interest in the Teshekpuk Lake area.

Garrard pointed out that FEX has established a substantial acreage position in and offshore NPR-A and has drilled several exploration wells in NPR-A, with some of those wells encountering hydrocarbons. The area north of Teshekpuk Lake is a logical extension of the company’s acreage position.

Barrow Arch

“The reason for the attractiveness of this area is the Barrow Arch, a geologically elevated area that has historically been the focus of oil and gas migration from the deeper basin areas (“source rock kitchens”) to the north and south,” Garrard said.

Traditional exploration plays in northern Alaska have tended to focus on the Barrow Arch that runs approximately along the Beaufort Sea coast. Fields like Prudhoe Bay and Endicott lie on the Arch.

The crest of the Barrow Arch lies just offshore Northeast NPR-A — the southern flank of the arch that lies under the Teshekpuk Lake area is considered to be one of the more attractive areas in Alaska for future exploration. Garrard said new high-resolution seismic data have revealed new exploration opportunities in the area.

FEX is “very aware of the environmental and cultural sensitivities of the onshore areas north of Teshekpuk Lake” and has demonstrated its ability to work in environmentally sensitive areas, he said.

BLM, in announcing the final plan, said that its deferral of oil and gas leasing in the area north and east of Teshekpuk Lake recognized the importance of the area for wildlife resources such as geese and caribou.

“The plan provides a balanced approach to energy development and wildlife protection, and forms a solid basis for the Bureau of Land Management to proceed with an oil and gas lease sale later this year,” said Secretary of the Interior Dirk Kempthorne.

Bisson: appropriate decision

The area of leasing deferral probably holds the most significant wildlife resources on the North Slope — it is also an important area for subsistence hunting by several villages, Henri Bisson, BLM deputy director, told Petroleum News June 3. BLM weighed the potential activities onshore and offshore before making the deferral decision, he said.

“At this point we view it as an appropriate decision to make,” he said.

Bisson said that everybody wants to see what unfolds in NPR-A, as oil and gas activities move ahead in areas that are open for leasing. In its decision, he noted, BLM reserved the right to lease the area in the future.

North Slope Borough

North Slope Borough Mayor Edward Itta lauded the deferral decision for the area north and east of Teshekpuk Lake. The borough was a cooperating government agency in the Northeast NPR-A plan of development.

“BLM listened to local communities and made the plan better,” Itta said. “The lease sale can proceed while one of the region’s most sensitive wildlife habitats will be protected. It’s a win-win.”

North Slope Borough spokesman David Harding told Petroleum News June 11 that the borough is opposed to opening the area north and east of Teshekpuk Lake at any time in the future because the area is environmentally unique.

“If the deferral had been permanent we would have been much happier,” Harding said. “Ten years is better than nothing.”

ConocoPhillips

ConocoPhillips has major oil interests in the Colville River Delta immediately east of NPR-A and has continued to actively explore in the petroleum reserve. ConocoPhillips spokeswoman Natalie Knox Lowman told Petroleum News June 3 that the company understands the difficulty of addressing all stakeholder interests in the Teshekpuk Lake area.

“What we said was that ‘we respect the process the BLM and the North Slope Borough went through to reach this point and recognize how important it is to balance the interests of all stakeholders,” Lowman said. “We also believe that access to new acreage is important for development of the state’s resources, and should be a priority in order to increase the availability of new energy supplies and lower energy prices in Alaska and the rest of the nation.”

Lowman declined to comment on how the Teshekpuk Lake decision might impact ConocoPhillips’ exploration plans. In 2007 the company, along with its partners Anadarko Petroleum and Pioneer Natural Resources, relinquished 300,000 leased acres in NPR-A, citing noncommercial finds and the cost of working far from infrastructure as the reason.

Unlike some past years, this past winter ConocoPhillips drilled wells close-in to existing Alpine infrastructure on the eastern edge of NPR-A versus venturing further into the petroleum reserve.



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