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Vol. 15, No. 46 Week of November 14, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Hewitt drops N. Aleutian leases; Armstrong adds North Slope acres

Armstrong continues to amass a major land position on Alaska’s central North Slope.

The Denver-based independent recently acquired five leases from the Italian major Eni Petroleum, according to lease reports from the Division of Oil and Gas. Through the deal, Armstrong acquired 100 percent working interest and 80 percent royalty interest in the leases.

The leases cover 12,726 acres adjacent to the southern boundary of the Kuparuk River unit and are also adjacent to dozens of leases that Armstrong, through its North Slope subsidiary 70 & 148 LLC, acquired in lease sales and private deals over the past year.

The five leases expire on June 30, 2012, and include ARCO’s Winter Trail No. 1 well.

Armstrong has not yet announced its plans for the central North Slope.

Hewitt Mineral Corp. surrendered its remaining North Aleutian basin leases in October.

The Oklahoma independent relinquished four leases covering some 22,682 acres in the North Aleutian basin, also known as the Bristol Bay basin, around the Alaska Peninsula.

Hewitt picked up the leases in the same October 2005 sale where Shell Offshore acquired some 190,000 acres. Hewitt also acquired a lease in 2007 that it previously dropped.

The four Hewitt leases were on the southwest side of Herendeen Bay.

Following some geologic studies, Hewitt believed it found a new natural gas play under its leases. “We now have identified some evidence that there could be a significant carbonate reservoir under the Peninsula that has not been recognized,” Bryan Sralla, a petroleum geologist for the company, told Petroleum News in February 2007.

Hewitt believed a 14,000 to 15,000-foot well could test all the stratigraphy with exploration potential in the geologic structure, but ultimately the company never drilled.

With the latest news, there are now no active leases in the North Aleutian basin.

Shell relinquished all 33 of its state leases in the basin in late 2008, saying the onshore and inland areas of the Bristol Bay region no longer fitted into the company’s exploration plans. State Alaska Peninsula lease sales in 2008, 2009 and 2010 drew no bidders.

Following the May 2010 lease sale, Division of Oil and Gas Director Kevin Banks connected the lack of bids to the federal government’s decision to take the North Aleutian basin off its sale schedule, but added that the State of Alaska would continue to offer Alaska Peninsula acreage for leasing each year under the areawide leasing program as a way to remain current and to be ready in case the conditions someday favored leasing again.

Storm Cat and Unocal drops

In other leasing news, the state terminated three Storm Cat Energy leases covering some 12,543 onshore Cook Inlet acres in the area north of Knik Arm for failure to pay rentals.

Storm Cat drilled its only Alaska well, called Northern Dancer No. 1, in that area in early 2006, but the recently terminated leases do not include the Northern Dancer well site.

Storm Cat holds both State of Alaska and Alaska Mental Health Land Trust leases.

As of Nov. 7 the termination had not been recorded in state lease files.

Finally, Union Oil Co. of California, an affiliate of Chevron, allowed two leases covering some 11,426 acres in the southern Kenai Peninsula to expire. Unocal picked up the leases for $60,652.80 in a May 2003 sale. One sat adjacent to the eastern boundary of Unocal’s Nikolaevsk unit, while the other was very far to the east of Unocal’s Ninilchik unit.

Chevron recently announced plans to market all of its Cook Inlet assets.

NOTE: A copyrighted oil and gas lease map from Mapmakers Alaska (www.mapmakersalaska.com/) was a research tool used in preparing this story.

—Eric Lidji



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