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Vol. 18, No. 11 Week of March 17, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil Patch Insider: Statoil Alaska strategy unchanged; Hess update; airship; big hearing?

A recent report from a financial news service indicated that Statoil has backed off its exploration program in the Alaska’s Chukchi Sea as a consequence of Shell’s February decision not to drill in the Chukchi in 2013. However, Statoil’s Alaska strategy did not change following Shell’s February decision, Jim Schwartz, Statoil’s head of communications in Houston, told Petroleum News March 11.

“Our view is still the same. We take a very long-term view with regards to Alaska,” Schwartz said.

In September Statoil announced that it was deferring its planned Chukchi Sea exploration drilling from 2014 to 2015 at the earliest, as a result of challenges “experienced by others,” in clear reference to the problems that Shell had encountered during its 2012 Arctic offshore drilling season. Statoil’s position has not changed since then, Schwartz said.

“We’re still evaluating the situation,” he said.

—Alan Bailey

Hess to focus on E&P, names ex-Alaska exec Meyers as a director

Hess Corp. is going through a transformation, and a former Alaska oil and gas executive has been named to help lead the recast company.

On March 4, Hess announced several initiatives to become “a pure play exploration and production company.”

Hess also named five new independent directors for election at the company’s May 16 annual shareholders meeting. Among the five is Kevin Meyers, former president of ConocoPhillips Alaska Inc.

Hess, headquartered in New York City, said its future production growth is expected to be driven largely by six core assets: the Bakken shale (North Dakota), the Valhall field (Norway), Tubular Bells (deepwater Gulf of Mexico), the North Malay basin (Malaysia), the Utica shale (Ohio), and Ghana.

The company said it would focus its portfolio by divesting Indonesia and Thailand, and is “pursuing monetization of Bakken midstream assets, expected in 2015.”

Hess also said it is fully exiting its downstream businesses including retail fuel stations, energy marketing and energy trading.

“Once complete, the transformed Hess will have a focused portfolio of higher growth and lower risk E&P assets,” Hess said in a March 4 press release.

Hess once had a substantial presence in Alaska.

Its website says that in 1969, Hess Oil & Chemical Corp. merged with Amerada Petroleum Corp. to become Amerada Hess.

“By May the following year the company drills its first successful wildcat well in Prudhoe Bay on Alaska’s North Slope,” the website says.

In 2003, Amerada Hess completed a sale of its 1.5 percent stake in the trans-Alaska pipeline system to ConocoPhillips.

In 2006, the company changed its name from Amerada Hess to Hess Corp.

The company is perhaps best remembered in Alaska for the so-called Amerada Hess royalty case.

This was an epic legal battle between the state and North Slope oil producers that wrapped up in 1995 and resulted in about $1 billion in total settlements from Arco, BP, Exxon and other companies. The state had accused the companies of undervaluing their oil and gas, thus denying the state the full value of its 12.5 percent royalty share.

The dispute became known as the Amerada Hess case because that was the first company listed alphabetically in the state’s lawsuit. Amerada Hess actually was a bit player in the case, settling with the state in 1989 for $319,000.

—Wesley Loy

An airship for Alaska

If you’re out and about in Alaska this summer, don’t be too surprised if you see a large and colorful airship floating above the muskeg or tundra. Skyship Services Inc. is bringing its Skyship 600 airship, the largest certified non-rigid airship in operation, to the state to demonstrate how a lighter-than-air vehicle of this type could be used for tasks such as aerial prospecting for minerals, geophysical surveys or environmental monitoring, according to a press release from Sen. Lesil McGuire, co-chair of the Alaska Arctic Policy Commission. This type of airship, filled with helium rather than inflammable hydrogen and powered by engines with directional control, can take off and land vertically; can cruise at 40 miles per hour; and can remain airborne for up to 18 hours, the press release said.

And, with an ability to move slowly coupled with no requirement to pitch or roll during operation, an airship can provide a stable observation or survey platform, with no dependence on roads or other means of surface travel.

“Alaska’s limited road system … limits the ability to efficiently survey our resource rich lands,” McGuire said. “It makes perfect sense for Alaska to have an airship to open up access to opportunities in resource development that will help secure Alaska’s financial future.”

The Skyship 600, which is 200 feet long and can carry up to 15 people, should arrive in Anchorage around July 4, remaining in Alaska until sometime in September, the press release said.

—Alan Bailey

AOGCC fracking hearing moved

Apparently anticipating considerable public interest, the Alaska Oil and Gas Conservation Commission said March 11 that its April 4 hearing on proposed changes to its fracking regulations has been moved.

Originally scheduled for the commission’s Anchorage offices, the hearing has been moved to the Hilton Hotel Anchorage at 500 W. Third Avenue, Anchorage.

The hearing will be held from 9 a.m. to noon and may be extended to accommodate those present before 9:30 who did not have an opportunity to comment.

The commission said it proposes to add regulations governing hydraulic fracturing applications, operations and reporting, including requirements for notification of landowners, surface owners and operators within one-quarter mile of the wellbore trajectory; pre and post hydraulic fracturing water well water sampling and analysis; disclosure of the chemical makeup of hydraulic fracturing fluids; wellbore integrity; containment of hydraulic fracturing fluids; casing and cementing; and disclosure of the intent to use a well for hydraulic fracturing on an application for a permit to drill.

The proposed regulations are available at

—Petroleum News

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