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Vol. 12, No. 1 Week of January 07, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Petro-Canada, FEX link up to explore NPR-A

Canadian companies form exploration partnership on jointly held leases in National Petroleum Reserve-Alaska

Kay Cashman

Petroleum News

It looks like Alaska will have one less operator than expected next winter. Two Calgary-based companies, Petro-Canada and Talisman Energy’s Alaska subsidiary FEX, have teamed up to explore their jointly held leases in the National Petroleum Reserve-Alaska.

FEX, which drilled an exploration well in Alaska for the first time last winter, will be the operator of the companies’ combined leases (see Mapmakers map with this story).

A 30-day public notice posted in December by the State of Alaska said Petro-Canada had submitted an oil discharge prevention and contingency plan for a “multi-year exploration drilling program” in the National Petroleum Reserve-Alaska. Drilling was to begin this winter.

Alaska Department of Environmental Conservation official Lydia Miner later explained that Petro-Canada’s proposed spill plan said the winter of 2006-07 would be the earliest the wells would be drilled.

Since it began its spill plan paperwork Petro-Canada has said in other venues that it would probably drill its first Alaska exploration wells in NPR-A in the winter of 2007-08.

And while the company’s spill plan approval was being processed by DEC an exploration partnership between FEX and Petro-Canada was being hashed out.

“At the time the plan was submitted, we intended to pursue independent drilling in the region. We’ve since entered into a partnership agreement that has changed these plans. Although we’ll be participating in exploration, it will be with another operator,” Petro-Canada spokesman Chris Dawson told Petroleum News.

Tim England, senior manager of exploration for Talisman confirmed the deal was in the works, but declined to say how many leases would be involved.

“I can confirm that Petro-Canada will be participating in our drilling program this winter. The details of their participation are under negotiation and therefore are not public information at this time,” England said in a December email to Petroleum News.

In early January, Kyle Happy, senior advisor with Petro-Canada’s North American Natural Gas division, told Petroleum News the agreement did not apply to all Petro-Canada leases in NPR-A.

One of the wells FEX is planning to drill this winter will be on a jointly held lease, Happy said.

FEX has a five-well exploration program planned for this winter in NW NPR-A, which is a continuation of the company’s previous winter’s exploration program on its leases south of Cape Simpson and west of the Ikpikpuk River in NW NPR-A.

The exploration partnership between FEX and Petro-Canada did not come as a surprise.

The companies were bidding partners in the most recent federal lease sale for the Northwest Planning Area of NPR-A, picking up a total of 48 tracts.

Plus, it’s expensive exploring in northern Alaska, especially as far from infrastructure as NW NPR-A. Other companies, serious about finding oil in the area, have already partnered up — ConocoPhillips and Anadarko Petroleum, which were recently joined by Pioneer Natural Resources.

Petro-Canada has also partnered elsewhere on the North Slope as a non-operating working interest owner — in the gas-prone Brooks Range Foothills with BG Group and operator Anadarko.

After the September 2006 Bureau of Land Management lease sale Richard Garrard, an FEX geoscientist based in Alaska, told Petroleum News that some of his company’s 100 percent acreage in NW NPR-A had been cross-assigned to Petro-Canada, but made no mention of an exploration partnership.

The Mapmakers map with this story shows all NPR-A leases belonging to both companies, as well as the 48 shared leases from September’s sale and another seven leases directly east of Teshekpuk Lake that were originally FEX leases, but have recently been co-assigned to Petro-Canada.

The partnership’s winning bids at the September lease sale consolidated FEX’s lease position in the northern part of the lease sale area because some of the leases the partners acquired are near and to the east of the city of Barrow. The geology of this area is dominated by a major structural high known as the Barrow Arch. The Barrow Arch is associated with many of the oil fields in the central North Slope and it seems likely the companies are seeking oil plays along the arch. Oil seeps at Cape Simpson have long been known and the presence of some of the prolific North Slope source rocks coupled with geologic structures that could form good petroleum traps all point to good oil potential in the area.

Other FEX/Petro-Canada September lease purchases targeted an area around and southeast of the village of Atqasuk, thus extending a major FEX/Petro-Canada lease position southwest from Smith Bay.

As part of its request to have its spill plan approved by DEC, Petro-Canada said its “multi-year drilling program” would involve drilling as many as eight wells (see map for proposed locations).

The first season’s two to four wells would be drilled from an onshore ice pad on Petro-Canada leases “between the Ikpikpuk River and Peard Bay,” approximately 80 miles southeast of Barrow and 140 miles west of Deadhorse, the company said.

Neither FEX nor Petro-Canada was ready to comment on how many of those proposed wells would be rolled into FEX’s exploration plans for next winter.

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