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Vol. 13, No. 43 Week of October 26, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Armstrong’s back

Denver independent has returned to northern Alaska, as bullish on oil as ever

Kay Cashman

Petroleum News

The Denver-based independent instrumental in bringing three new oil companies to northern Alaska in less than three years is back. On Oct. 22 an Armstrong Oil and Gas affiliate accounted for 77 percent of the high bids in the State of Alaska’s North Slope oil and gas lease sale and 71 percent of the high bids in the state’s Beaufort Sea sale.

The last Armstrong affiliate holding acreage north of the Brooks Range Foothills was called Armstrong Alaska LLC. The affiliate that picked up more than 200,000 acres in the Oct. 22 areawide lease sales is called 70 & 148 LLC.

According to the top executive of all the Armstrong companies, Bill Armstrong, 70 and 148 are the latitude and longitude coordinates for Prudhoe Bay, North America’s largest oil field.

Why that name?

“It’s got good karma,” Bill Armstrong told Petroleum News in an Oct. 22 interview.

After selling its northern Alaska assets in 2005 to Eni Petroleum, the last of the three new companies Armstrong had brought to the state, Bill Armstrong said his company would be back.

“We’re definitely not leaving Alaska. … We still see huge opportunities on the North Slope,” he told Petroleum News. “It’s a great place to be and it’s a great petroleum system.”

Two years later, in 2007, an Armstrong affiliate entered Southcentral Alaska’s Cook Inlet basin for the first time.

Armstrong Cook Inlet LLC has since drilled a well in an undeveloped gas field on the southern Kenai Peninsula and is looking to develop that field once it’s certain a pipeline will be built to take its natural gas to market. (See Petroleum News archives at www.petroleumnews.com for more information.)

Why is the company back in northern Alaska?

“We’re much more bullish on oil than gas, so that’s one of the reasons we are coming back to the slope,” Bill Armstrong said Oct. 22. “It’s a very forgiving petroleum system so we like it. We’re glad to be back.”

Armstrong said he’s also “bullish on oil prices,” which he pointed out are “much better than when we first went to the North Slope” in late 2001. “Oil was at $15 a barrel back then, so even if the prices have dropped some recently, they’re still much higher than when we first went up there.”

Armstrong said he and his staff, which has grown “substantially” since 2005 when the company sold its oil and gas assets in northern Alaska, are “real excited” to be back “on the North Slope” and “looking forward to working with other leaseholders and operators in the Kuparuk River unit area,” such as “ConocoPhillips, Pioneer Natural Resources, Eni Petroleum, Chevron and BP.”

He said his company had “a good relationship with all those companies in the past, and it will take cooperation between all of us” to get the leases from the Oct. 22 sale explored and developed.

Plans to be just as active as last time

When asked if 70 & 148 LLC planned any exploration work during the upcoming winter season, Armstrong said no.

“This winter would be too quick for us. We have got to get leases issued, which takes seven to eight months,” he explained.

“But we don’t go into an area NOT to create activity. Our game plan is some variation of what we did before, which is to create a lot of exploration activity. That is good for everybody, including the State of Alaska,” Armstrong said.

He reminded the author that when he was first interviewed by her in 2001, he said, “Just print what I do, not what I say.”

Armstrong’s subsequent track record on the North Slope was three out of four — i.e. in four North Slope prospects that were drilled by Armstrong and the bigger partners it brought in between 2002 and 2005, three discoveries were announced — first at Oooguruk by Pioneer in 2003 and then by Kerr-McGee at Nikaitchuq in 2004 and again by Kerr-McGee in 2005 at Tuvaaq.

First oil flowed from the Oooguruk unit in June 2008. Nikaitchuq is scheduled to produce its first oil by the end of 2009. (Tuvaaq is being developed as part of Nikaitchuq.)

During its first stint on the North Slope and the near-shore Beaufort Sea, Armstrong also helped set records for the shortest time to permit exploration and development projects, initially working closely with both Pioneer and Kerr-McGee for the permitting of Oooguruk and Nikaitchuq.



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