With the withdrawal of MidAmerican Energy Holdings Co. as a potential developer for an Alaska gas pipeline, 12 Alaska Native regional corporations elected not to meet a deadline for investment in Pacific Star Energy LLC, an Anchorage-based company formed by former ARCO executive Ken Thompson to give Alaskans a vehicle for equity investment in a natural gas pipeline from the North Slope to outside markets.
“After the MidAmerican deal fell through in late March PSE lost a lot of momentum with the Alaska Native corporations,” Thompson said. “Several of the Native leaders believe it will be some time before a pipeline gets built. … So they elected to conserve their cash until a deal is more certain. … For many, a quick payout of three to four years is important and this is a long-term deal.”
Thompson said some of the CEOs of the Native corporations told him that when a new deal does come together they will likely form a new Native consortium instead of investing in PSE, “although they will look at both consortiums and decide which is best at that time.”
Thompson was urged by some Native leaders to dissolve PSE, but he disagreed: “It is important to keep visible and continue working with all Alaskans,” including the non-Native companies he had been talking to before MidAmerican came into the picture in January.
“I bought back all the stock myself. I still believe in the vision of having an Alaska-owned company for investment in a gasline; one that’s available for all Alaskans,” Thompson said.
He also believes it’s important to be “in position” in case another MidAmerican-type deal comes along. “The MidAmerican deal happened quickly. We were literally given 72 hours to sign agreements.”
Thompson’s goal for the coming year is to approach all interested Alaska private and corporate investors, including “alliance contractors, Native village corporations and individuals. … Maybe that first well was a dry hole; maybe the second well will be a good discovery,” he quipped, acknowledging his disappointment over loss of the Native regional corporations, as well as his determination to move forward.
“Alaska companies did not participate as equity owners in the trans-Alaska oil pipeline, but if they do this time, it’s a win-win situation for everyone. The equity owners and the state’s economy stand to benefit if Alaska companies participate in a natural gas pipeline and infrastructure.”
PSE wouldn’t just be keeping profits in the state, Thompson said, but the company will also redeploy half of its cash flow to build natural gas infrastructure in Alaska, such as spur lines and natural gas liquids processing.
Last year the company commissioned Northern Economics to look at the socio-economic impacts of Alaska ownership of 10 percent of the gasline. The study determined that “if 10 percent of the line was owned by an Alaska company vs. a company with its profits going back to Houston, London or Calgary, the multiplier effect would be more than 22,280 additional part-time and full-time jobs over 30 years, and the cumulative, incremental contribution to the state economy would be $1.8 billion.” (See story on Pacific Star Energy in the Dec. 28 edition of Petroleum News.)
PSE is still looking at a 5-10 percent interest in the “main gasline and we’re continuing our assessment of a spur pipeline into Anchorage, natural gas liquids processing in the Interior … and we plan to further assess a niche for smaller-scale petrochemicals,” he said.
Thompson has had “some discussion on a spur line into Anchorage” with the Alaska Natural Gas Development Authority, headed by Harold Heinze. “We’re looking at possibly teaming up to assess that project ... over the next two months.”
Pioneer-Evergreen merger vote set for Sept. 28
Shareholders of Pioneer Natural Resources and Evergreen Resources are scheduled to meet separately Sept. 28 to vote on whether to merge the companies.
Pioneer shareholders are to meet at 9 a.m. Central Time in Irving, Texas, while Evergreen shareholders are to meet at 11 a.m. Mountain Time in Denver, Colo.
Under the previously announced agreement, holders of 44 million shares of Evergreen common stock will have the right to receive an aggregate of 25 million shares of Pioneer common stock and a total of $850 million in cash. Evergreen stockholders who do not choose among three share options being offered would receive 0.58175 shares of Pioneer common stock and $19.50 in cash per Evergreen share.
Antigua wells added to North Slope winter exploration list
The list of exploration wells planned for the coming North Slope drilling season is growing. On Aug. 31, ConocoPhillips notified state regulators that it plans to drill “one or more” Antigua wells south of its Kuparuk River unit this winter.
The four wells will require ice pads and 20 miles-plus of ice roads. Antigua No. 1 is in township 10 north range 10 east, Umiat Meridian; Antigua No. 2 is in T9N-R11E, UM; Antigua No. 3 is in T9N-R10E, UM; and Antigua No. 4 is in T9N-R10E, UM.
One or more of the following drilling rigs would be used at the project, the company said in notices to the Division of Air and Water Quality within the Alaska Department of Environmental Conservation: Nordic 3, Doyon 19 or Doyon 141.
The list of proposed North Slope exploration and appraisal wells for the coming winter includes the following:
• ConocoPhillips, one to four Antigua wells
• ConocoPhillips, one Iapetus well, part of Colville unit expansion
• ConocoPhillips, one or two of the four Kokoda well locations in the National Petroleum Reserve-Alaska. Plans include an 85-mile ice road.
• ConocoPhillips, Bounty and Defiance wells in NPR-A: A few miles west and north of Kokoda prospect, the company applied for drilling permits on July 9 for both wells.
• Armstrong Alaska, one or two wells at Two Bits prospect
• Kerr-McGee, two to six wells in the Nikaitchuq unit, including one well in the adjacent Tuvaaq unit, with access by sea ice roads from Oliktok Point to ice pads on and adjacent to Spy Island.
• Pioneer Natural Resources, Caribou well northeast of Point McIntyre on trend with Northstar from the Point McIntyre 2 pad.
Plus, Pioneer is looking at one to six development wells in Gwydyr Bay immediately north of Prudhoe Bay. The company’s plans include a new gravel pad and six wells tied back to Prudhoe.
