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NEWS BULLETIN

August 20, 2019 --- Vol. 25, No.32August 2019

Feige issues cure of Guitar unit default

One of the two Guitar unit defaults issued by the Alaska Department of Natural Resources' Division of Oil and Gas has been cured, per an Aug. 19 decision by DNR Commissioner Corri Feige.

On March 26, Alliance Exploration, operator of the North Slope Guitar unit, received a notice of unit termination for failure to provide a plan of exploration update and failure to comply with applicable statutes and regulations requiring a unit operator bond (state statute 11 AAC 83.390).

All unit operators are required to have a unit bond in place with the division. As the Guitar unit operator, Alliance was obligated to secure this bond when the unit was formed in 2017.

The small independent eventually promised to secure it by June 25 and did not. However, the bond was received by the state on Aug. 5 from Alliance's surety bonding agent, Bowen, Miclette & Britt Insurance Agency of Houston, Texas.

The commissioner asked that Alliance also file the second plan of exploration update, which had been due by July 1, no later than Sept. 1. Not doing so, she said in her Aug. 19 letter to Alliance, "will be grounds for another default."

The second default was not cured. It had been issued Feb. 7 for failure to meet work commitments; specifically, to drill a well by March 31.

In response to the company's request for a two year extension, the commissioner had given Alliance a one year reprieve until March 31, 2020.

Feige said she wanted Alliance to include the well in its updated plan of exploration.

One of the owners of Alliance, Barry Foote, told Petroleum News June 25 that although the unit, which is on the southwestern edge of the Prudhoe Bay unit and close to infrastructure, could have an upside in the neighborhood of 200-300 million barrels of oil, his company needed a partner to help cover the cost of the well.

Foote said Guitar was the least expensive and least risky play on the North Slope.

- KAY CASHMAN

Oil Search clarifies development schedule for Pikka

In a webcast this morning, Aug. 20, Oil Search released its first half year results for 2019, clarifying its plans for its Pikka unit west of the central North Slope.

As reported in the Aug. 19 news bulletin, the company's operations plan filed with the Alaska Department of Natural Resources' Division of Oil and Gas calls for first oil production from the Pikka unit (part of the larger Nanushuk Project) in April 2023, via an Oil Search operated 120,000 barrel per day facility.

Today, the company said it was still planning early production in 2022 of approximately 30,000 barrels of oil per day utilizing "infrastructure owned by a nearby operator" (see original report in the June 30 issue of Petroleum News titled "Starting early?").

The full-scale field development, "with a nominal capacity of 120,000 bopd, is expected to come onstream in 2024," Oil Search said, explaining a phased development approach will allow "early learnings from development drilling" to be incorporated into the full development plan, as well as generate early cashflow.

As far as front-end engineering and design, Oil Search is targeting to enter FEED late in the fourth quarter of this year for Pikka unit development and make a final investment decision in mid-2020.

Oil Search also said it and ConocoPhillips "are working together to develop the Nanushuk (Narwhal) reservoir, which extends across both companies' leases in the Colville delta region."

- KAY CASHMAN

See stories in Aug. 25 issue, available online Friday, Aug. 23, at www.PetroleumNews.com

For information on PN's news bulletin service, call 907-522-9469.

PO Box 231651, Anchorage, AK 99523 - 1651

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