House Resources hears Narwhal on West Harrison Bay unit issues
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Kristen Nelson Petroleum News
Rep. Tom McKay, chair of the Alaska Legislature's House Resources Committee, wants to know why there is no development at the West Harrison Bay unit on the North Slope. He said at a committee hearing April 15 that he was concerned about delays in developing West Harri-son Bay, which he said he understands is considered "highly prospective" in the industry and has been described as containing an accumulation as large as Kuparuk.
(See map in the online issue PDF)
McKay invited testimony from the parties involved in current issues around development -- unit operator Shell Offshore, the Alaska De-partment of Natural Resources and adjacent leaseholder Narwhal.
He said the committee was unable to have Shell or DNR at the hearing but welcomed two managers from Narwhal.
Narwhal Michael Parker, a manager and an owner of Narwhal and an affiliate EE Partners Corp., said Narwhal holds 83,000 acres in West Harrison Bay adjacent to the unit and has invested some $8 million in acquiring the leases, conducting a geological assessment and beginning permitting and field work, with plans to invest up to $100 million in an exploration pro-gram over the next two years depending upon permits and the availabil-ity of equipment and service providers.
Both Shell and DNR are impeding efforts to bring West Harrison Bay into production, he said.
Shell, which unitized its West Harrison Bay leases in 2020, has said it will no longer operate in Alaska, Parker said, and has been open about looking for a third party to operate West Harrison Bay.
DNR, since 2020, "has accommodated nearly every extension and other accommodation requested by Shell," Parker said.
DNR and Shell Narwhal's Stephane Labonte presented a proposal from the company to put into statute requirements that DNR issue default letters and require cures within specified periods of time for all operators who fail to meet requirements of plans of exploration or operation.
He compared the treatment of Shell with that of smaller operators and said recently DNR has been quick to issue letters of default to Jade En-ergy and Furie when those small companies failed to meet requirements in their plans but has so far let Shell be in default for 16 months.
Labonte said requirements on default are in DNR's regulations and pro-posed putting them in statute. Narwhal included proposed statutory lan-guage in its presentation to the committee.
In early March Narwhal filed against DNR in Alaska Superior Court for its failure to act against Shell (see story in March 24 issue of Petroleum News).
In 2022, Narwhal had asked DNR's Division of Oil and Gas to expand the West Harrison Bay unit to include Narwhal's adjacent leases and name Narwhal operator, requests denied by the division in 2023. In Jan-uary of this year Narwhal filed a reconsideration request with DNR Commissioner John Boyle.
DNR, Shell Committee records do not reflect any response from DNR on invitations to present at the hearing but do include a letter from Shell explaining why it felt unable to provide testimony at the hearing.
Shell said it had a meeting scheduled with DNR on April 17 concerning the West Harrison Bay unit and "given the confidential nature of Shell's ongoing work and immediacy of our critical meeting with DNR, Shell is not in a position t provide public testimony regarding these efforts."
Shell cited its work on the acreage and said it "has continued searching for a potential co-owner or co-owners with the demonstrated financial, technical, and operational capability to participate in this project."
That has included "confidential discussions with multiple potential co-owners" as well as regular communication with DNR on that search.
Narwhal said it has made several proposals to Shell to buy its acreage or work with Shell cooperatively to develop West Harrison Bay, but all of-fers have been rejected.
Committee members The committee did not take any action following Narwhal's presenta-tion, but some members expressed concern about statements unflattering to DNR and Boyle made by Narwhal. McKay assured the committee that DNR was aware of the hearing and the nature of what Narwhal would say and had not responded to requests to participate.
He said DNR had known for weeks that the hearing was going to occur and had opportunities to participate -- or to provide confidential re-sponses to McKay's office on the subject -- but refused both offers sev-eral times.
McKay said his office had been following the West Harrison Bay issue for about a year and a half, but hadn't brought it before the committee, hoping for resolution of the issues. But with no resolution, and the end of the session approaching, he said he thought it was important for the committee to hear about the issue and make up their own minds.
He acknowledged that there was an ongoing administrative appeal but said since it was not a lawsuit seeking damages, the committee hearing did not violate legislative rules.
McKay said his office and the committee didn't condone any allegations made in the hearing but was just trying to provide an open forum.
--KRISTEN NELSON
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