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Shell has stranded discoveries, prospects Hammerhead, Kuvlum on company’s Beaufort Sea leases; official says Shell looking at other opportunities in Alaska Kristen Nelson Petroleum News Editor-in-Chief
Shell had some of its top Americas’ exploration staff in town the week of Aug. 22 for an open house at the company’s Anchorage office. The newly opened office is staffed by geologist Tom Homza, Anchorage office manager, and Edna Beuhler, Anchorage office coordinator.
Annell Bay, Shell’s vice president of exploration for the Americas, said Shell is in Alaska because “we’re really excited about the potential in Alaska and we believe that Alaska certainly has the large resource base that we need and we want to see grow for our company.”
Shell, which formerly operated in Cook Inlet, returned to the state with a bang in March, taking 84 leases in a Minerals Management Service Beaufort Sea lease sale for $44 million.
Bay said at a media briefing Aug. 23 that Shell first came to Alaska some 50 years ago and was here until 1998. “We were an active explorer and operator and producer here primarily in Cook Inlet,” she said. Shell sold its leases and two platforms in Cook Inlet to Cross Timbers, now known as XTO, which continues to produce oil from the platforms off the Kenai Peninsula. Extensive review What brought Shell back? It was an extensive review, Bay said, “geological, technical, environmental, political, social and certainly commercial. We have re-looked at the elements and the opportunities in Alaska and feel like now is the time to come back” and build “another successful venture.”
The company’s “ambition and plan” is to make “additional investments here in Alaska,” Bay said. “And we think we have the experience … to build a significant position and make a significant presence for Shell here in Alaska.” The position the company took in the Beaufort outer continental shelf lease sale includes “some stranded discoveries” and the company also hopes “to make some new discoveries here,” she said, calling the Beaufort lease position “a platform for us to build on from here.”
Wilhelm Chandler, Shell’s Houston-based exploration manager responsible for Alaska, called Alaska “a great and vast land. It’s for people who think big; it’s for people who are not afraid to face big challenges, and we recognize that that’s what we are doing.”
Chandler said Shell plans “to be a responsible operator and we plan to be an active and constructive member of the communities in which we operate …” Initial focus on Beaufort Bay said the company’s initial focus will be on the tracts it took in the Beaufort lease sale. “And then we’re certainly looking at other opportunities all over the state. We continue to evaluate opportunities and Shell is committed to growing globally through exploration, new material oil and integrated gas, and Alaska offers us a lot, so that’s why we’re here.”
The Beaufort Sea leases Shell took earlier this year include Unocal’s mid-1980s Hammerhead discovery and ARCO Alaska’s early 1990s Kuvlum discovery, both on the eastern side of the North Slope, Hammerhead some 10 miles off Point Thomson and Kuvlum some 15 miles off the coastal plain of the Arctic National Wildlife Refuge. MMS data indicates that neither reservoir has been fully delineated, but the agency estimates 100 million to 200 million barrels of oil at Hammerhead and 160 million to 300 million barrels at Kuvlum. ARCO Alaska said in October 1993 that while the wells at Kuvlum found a substantial accumulation of hydrocarbons, the discovery was not commercial as a standalone development. The Kuvlum No. 1 well flowed 3,400 barrels per day of 34 degree API gravity oil, the No. 2 well confirmed the existence of hydrocarbons, including the reservoir found in the discovery well; a third well to the north found hydrocarbons, but not in a commercial quality reservoir.
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