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Conoco returns to Alaska’s North Slope After having left Alaska in 1994, the former Milne Point operator acquired leases on the slope in 2001 through its acquisition of Gulf Canada, Crestar Kay Cashman PNA Publisher
The company that developed the Milne Point field but pulled out of the state in January 1994 after filing suit against the trans-Alaska pipeline owners for their tariff policies, is once again a leaseholder on Alaska’s North Slope.
Conoco, which is awaiting Federal Trade Commission approval for a merger of equals with Phillips Petroleum Co., acquired eight North Slope leases when it purchased Gulf Canada Resources Ltd. for $6.5 billion last summer. Gulf Canada was one of the four companies who controlled the Mackenzie Delta’s 5.8 trillion cubic feet of natural gas reserves and were interested in building a gasline from the delta to Alberta and Lower 48 markets. Three leases with Unocal The eight tracts were acquired by a bidder identified as 3793885 Canada Ltd. at the state’s Nov. 15, 2000, North Slope areawide lease sale.
3793885 Canada was established by Calgary-based independent Crestar Energy Inc., which had just been acquired by Gulf Canada the month before. The acquisition put Gulf Canada among the top five independent Canadian producers and the top 10 independent North American producers.
Three of the eight leases are south of Prudhoe Bay (ADL’s 389671, 389672, 389647). According to the Alaska Division of Oil and Gas, Unocal Corp. was assigned a 50 percent ownership interest in those leases after the sale. The assignment was approved on Feb. 11 and was effective March 1.
Unocal Alaska is a major player in Cook Inlet, has a minor interest in the trans-Alaska oil pipeline, has scattered interests on the North Slope in the Kuparuk Uplands area, Foothills area and just south of Prudhoe Bay unit. The company is also a minority owner in the North Slope’s Kuparuk River (4.956 percent) and Endicott (10.5 percent) fields and a leaseholder in the gas-prone Brooks Range Foothills, although according to Unocal Alaska’s manager of land and government affairs, Kevin Tabler, most of Unocal’s North Slope acreage is considered oil prone.
Tabler told PNA in mid-May that Unocal is the designated operator for the three leases. His company has “no immediate plans (to explore or develop the three leases) at this point. We’re still getting our North Slope portfolio put together. We’re starting to accumulate North Slope acreage and getting a game plan put together. … The leases will be about 50-50 owned by ConocoPhillips and Unocal once the Conoco-Phillips merger is complete.” Five leases near NPR-A The other leases won by 3793885 Canada in the November 2000 lease sale were five tracts just west, but not adjacent to, the National Petroleum Reserve-Alaska. (See map on page A17 of the November 2000 Petroleum News • Alaska.) Two of the five tracts lie between AVCG LLC and Phillips Alaska Inc. leases acquired in the same sale.
The person in charge of Conoco’s northern frontier leases is former Gulf Canada landman Marilyn Brenneis, who now works for Conoco subsidiary Conoco Canada Ltd. in Calgary. Brenneis handles leases in both northwestern Canada — i.e. the Mackenzie Delta — and Alaska’s North Slope. No plans yet In a May 15 interview Conoco Canada spokesman Peter Hunt told PNA that all plans for the five leases held 100 percent by Conoco are on hold until after the company’s anticipated merger with Phillips.
“We can’t even hold hands before we get married,” he said of the federal rules that dictate no communication between the two companies prior to approval of the merger by the Federal Trade Commission, which is expected the second half of this year.
Alaska is — and will continue to be — a major asset, Phillips Alaska spokeswoman Natalie Knox told PNA at the time the merger was announced last year. Alaska accounts for 40 percent of Phillips’ worldwide production (barrels of oil equivalent).
“After the merger Alaska’s share will be about 25 percent of combined production,” she said, “still a major legacy asset.”
After the merger, Phillips geologists in Alaska may get some help from old exploration data in Conoco’s vaults as Conoco was once was a significant Alaska explorer. Alaska one of several expansion spots When asked what Gulf Canada and its predecessor Crestar’s intentions were when they purchased the eight leases in 2000, Hunt said the acquisition was “consistent with the sort of international expansion” the major Calgary-based oil companies were involved in at the time.
“The companies had to run hard just to stand still with hydrocarbon production. They were looking further afield. Twenty-five percent of the companies in the downtown oil towers were looking at international prospects, including Alaska,” he said.
During the same period that Gulf Canada was bidding on Alaska acreage, it was acquiring properties in the Netherlands, Indonesia and North Africa, Hunt said.
“Their interest in Alaska was consistent with that sort of internationalization,” he said.
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