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Armstrong working more ANS prospects
Kristen Nelson Petroleum News Editor-in-Chief
Armstrong Oil and Gas leased and developed the Northwest Kuparuk prospect in the Beaufort Sea off Alaska’s North Slope, drilled successfully by its partner Pioneer Natural Resources last winter, and is now working on drilling another prospect, on its own, this winter.
Bill Armstrong, founder and president of Armstrong, told the Resource Development Council Nov. 20 in Anchorage that the company, basically geologists and geophysicists, is primarily focused on “generating, assembling and drilling exploration opportunities that we think have good company impact and nice size.
“We’ve established the deepest production in probably a dozen different horizons in the Lower 48,” Armstrong said. The company typically goes into an area considered fairly mature and finds new fields, he said. Why Alaska? Six of the top 14 producing fields in the United States are on the North Slope, Armstrong said, yet the area is virtually unexplored. The North Slope is roughly the size of my home state of Colorado, he said, and what’s been developed is a little bigger than the size of the Denver-Boulder metropolitan area.
There is a lot of running room on the North Slope with great source rocks. Compared “to the majority of the petroleum provinces in the world,” Armstrong said, “the North Slope is wide open.”
But when Armstrong Oil and Gas first looked at Alaska, the North Slope was considered “too complex and way too expensive” for independents, Armstrong said, and the belief was that all the big fields had been found, although there was infrastructure in place, and that infrastructure was about half full.
The company was also told that they were too late, everything had been found on the North Slope; that it would take five years and $5 million to permit a well; and that the big companies wouldn’t make land deals.
Armstrong said he was also told he was naïve to even consider the North Slope.
So what the company heard, he said, was “you’re going to lose your money, you’re too late — not going to find any oil, we don’t do a deal with you, it takes forever to permit a well and it takes somebody who’s basically an idiot to come up here.” Barrow arch, close to infrastructure The company came in spite of that, decided to stay close to the Barrow Arch and infrastructure, and to go into shallow water. “Our decision was that we would not be afraid of the water,” he said, showing a photo of the company’s vice president of land, Ed Kerr, coming out of the water after a dip in the Beaufort Sea near Barrow.
As for the warnings the company had been given, “we went from lease issuance to full permits in about three and a half months,” Armstrong said. The company brought in Pioneer Natural Resources as majority partner and operator at the Northwest Kuparuk prospect and the companies drilled three exploration wells, two discoveries and one dry hole.
“We’ve had fabulous cooperation with the state. We have had the pleasure of working with some outstanding, awesomely talented service companies,” he said.
And the company is now working on more prospects in the state. So how about the warnings? Armstrong credited the state administration with cutting down on the time required to permit projects and the Alaska Legislature for passing tax credits for exploration work. BP and ConocoPhillips, which control the majority of oil and gas leases on the North Slope, have been “awesome” to work with, he said. When BP and ConocoPhillips say they want to encourage other people, Armstrong said, “they mean it.”
The prospect Armstrong plans to drill this winter is on acreage the company got from BP, he said, and they are also working on deals with ConocoPhillips.
At this year’s project, northwest of the Milne Point field, the company plans two to three offshore wildcats in water about one foot deep.
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