Providing coverage of Alaska and northern Canada's oil and gas industry
October 2021

Vol. 26, No.41 Week of October 10, 2021

Oil patch insider: Honoring Kuparuk; OSH investors mull Santos deal; ANS renaissance

Kay Cashman

Petroleum News

ConocoPhillips Alaska and Petroleum News recently entered into an agreement to produce a magazine celebrating the 40th anniversary of the Kuparuk oil field on Alaska’s North Slope.

Fifteen years ago, Petroleum News published “Kuparuk - Celebrating 25 years of production at the Kuparuk River oil field.”

The second largest oil field on the North Slope, initially Kuparuk was viewed as a marginal field. Second only to Prudhoe Bay, in July, Kuparuk River produced an average of 89,170 barrels of oil per day of the 409,720 bpd that came from the North Slope.

The history of the Kuparuk oil field is one of technological innovation, environmental stewardship and enthusiastic commitment from both ConocoPhillips employees and its contractors.

For more information on the magazine, contact Susan Crane with Petroleum News at 907-250-9769 or Kay Cashman at 907-782-6110.

Major OSH shareholders question Santos deal

According to an Oct. 4 article in The Australian, “several large institutional” Oil Search Ltd. shareholders are reconsidering Santos Ltd.’s $6.2 billion (A$8.4 billion) buyout merger proposal due to a “surge in liquefied natural gas and oil prices and more favorable prospects in Papua New Guinea,” which “test the merits of the deal.”

If the transaction goes forward, Santos will control 61.5% of the merged company to Oil Search’s 38.5%.

At least 75% of shareholders must approve the deal at a meeting scheduled for Nov. 29.

“Several investors have canvassed the possibility of former Oil Search chief executive Peter Botten returning to the company as chairman, replacing Rick Lee, should the company vote down the merger proposal and remain an independent entity,” the publication reported.

Allan Gray, which holds nearly 5% of Oil Search’s stock, said it is not sold on the merger.

“We weren’t that keen on the combination at the outset, and with some of the developments that have happened subsequent to the deal being announced, they have made us even less keen on this transaction,” Simon Mawhinney, Allan Gray managing director, was quoted as saying in The Australian. “We are not partial to this combination on these terms. … I think there’s every chance shareholders in Oil Search vote this down.”

Credit Suisse analyst Saul Kavonic told The Australian: “Given the 75% vote threshold, a negative vote cannot be completely ruled out and we can perhaps hypothetically contend with the possibility some shareholders could seek someone like Peter Botten to return to the field, who may be the only person able to cajole momentum behind Oil Search as a stand-alone entity again. Unlikely, yes, but in the LNG game anything can happen.”

Note: The Australian can be found online at https://www.theaustralian.com.au/

JPT: North Slope may see exploration renaissance

On Oct. 1, the Journal of Petroleum Technology reported that as Canada, Greenland and Norway shy away from developing their Arctic oil and gas resources, only Russia and the United States remain in the game as Alaska seeks to renew interest in exploration and development of its North Slope.

Following are excerpts from the JPT article, which can be found in its entirety and with accompanying graphics at: https://jpt.spe.org/alaskas-north-slope-may-yet-see-its-renaissance-in-arctic-exploration

* Russia sees its Arctic reserves, particularly gas reserves, as vital to its national security….

* With navigation now possible year-round along the Northern Sea Route, Russia’s LNG champion and its largest independent gas producer, Novatek, is moving forward with exploration to expand its resource base and build infrastructure to ship product east to Asia and west to Europe.

* Russia’s state-owned majors - Rosneft, Gazprom, and Gazprom Neft - are lining up behind their IOC colleagues as new investment in Arctic exploration and development is encouraged and rewarded by the Kremlin.

* Among countries with Arctic coastlines, Canada has focused its hydrocarbon production on its oil sands which sit well below the Arctic Circle, Greenland has decided not to issue any new offshore exploration licenses, and while Norway is offering licenses in its “High North,” the country can’t find many takers.

* The Norwegian Petroleum Directorate, NPD, reported that while 26 companies applied for licenses in 2013, this year’s bid round attracted only seven participants.

* Norway is Europe’s largest oil producer after Russia with half of its recoverable resources still undeveloped and most of that found in the Barents Sea where the NPD says only one oil field and one gas field are producing.

* The U.S. Geological Survey estimates 27% of global unexplored oil reserves may lie (in Alaska’s Arctic)

* Between ConocoPhillips’ Willow project, recent discoveries by Australia’s 88 Energy … and Hilcorp Energy Corp.’s acquisition of BP’s Alaska assets - the North Slope may be in for a renaissance.

* ConocoPhillips Senior Vice President Nick Olds said in an investors call (that) Willow (is) the company’s “next great Alaska hub” with 200 wells and a processing plant to support 180,000 bpd of production.

* Significant oil exploration and development opportunities still exist on the North Slope, with 75% of the (ConocoPhillips) exploration portfolio undrilled.

* The Biden administration has supported the (Willow) project, which was green-lighted during the Trump administration.

* Meanwhile though, the Alaska Industrial Development and Export Authority, AIDEA, a state-owned economic development corporation which had bought seven of the nine oil leases auctioned in the Arctic National Wildlife Refuge (ANWR 1002 Area) before Biden took office, has fast-tracked implementation of a $1.5 million pre-exploration workplan to develop its leases regardless of any federal moratorium.

* AIDEA approved the expenditure in June, two weeks after the Interior Department issued its license cancellation order.

* On 4 August the state authority reported on its website that it had awarded a contract to SAExploration Inc. to perform predevelopment permitting and planning work including impact studies, data collection and regulatory permitting to support a phased, multiyear seismic acquisition program targeted to begin in 2022.

* In a statement on its website, AIDEA contends that the moratorium is not legally valid, an argument that seems to have been reinforced by Judge Doughty’s decision in the case brought in Louisiana.

* And in a letter sent on 11 June to the Interior Department, AIDEA said it holds “valid and enforceable leases covering 365,775 acres onshore” that grant AIDEA “legal, exclusive rights of access” to explore and develop any reserves there.

* AIDEA noted that the non-wilderness Section 1002 Area of ANWR where its leases are located contain an estimated 7.6 billion barrels of recoverable oil and 7.0 tcf of natural gas.

- Oil Patch Insider is compiled by Kay Cashman

Petroleum News - Phone: 1-907 522-9469
[email protected] --- https://www.petroleumnews.com ---

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)Š1999-2019 All rights reserved. The content of this article and website may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law.