Providing coverage of Alaska and northern Canada's oil and gas industry
February 2020

Vol. 25, No.07 Week of February 16, 2020

Dispelling myths

Corri Feige pokes holes in misperceptions about Alaska oil & gas at NAPE

Kay Cashman

Petroleum News

Department of Natural Resources Commissioner Corri Feige spent part of her time at the recent NAPE Summit in Houston tackling two major myths about doing business in Alaska’s oil and gas basins: one was about the number of rigs working on the North Slope and the other the regulatory environment.

“The first of the myths I poked at was that just because the North Slope basin doesn’t have a hundred rigs working doesn’t mean we’re not enjoying an exploration renaissance and that it isn’t a hot spot for oil and gas exploration and development,” Feige reported in a Feb. 10 interview with Petroleum News.

“I told them while a high rig count is a direct indication of how well a Lower 48 shale play is doing, on Alaska’s North Slope reaching more resource with fewer wells is the name of the game.”

Back in 1970, Feige explained, it took a 65-acre gravel pad on the North slope to produce roughly 3 square miles of reservoir.

“Fast forward to today, and through the advances in extended reach drilling and advanced completion technologies, one 12-acre pad can produce approximately 125 square miles of reservoir. … On Alaska’s North Slope it’s the accuracy of those drill targets that matters. It’s the play type that matters. … In the last 5 years we have seen three Brookian oil discoveries all in excess of 1 billion barrels of resource,” she pointed out in a Prospector’s Presentation and at the state’s booth.

Feige told attendees that the North Slope Brookian Nanushuk and Torok discoveries of recent years represent an unmatched shallow, onshore, conventional opportunity: “These are not discrete stratigraphic trap accumulations. These are laterally extensive stratigraphic trends that run for miles. In the case of the Nanushuk-Horseshoe trend, it exceeds 40 miles in length.”

Project timelines stay on track

“The second big myth is everybody will tell you, is that Alaska’s regulatory environment is too complex and unpredictable,” Feige said. “In fact, Alaska’s regulatory environment is robust, science-based and transparent.”

“The Department of Natural Resources houses the Office of Project Management and Permitting,” she told NAPE attendees “which exists to help coordinate federal and state permits and assist project developers in navigating the permitting process,” in particular federal permits that do not have timelines associated with them.

“We can help make sure project timelines don’t drag. Somebody must stay at the table to keep their finger on the pulse to make sure things keep moving. And so being able to provide the services that OPMP provides can take a lot of that regulatory risk out of the picture,” Feige said.

“OPMP also ensures that the State of Alaska has a seat at the table in discussions regarding developments within Alaska and any federal action that may impact them. No one takes better care of Alaska than Alaskans and we have been leading the world in environmentally sensitive arctic oil and gas development for more than 40 years. That kind of experience doesn’t add regulatory risk it reduces regulatory risk,” Feige said.

As a result of streamlined permitting and “with 3D seismic and all the well data that’s available through DNR you can really get your feet on the ground and get moving a lot quicker than you used to in Alaska and that is part of our renaissance,” she said.

A little known asset

One thing that the State of Alaska, specifically DNR’s Geologic Materials Center, part of the Division of Geological and Geophysical Surveys, can offer companies is easy access to publicly available well core samples, drill cuttings, log data, well history files, geologic data and modern 3D and 2D seismic data they can purchase.

Many of the firms Feige talked to had no idea the information was available.

“As a part of being ‘open for business’ in the modern oil and gas industry, driven by big data and machine learning, the State of Alaska offers an extensive collection of publicly available information. … The Geologic Materials Center functions as a clearinghouse for all of this data, housing data and samples from more than 3,000 wells, over 3,000 square miles of modern 3D seismic data and nearly 1,300 line miles of 2D data,” she said.

The agency has “the technical personnel with expertise to help companies find what they’re looking for; the GMC is truly a unique facility designed to help jumpstart exploration programs.”

Conventionals back in the mix

As mentioned in the “Shift to conventional” story in this issue about NAPE and the oil companies that were marketing Alaska prospects or looking for partners there, Feige said she took away from NAPE this year “a different tone than in the past where the shale craze has been the story.”

Technologically the shale industry has “hit that next barrier … their wells are in decline so there’s some challenges for them right now.”

“Companies are looking for ways to balance their portfolios … to get conventionals back in the mix … and Alaska’s North Slope has an abundance of those - shallow and onshore,” Feige said she repeatedly told attendees.

“That shift in thinking we saw coming. We first saw it last year at CERA Week, evidence companies were interested in balancing their portfolios away from shale, and adding conventional oil,” she said.

Another “kernel” Feige took away from NAPE has also been developing for some time and that is Lower 48 refineries “needing a good source of heavy and viscous crude. We have over a 100 million barrels of it.”

Interacted with small to large companies

When asked who she talked to at NAPE, Feige named a large number of company officials, from small independents such as Jim White of Alaskan Crude, to Bill Armstrong and his team, representing mid-sized independents, to the people manning ConocoPhillips’ booth.

“Bill Armstrong was there with Nate Lowe, Ed Teng and members of his team. They’re very bullish … about exploration both in NPR-A, as well as the Lagniappe piece over on the east side of the North Slope. They’ve been more excited about the G&G work they’ve been doing over the last year or so than I’ve ever seen them, so from an exploration standpoint that’s going to be exciting to watch,” she said.

The commissioner also spent time at Hilcorp’s booth, discussing both Cook Inlet and the North Slope.

“We talked about as cold as this winter has been they have been producing all out so they’re very excited about new Cook Inlet gas prospects,” as well as “the new prospects they have down in the southern waters in Lower Cook Inlet,” Feige said, noting Hilcorp officials are “feeling very bullish about both oil and gas down there. They were actively talking to people visiting their booth about it,” confirming what other visitors to the Hilcorp booth said about the company seeking a partner(s) for the area.

The commissioner also spent time “chatting with the guys from the Australian contingent. … They seem to find themselves in a somewhat similar position to Alaska, and they like working up here. We’ve seen an influx of Australian companies (Oil Search, XCD Energy, etc.). They’re comfortable working in the regulatory environment here. They appreciate that we’ve got seasonal limitations - in many parts of Australia you have to avoid the heat. … They, too, have a fairly small population,” Feige said, noting the Australians she spoke with were enthusiastic about Alaska “and what Alaska can mean for their operating companies.”

She also made the rounds visiting with companies at their booths and asking them, “have you considered Alaska. I know you’re rounding out your portfolio and you’re beginning to think more about conventionals; I’d love to talk to you about Alaska.” Feige said many company officials were receptive to learning more about the state’s oil business.

Feige said her team was also very active at the conference. They included DNR Deputy Commissioner Sara Longan, Division Director Tom Stokes, Division Deputy Director Jason Black, resource evaluation chief Kevin Frank, and other support personnel such as geoscientists and a commercial analyst/engineer.

“We had a really good team and got lots of questions,” she said.

‘Where companies are made’

“It’s always good to go to NAPE and get a sense of the tone of the domestic industry. What I’ve always come away with is a better way to pitch Alaska,” the commissioner said.

“Alaska offers some really unique aspects … that no shale basin will ever give you and that no Lower 48 play is going to give you either. We have a great story to tell here; we just can’t be bashful about it.”

The State of Alaska as landowner-lessor “offers competitive lease terms, standard royalty rates, and large land tracts available for exploration and development,” Feige said. “This is not just where wells are drilled, this is where companies are made.”

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