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Oil Patch Insider Eni, Kerr-McGee apply to drill three wells at Rock Flour
No one can accuse Eni Petroleum Exploration Co. of moving slowly. On Aug. 26 the company announced a mid-August deal to buy the assets of Armstrong Alaska, which include 104 oil and gas leases on the North Slope. (See story on page 1 of Petroleum News’ Aug. 28 edition.)
Four days later Eni and Armstrong officials arrived in Anchorage to do lease assignments — and to apply to drill up to three wells this coming winter on leases Eni purchased from Armstrong.
The application, which is in Armstrong’s name but will actually be a partnership between Kerr-McGee (70 percent) and Eni (30 percent), is for four state leases that make up the onshore Rock Flour prospect along the southeast corner of the Kuparuk River unit. Just a few miles west of the Prudhoe Bay unit, the Rock Flour lease block is shaped like a chimney. (See map on page 19 of the Aug. 28 issue.)
The companies propose to drill the wells from three ice pads with access via a nine and a half mile ice road from Kuparuk River MP1.
Although Armstrong is listed as project operator for Rock Flour, Armstrong’s M.O. has been to handle the permitting (and units) and then turn operatorship of the project over to the majority interest holder, which in the case of Rock Flour is Kerr-McGee.
Eni Petroleum is an affiliate of Italy’s Eni SpA, one of the largest oil companies in the world.
—Kay Cashman ConocoPhillips Alaska looking for a new source of methanol The last two remaining methanol producers in western Canada said in August that they are shutting down production in 2006 because of the high cost of natural gas, the primary feedstock used to produce methanol.
The Celanese plant in Edmonton, which supplies much of the methanol used for oil and mining operations in Alaska, said in early August that it will close in late 2006 or early 2007. Methanex, which currently does not list Alaska as a major customer in its public reports, said its plant in British Columbia will stop producing methanol no later than January 2006.
“While Kitimat is an ideal location to supply our customers in North America and Asia, it is exposed to high cost North American natural gas, which is the main feedstock for this 500,000 tonne per year methanol plant,” Methanex President and CEO Bruce Aitken said Aug. 30, echoing the same sentiments expressed by Celanese earlier in the month. “It just doesn’t make long term economic sense to manufacture methanol in North America with high cost energy.”
However, Methanex intends to continue supplying its U.S. and Canada customers in the Pacific Northwest by bringing in methanol from its plants in Trinidad and Chile where natural gas is much cheaper, Aitken said in an investor teleconference Aug. 31.
“We have a terminal here in Kitimat that will continue to bring product into this part of the world and we see some interesting opportunities to grow our business in the Pacific Northwest,” he said.
Another Methanex official told Petroleum News that Alaska could be a potential methanol market for the Kitimat terminal and that anyone in the state interested in purchasing methanol should contact the Vancouver office at 604-661-2600 and ask for the marketing department.
ConocoPhillips Alaska, which brings methanol into Alaska for its and BP’s North Slope operations, told Petroleum News it has “identified several sources for supplying the North Slope methanol requirements and are evaluating those different sources.” Currently, the company brings 275 to 300 rail cars (30,000 gallons each) into Alaska annually.
Methanol is mainly used as a freeze protectant in pipelines and wells.
—Kay Cashman Drilling in Paradise Expertise and hard work have really paid off for Kuukpik Drilling LLC.
Since June Kuukpik crews have been working on the Big Island of Hawaii, under a drilling labor contract with Puna Geothermal Venture. Puna Geothermal operates a geothermal power plant 21 miles south of Hilo. The contract runs to November or December and currently involves a four-weeks-on and two-weeks-off-work schedule.
The Hawaii contract provides a good example of an Alaska company exporting its expertise, Randy Hicks, Kuukpik’s general manager, told Petroleum News.
The contract involves redrilling one well and drilling two new wells to a depth of about 6,500 feet through volcanic rock, Hicks said. The drilling crews are using Puna Geothermal’s Rig 51.
“The volcanic rock is very hard drilling,” Hicks said.
Although the rock may be challenging quite a few drillers would probably be happy with this particular assignment.
—Alan Bailey
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