Oil Patch Insider

Unoilgas claims Arctic Ocean common area: TransCanada still in play for Alaska gas pipeline

From that hotbed of the oil industry, Beverly Hills, comes explosive news: The Arctic has been claimed.

Luckily, it’s been claimed by people who believe in Santa Claus.

How else to interpret a press release we got this month from the United Oil and Gas Consortium Management Corp.? After all, it’s titled: “Father Christmas is about to get some company.”

No, no, look at your calendar. It’s not the first of April.

But right here (for those who believe in Santa) is the news that United Oil and Gas “has claimed Exclusive Rights to the 3,000 square mile seabed within the international waters of the Arctic Ocean Common area for oil and gas resource exploration.”

Never mind little details like the International Law of the Sea.

How’d they do it, you ask?

Never mind other little details like the fact that two geologists we ran this past say there’s little chance of finding commercial oil even if you could drill in the shifting ice.

“There is one shelf area, the ‘keyhole’ north of Siberia, that could be prospective, that would be covered under their ‘claim,’ but this is a remote, difficult area,” one geologist told us. “Some of the deep basin could be prospective, but it is a very speculative possibility. At best, it could be an outstanding legacy for their great-grandchildren.”

But hey, if it works out, those grandchildren will undoubtedly believe in Santa Claus.

In case you think we’re pulling your leg, you can find more about this exciting venture at www.unoilgas.com. They even want industry partners for their Study Group. Tell them the Easter Bunny sent you.

—Allen Baker

TransCanada still in play for Alaska gas line

He said pipeline company TransCanada was only interested in building the Canada portion of the Alaska gas line.

Since there is a 2005 Memorandum of Understanding between the Murkowski administration and TransCanada to build the entire line starting on the North Slope, Petroleum News pursued TransCanada for clarification.

It turned out the governor was half right. On May 16 TransCanada’s Tony Palmer told Petroleum News that his company’s current focus is definitely on the Canada portion of the pipeline. But if the Alaska Legislature does not approve the proposed fiscal contract between the North Slope producers and the Murkowski administration, then TransCanada is interested in building the entire gas line.

“TransCanada, as you know, is focused on the Canadian portion of the project. … The government in Alaska has a decision to make how to proceed with the producers. … We’re … on standby to see if that comes to fruition. If that does not succeed we’ll be prepared to move forward … to structure a project” under “our Stranded Gas Act application. … That was our proposal last year. Clearly we’re interested in seeing a project advance,” Palmer said, noting TransCanada would look to involve “all stakeholders” in its project.

Three documents revealing information about TransCanada’s proposal to the administration were available on the governor’s gas line Web site (http://www.revenue.state.ak.us/gasline/ContractDocuments) for a short time prior to the governor’s May 12 press conference. They have since been pulled.

One document revealed that TransCanada was contemplating a 2012 in-service date for its pipeline with a fixed toll of $1.69 for a 3.5 billion cubic feet per day line. The toll dropped to $1.30 for a 4.3 bcfd pipeline.

In other places in the documents it is apparent the administration was looking at as much as a 50 percent stake in the pipeline for the state and could do so while maintaining an investment grade rating for both the state and the project.

—Kay Cashman