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This month in history: Myers: Alaska has resources to increase pie
Twenty years ago this month: DO&G chief says increasing taxes not way to deal with decreasing production; more exploration needed
Kristen Nelson Petroleum News
Editor’s note: This story appeared in the Dec. 1, 2002, issue of Petroleum News Alaska.
State Division of Oil and Gas Director Mark Myers says “Mother Nature smiled on us” in Alaska, giving us the resources to increase state revenues through the drill bit, not the tax bill.
As production decreases and tax revenues drop, he said, one way to keep revenues up is to increase taxes on oil. But that’s not the only option.
“There is a totally win-win solution out there between government and industry,” Myers told the Resource Development Council’s Nov. 21, 2002, annual conference. Alaska has 20% of the nation’s oil production and a significant portion of its gas reserves, plus an “incredible upside potential for natural gas.”
But to get a “long-term increase in production we’ve got to get more exploration activities going. We have to find that pipeline of new discoveries,” Myers said.
Exploration drilling peaked in the Prudhoe Bay discovery-development timeframe and again when offshore basins were being explored but has never recovered since the oil price crash in the mid-1980s.
“We need to see a third spike there to have that long-term goal of production. And that’s going to take concerted efforts by all of us.”
Role of government? Myers said he thinks one role of government is to recognize the needs of all players - from majors to independents. The majors, he said, have information. Independents coming into the state “don’t have basic geologic data and engineering and seismic and a full understanding of the regional geology.”
Government, he said, can provide access to that information.
Some is available now on the Division of Oil and Gas web page, he said, and the division, in conjunction with the Alaska Oil and Gas Conservation Commission, is working with a grant from the U.S. Department of Energy to get all public well data available for downloading.
“So in two years, we hope someone from Houston can push a button and download all the well curves for critical well data throughout the state.”
The state is also working on basic geologic mapping, Myers said, including “the work of Gil Mull, sort of a legendary North Slope geologist, and other folks who are assisting him.” The state needs to make those kinds of products available, he said.
The state should do baseline research, he said, and “really needs to focus its research dollars, I think, on things that matter: And oil and gas, sedimentary geology and structural geology, really matters.”
The state is already providing an opportunity for independent geologists to get out into the field. Myers said the Division of Geologic and Geophysical Surveys has a field visitation every year, “a few days where independent geologists can actually come up to the North Slope and see the rocks.” Myers said this is difficult to do on your own because you need a helicopter and the proper permits.
Leasing effective Access to land is another state responsibility, Myers said, and with areawide leasing the state has an effective program.
“The process is working very well. And we have, because of that, a record amount of acreage under lease,” he said.
The state has also looked at future potential. About 10 years ago the state looked at what was going on elsewhere and did some preliminary work on coalbed methane, including getting money from the Legislature to core a well near Wasilla. The Legislature created a shallow gas leasing program and now, Myers said, Evergreen Resources is on the way to what he hopes will be a successful coalbed methane development in the Matanuska-Susitna Borough.
The state also did basic gravity research in Interior basins, “basic technical work, put that data out there.” Exploration licensing was created and now there are two licenses issued and two more in the works, almost 2 million acres that will be under license in Interior basins, basins overlooked for the last 10 or 15 years, Myers said.
“Again, the role of government is important to get the land out there, do the basic research.”
Permitting a difficult path The state also has a responsibility to ensure safety and do permitting, Myers said, and “that’s one of our greatest areas of challenge.”
Just the list of agencies to permit a winter seismic shoot on the North Slope is long.
“It’s a huge process for things that seem to be relatively intuitively obvious and I agree with Ken (Boyd), we’ve got to automate the program,” Myers said.
The path to a permit needs to be simpler, he said.
“We believe it can be simpler and still provide the necessary environmental protection. We have a lot of cooks in the broth, it’s time to get a chief chef.”
Stipulations and mitigation measures, he said, “need to be supported by data. They need to be scientifically sound. They don’t need to be based on hearsay or political persuasion.”
“We have to manage the resource scientifically and efficiently, fairly and consistently.”
Acceptance of some risk One other thing the state is not doing as well as it could has to do with best available technology, he said: “adapting and embracing new technology that minimizes environmental impact and at the same time allows for development in sensitive areas.”
Myers said there is new technology that is revolutionizing the way development is done, and “government has to be out front and be willing to take a certain level of risk in employing this new technology.”
Anadarko Petroleum Corp.’s proposed onshore drilling platform is such new technology, he said.
“It’s a very simple idea. It’s one of these things that I struck my forehead when I saw it and thought, why didn’t I think of that? We need to extend the winter drilling season, we need to minimize environmental impact, here’s a system that can do that, and probably can be done so cost effectively, obviously with a lower abandonment cost after production. It’s so simple, it’s so brilliant at the same time. Government needs to embrace and encourage these sorts of revolutionary ideas when they come along. We need to be in the forefront.”
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