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Talisman high bidder Bureau of Land Management’s NW NPR-A sale draws 123 bids for 165 tracts Kristen Nelson Petroleum News Editor-in-Chief
Five companies, singly and in partnerships, put up $53,904,491 in high bonus bids at the Bureau of Land Management’s northwest National Petroleum Reserve-Alaska sale in Anchorage June 2.
Bidders were: Anadarko Petroleum Corp., ConocoPhillips Alaska Inc., Pioneer Natural Resources Alaska Inc., Petro Canada Alaska Inc. and Fortuna Exploration LLC.
The highest bid, $13,745,000, was from Talisman subsidiary Fortuna for tract D-19, 14,451 acres near the Ikpikpuk River, at the junction between the northwest and northeast NPR-A planning areas.
Anadarko took two tracts bidding by itself for $155,356 and paid out another $2,308,290 as a 30 percent partner with ConocoPhillips and Pioneer, for a total of $2,463,646.
ConocoPhillips Alaska bid $1,860,500 for eight tracts by itself, $2,871,540 in partnership with Pioneer and $3,847,150 in partnership with Anadarko and Pioneer for a total of $8,579,190.
Fortuna, bidding by itself, had $26,480,300 in high bids, 49 percent of the high bids at the sale.
Petro Canada, bidding by itself, had $13,614,835 in high bids, 25 percent of the high bids at the sale.
Pioneer, bidding in partnership with ConocoPhillips and Anadarko, and in another bidding group with ConocoPhillips, had $2,769,520 in high bids. No new players None of the bidders are new to Alaska.
ConocoPhillips Alaska is a major North Slope producer and operates both the Kuparuk River and Alpine fields. Anadarko Petroleum is ConocoPhillips’ partner at Alpine and in northeast NPR-A acreage and also holds substantial North Slope state, federal and Native corporation acreage.
Pioneer Resources Alaska, a subsidiary of Dallas, Texas-based Pioneer Resources, is a partner, and operator, in the Oooguruk exploration unit assembled by Denver, Colo.-based Armstrong Oil & Gas in Harrison Bay offshore Kuparuk and also has a large acreage position on state lands south of Prudhoe Bay.
Petro-Canada holds a major acreage position in the Foothills area north of the Brooks Range, and Fortuna farmed in on Total’s exploration acreage in the northeast NPR-A and was a partner in the exploration well drilled there last winter.
Dick Garrard, ConocoPhillips Alaska exploration manager responsible for the NPR-A area, said after the sale that ConocoPhillips expected “some Canadian companies would come here, it’s been a trend recently.” And it’s logical, he said, as “they’re accustomed to working in northern latitudes” and have experience in the Arctic.
Petro-Canada is Calgary-based and Fortuna is a subsidiary of Calgary-based Talisman Energy. A blocky affair Most of the tracts drawing bids were in good-sized blocks.
The only outlier was two tracts Anadarko bid on by itself, adjacent to the southern edge of the northeast NPR-A planning area and the most southerly of tracts receiving bids.
In the southwestern portion of the sale area the ConocoPhillips (50 percent)-Anadarko (30 percent)-Pioneer (20 percent) partnership took 13 tracts and the ConocoPhillips (70 percent)-Pioneer (30 percent) partnership took 14 adjacent tracts.
On the northwestern edge of the sale area, southwest of Barrow, Petro-Canada took a block of 10 leases, and the ConocoPhillips-Anadarko-Pioneer bidding group took a block of 19 tracts in an arc south of Barrow.
The remaining 65 leases receiving bids are in a single block beginning at Smith Bay in the Beaufort Sea and along the boundary between the northeast and northwest NPR-A planning areas, and extending to the southwest.
Thirty-one of the 65 leases in this block received multiple bids, the only tracts in the sale that did, so the pattern of lease holdings does not necessarily reflect the plans of the companies bidding at the sale. Most of the leases drawing multiple bids are in the center and on the eastern edge of this large block.
All of the Fortuna leases are in this block: those 22 leases include a band near the top of this lease block and leases trending down to the southern edge of the block. Petro-Canada took 18 leases in this block, three on the eastern edge, eight running through the middle of the block and the remainder on the western edge.
The eight tracts ConocoPhillips bid on by itself are in the upper half of this block. Five of the ConocoPhillips-Anadarko-Pioneer tracts are in this block, one to the north, one to the east and three on the southern edge. Twelve of the ConocoPhillips-Pioneer tracts are on the northern and southern edges of the block. What do the companies see? The multiple bids made it evident that several companies see opportunities in the same area.
Anchorage geologist David Hite said after the sale that the companies are probably looking for stratigraphic, not structural plays. Stratigraphic plays, like the Alpine trend, are associated with “ancient shorelines,” he said. Looking at the big block of leases he noted it was “running sort of northeast-southeast, so I suspect that they’re looking at paleo shorelines…”
As for earlier drilling in the area, Hite said the Brontosaurus well, which is in the sale area southwest of Barrow, is a case of companies probably looking for structural features when it was drilled, and now going back to revisit the area as ideas have changed.
Brontosaurus (see map) appears to be adjacent to tracts taken by ConocoPhillips-Anadarko-Pioneer southwest of Barrow. The well was drilled to a measured depth of 6,660 feet and a true vertical depth of 6,635 feet in section 18 township 18 north range 20 west, Umiat Meridian. It was plugged and abandoned in February 1985. ConocoPhillips Alaska is the successor to ARCO Alaska, the Brontosaurus operator.
Ken Boyd, a geophysicist and former director of the Alaska Division of Oil and Gas, said he thought the companies were probably looking for an Alpine-type trend in the northern part of the sale area, and noted that ConocoPhillips Alaska drilled the Puviaq well on the western edge of the northeast NPR-A planning area. That well, which ConocoPhillips’ Garrard said is a “very tight hole,” on which the company has not released any information, was drilled on a tract in the northeast planning area adjacent to tract D-20, acquired by the ConocoPhillips-Anadarko-Pioneer partnership for $251,600. The tract also received a $240,835 bid from Petro-Canada.
As for the Brontosaurus well, Boyd noted that “they were chasing something else 20 years ago.”
Garrard said Brontosaurus is the “only industry well ever drilled” in this area, although the government, first the U.S. Navy in the 1940s and 1950s and then the U.S. Geological Survey in the 1970s and 1980s, drilled in the area. The Navy discovered the Barrow gas field and USGS discovered the Walakpa gas field, he said. “But largely, both of those campaigns were unsuccessful in terms of finding commercial volumes of hydrocarbons.” Distance will be a challenge As for plans for the area, ConocoPhillips’ Garrard said work in such a remote area requires a lot of planning — and regulatory and permitting work. He should know, as ConocoPhillips is the only company to have drilled even close to this area in recent years.
Predecessor ARCO drilled the Brontosaurus well, and ConocoPhillips drilled the Puviaq well at the far western edge of northeast NPR-A leases. “Drilling the Puviaq well was a two-year process,” he said. The rig was staged on an insulated ice pad, where it over-summered, and the well was drilled the following season.
And before ConocoPhillips was allowed to drill, BLM did an environmental assessment of the project.
Bisson said after the sale that the “area is far from the infrastructure developing along the eastern border of the reserve” and the agency is “gratified to see industry’s vote of confidence and willingness to invest in the future.”
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