THE EXPLORERS 2004: Talisman looks to drill North Slope well

Kay Cashman

Petroleum News

Talisman Energy’s U.S. subsidiary increased its land position on Alaska’s North Slope at the June 2004 northwest National Petroleum Reserve- Alaska lease sale. Fortuna Energy had a North Slope acreage position before the sale, but the $26,480,300 spent by Talisman in the U.S. Bureau of Land Management’s June sale represented more than a simple acreage increase.

For Talisman, which farmed into Total’s NPR-A acreage last year as a minority partner, the NPR-A leases represented its first acreage as an operator.

To drill well in winter of 2005-06

John ’tHart, Talisman’s executive vice president of international exploration, is in charge of the company’s Alaska exploration program.

David Mann, manager of investor relations and corporate communications for Talisman, told Petroleum News July 15, 2004, “The view within the company is that the next well we drill in Alaska will be in the winter of 2005-06.”

When asked if the well would be on the acreage it shares with Total, the new NPR-A acreage in just picked up on the eastern edge of the northwest NPR-A planning area, or elsewhere, Mann said he didn’t know.

“Obviously we already have seismic on the Total acreage where Total is the operator,” he said, and no seismic has been shot in recent years on Talisman’s new NPR-A acreage.

“And obviously we have our own views on geology and prospectivity,” he said in regard to the 9,362 foot, Caribou 26-11 No. 1 well Total drilled on their joint acreage this past winter. (See July 4, 2004 article in Petroleum News.)

Mann said Talisman “is in the middle of the budgeting and planning process right now,” and is looking at all its “high impact, albeit higher risk prospects,” including the NPR-A. “Typically we finalize our budget in September or October. We think there is a lot of prospectivity in Alaska,” he said, noting that the company was also looking at its portfolio of “higher impact, higher risk prospects, in Trinidad, Columbia and Qatar.

“We typically spend 5 to 10 to 15 percent of our capital budget on some of the larger, higher potential prospects. … For an oil and gas company, a successful exploration program is the best way to add shareholder value,” Mann said. Talisman’s capex budget is expected to be $2.5 billion next year.

As The Explorers was getting ready to go to press in mid-October 2004, Petroleum News queried Mann again. His response: “We are still in the process of putting together our budget for 2005. Fortuna is still bullish on Alaska and expects to drill a well in the winter of 2005-2006. In the meantime, the analysis leading up to picking a well location is ongoing. We still aren’t saying anything about the Caribou well because of the competitive environment.”

When asked in July if the company was looking at other investment opportunities in Alaska, Mann said, “It’s a relatively new area for Fortuna, and indirectly for Talisman. We … drilled the first well and are starting to get a feel for the play fairway in that part of Alaska. If there are attractive deals to be done, we’d be happy to do them.”

Mann’s final comment in mid-October? “Stay tuned.”

Talisman takes first Alaska steps in NPR-A with Total as operator

Talisman CEO Jim Buckee told analysts on May 7, 2003 that his company was close to a deal that would make Fortuna a significant player in Alaska. He said Fortuna has its eye on at least four prospects of 300 million to 500 million barrels each.

Calgary analysts said Alaska had special appeal to Buckee because infrastructure was in place and there was none of the negative fallout from Sudan that had been a drag on Talisman stock values.

At the time Talisman had an international portfolio that included the North Sea, Algeria, Malaysia, Vietnam, Indonesia, Colombia and Qatar — locations that Buckee conceded were riskier than those in North America, while holding the promise of much greater returns.

On June 24, Buckee announced the deal with Total, which he said represented an opportunity, through farm-in options, to farm-in to 360 square miles in NPR-A and build production at minimal political risk.

Fortuna was committed to drill an exploration well on a selected prospect to earn a 30 percent interest, with the right to earn a similar interest in the remaining prospects.

Total spud the Caribou 26-11 No. 1 on Jan. 29, 2004. A vertical hole, it was drilled to 9,362 feet and completed on Feb. 25. The well, on federal lease A084170, was in section 26, township 10 north, range 5 west, Umiat Meridian, in NPR-A.

Four months later Total announced it would not drill another well in Alaska the following winter and said it was moving its Alaska manager, Jack Bergeron, back to Houston by Aug. 1.

Total’s Houston-based communications manager, Jenna Wright, told Petroleum News July 1, 2004 that Total’s “Anchorage-based personnel would be reduced to one full-time and one part-time representative “as Alaskan operations move from the drilling stage to an evaluation and planning period.”

Total was “focusing on the evaluation of data gained from the first well and developing plans for its remaining” Alaska acreage, she said. (See Total story on page 64.)