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THE EXPLORERS 2005: Talisman subsidiary upbeat about Alaska FEX (Fortuna) enters state with Total in 2003; in 2005 plans to drill two NPR-A exploration wells Kay Cashman Petroleum News
Talisman Energy’s U.S. subsidiary took its first steps in Alaska by farming into Total E&P USA’s Caribou exploration prospect in the National Petroleum Reserve-Alaska in 2003. A year later it bought out Total’s interest in Caribou and picked up its own NPR-A leases in the Northwest Planning Area in a June 2004 federal oil and gas lease sale. Talisman dominated that sale where it was the highest bidder with $26,480,300 in high bids and also offered the highest bid for a single tract with its winning bid of $13,745,000 for a tract near the Ikpikpuk River at the junction between the northwest and northeast NPR-A planning areas.
Initially operating as Fortuna Exploration — later changed to FEX — Talisman’s subsidiary in Alaska next dominated a state lease sale for the Beaufort Sea in October 2004. Fortuna bid $3,453,312 in that sale for a block of 19 leases in Harrison Bay offshore NPR-A.
Eight wells in three years In a July 28, 2005, conference call, Talisman Energy executives said the Calgary-based independent would be drilling two wells in the Northwest Planning Area during the coming winter drilling season of 2005-06.
In a newsletter distributed to residents of the North Slope Borough prior to mid-2005 community meetings, FEX said the two wells were part of a three-year winter exploration program during 2005-06, 2006-07 and 2007-08 in which “a total of two to three drill site ice pads will be constructed per year” east and north of the village of Atqasuk and southeast of Barrow on the company’s 250,069 acres in Northwest NPR-A.
On Sept. 26, the State of Alaska began its Alaska Coastal Management Program consistency review of FEX’s exploration drilling project in Northwest NPR-A. FEX said in paperwork it was looking at drilling a total of eight exploration wells in the three-year program. (One of the proposed drill sites — the Aklaq-1 site — lies within the statutorily defined coastal zone and therefore requires review under ACMP.)
The company has already staked 11 possible locations for those wells and initiated permitting for most of them, U.S. Bureau of Land Management records show. But as is the norm with staking, Tim England told Petroleum News Aug. 2, a company often stakes more than it intends to drill. England is senior manager of exploration for FEX.
A drilling rig and supplies were barged to Cape Simpson from West Dock in the summer of 2005. Mobilization via low-pressure vehicles (LPVs) from Barrow, Cape Simpson, Deadhorse and possibly Inigok to the drill sites was expected to proceed later in the year when tundra travel conditions were acceptable.
Looking for big numbers Talisman Exploration Executive Vice President John ‘t Hart, to whom England reports, said in the August conference call that FEX is “looking at very big numbers” from its 443,000-acre interests in and offshore NPR-A — on the order of 250 million barrels of oil equivalent per prospect — with the potential to exceed 1 billion boe from something he referred to as “the structure” within the northwest area being drilled in the winter of 2005-06. Because of the remoteness of Alaska, he said “we are going for a big prize, bigger than we have ever drilled.”
England said the volumes of oil quoted by ‘t Hart were upside volumes. “We recognize there are gas risks in this area (the risk of finding natural gas instead of oil), the risk of not having productive reservoirs and the risk of spending a lot of money and not finding anything at all.”
Having said that, England said FEX had “identified several prospects in the NPR-A” and is “quite bullish on the areas.”
Working with competitors in a JV possibility The prospect being drilled in the winter of 2005-06 was not all on FEX land; the “structure was partly on a competitor’s land,” ‘t Hart said
FEX’s 22 leases in Northwest NPR-A were part of a single block of 65 leases sold at a June 2004 sale. The block begins at Smith Bay in the Beaufort and runs along the boundary between the northeast and northwest NPR-A planning areas, and extends to the southwest.
FEX’s 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 partnership 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.
“We’d prefer to work with the other companies in the areas we have leases to make the exploration process more efficient,” England said, declining to mention if there were any deals in the works. “It’s a remote area, so it makes more sense.”
England said FEX has contracted with Lynx Enterprises, part of ASRC Energy Services, to handle its permitting. ASRC Energy Services is a subsidiary of Arctic Slope Regional Corp., the Alaska Native regional corporation for northern Alaska.
The drilling rig and support equipment will be returned to Cape Simpson between drilling seasons.
“FEX has received a warm welcome to Alaska by federal and state authorities, and we look forward to working successfully with regulators and the local communities” England said.
Talisman CEO Jim Buckee and ’t Hart said that even if an NPR-A discovery is made it will take another year to appraise the find and at least four to five years before oil could flow to market.
—Gary Park contributed to this story
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