THE EXPLORERS 2005: Calgary-based EnCana pulls out of Alaska

Kay Cashman

Petroleum News

In a move that EnCana Chief Executive Officer Gwyn Morgan referred to as going “back to our roots” the Calgary independent added its Alaska properties to its sale list of worldwide conventional oil and gas assets in late 2004.

EnCana, which first entered Alaska in 2000 as Alberta Energy, has been selling off conventional assets in order to focus its attention on North America unconventional (resource) gas plays and Alberta oil sands.

As of Oct. 15, 2005, the company had sold no significant acreage in Alaska, although it has relinquished its interests in its Brooks Range Foothills partnership with Anadarko Petroleum and Petro-Canada. The foothills are a gas-prone area of northern Alaska that have not been developed because of the lack of a pipeline to take natural gas to market.

“We were sitting and waiting on gas line issues to be resolved,” Paul Myers told Petroleum News in late 2004. Myers was EnCana’s vice president for the Gulf of Mexico and Alaska at the time. He said the biggest gas line issues were timing and access for explorers.

However, Myers said the North Slope gas pipeline issues had nothing to do with EnCana’s decision to pull out of Alaska.

The majority of EnCana’s attention had actually been focused on its 24 leases on Alaska’s Outer Continental Shelf — specifically some 52,265 acres in the Beaufort Sea.

“We were quite keen on the OCS. It’s just that EnCana’s focus is not going to be on that type of play,” said Myers, who has since left the company.

Other assets being sold by EnCana included conventional oil and gas acreage in the United Kingdom, Canada and the Gulf of Mexico.

Following EnCana’s creation from the merger of PanCanadian Energy and Alberta Energy Co. almost four years ago the company announced its intention to become a “global super-independent.” That dream was scrapped in favor of a lock-stock-and-barrel pursuit of unconventional (resource) gas plays stretching along the Rocky Mountain fairway from northeastern British Columbia through Alberta, Colorado and Wyoming into northern Texas.

Once the shake-out is complete, EnCana will be on a path that sidesteps the gambles of traditional wildcatting, which Morgan believes has most of the North American industry caught in a trap of spiraling costs and shrinking production and is forcing companies to go abroad.

With no immediate prospect of gas relief from the Arctic or liquefied natural gas, he says unconventional resources are the “only means of offsetting” the loss of supply since output peaked a couple of years ago.

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