Oil Patch Insider

Wadeen Hepworth

Netricity, producers unable to reach deal to supply gas for $1 billion North Slope data center

Negotiations between Netricity LLC and Prudhoe Bay operator BP Exploration (Alaska) Inc. have ground to a halt, both parties told PNA’s publisher Kay Cashman last week.

Netricity wants to buy natural gas from Prudhoe Bay to power a $1 billion data center it wants to build on the North Slope. Proponents say when completed the server farm would provide some 300 year-round jobs in the North Slope Borough

In case you don’t remember, a gas sales deal between Netricity and the North Slope producers was expected to close late last year, but negotiations have been dragging on. Some say it is a lack of interest by BP and the other producers because the project is too small 120 million cubic feet of natural gas per day) to be bothered with in terms of how much gas they would sell to Netricity; others say Netricity can’t make the project pencil out unless it pays an unacceptably low price for gas.

Here’s what Netricity and BP told Kay last week:

“The majors do not want to supply gas for this project no matter how many jobs it might represent or how much new industry might help Alaska,” said Mike Caskey, vice president of Fidelity Exploration and Production Co., which is one of Netricity’s owners. Netricity is working on other alternatives for a fuel source, he said, but did not elaborate.

And from Dave MacDowell, spokesman for BP’s Alaska gas group, “We were unable to reach a commercial agreement with Netricity.”

When pressed for details, MacDowell said BP does comment on commercial negotiations.

Netricity, by the way, has some interesting owners. It is an Alaska-based company that is 75 percent owned by Fidelity Exploration and Production, a subsidiary of MDU Resources Group, the parent company of Knife River Corp. which owns Alaska Basic Industries and Alaska Sand and Gravel.

The other 25 percent is owned by Andex Resources LLC of Houston, which, among other things, is currently a partner in BP’s North Slope Slugger unit and putting together a 538,000 acre exploration project on state and Native land in the Nenana basin in the Interior.

How does a new oil company field office in the Mat-Su Valley sound? Evergreen Resources (Alaska) Corp.’s President Mark Sexton told PNA’s publisher Kay Cashman in an interview for The Independents special publication that if the company’s Pioneer unit exploration program is “as successful as we expect,” Evergreen will be opening a field office adjacent to the unit early next year — i.e. “somewhere along the Parks Highway near Wasilla or Houston.”

How about several hundred new jobs in the Mat-Su? Evergreen Resources President Mark Sexton also said Evergreen’s parent company employs, directly and through contractors, about 500 people in the Raton basin of southern Colorado.

“The Matanuska Valley has the same type of coalbed methane resource potential as our leasehold properties in southern Colorado’s Raton basin,” he said.

Not only could development of the Pioneer unit between Houston and Wasilla mean new jobs, Evergreen is also the largest taxpayer in Las Animas County, Colorado.

“County residents are now paying half the taxes they would be paying the county if the natural gas industry had not developed over the last seven years,” he said.

And how would you like to work closer to home? If Evergreen Resources goes ahead and develops the Pioneer unit, it expects to attract a lot of talented, industry knowledgeable people in Alaska. The big plus is that they will be able to live and work in the same area.

We know she’s a real politician now: Becky Gay even kissed babies at her first fund raiser for state house district 26. If you want to see an impressive host list for this fun affair held at the Petroleum Club on Monday, July 22 read on. To start there was T.J. Bourdon, Mark Helmericks, Jim Jansen, Chuck Johnson, Pete Leathard, Dennis Nottingham and Rick Smith. Other hosts included Bob Stinson, Rita Sholton, Ken Thompson and Jim Weeks. Bob Stinson said, “It was the best fund raiser I ever attended.”

Becky, former executive director of the Resource Development Council for Alaska, put together an interesting brochure called “Alaskan All the Way” showing pictures of her outdoor self, her political self, her working self and her fun self.

After reading this brochure you certainly know Becky much better as it was zippy, with catchy quotes and good firm objectives.

One question, on the brochure, was “Have you ever met a person, who will tell you, like Ted Stevens, “To hell with politics — do what’s best for Alaska? That’s Becky Gay.”

Another question was “Have you ever met a person who seems like they’re running on 12-cylinders all the time? That’s Becky Gay.”

Lastly, the question “Have you met your next district 26 representative? That’s Becky Gay.”

A good turn out of long time friends and supporters saw Carl Marrs, Cindy Bailey, Bill Allen, Mike O’Neill, Alyce Hanley, Pete Casper, Barbara and Wilber O’Brien, Joe Henry, Barb and Vince Mee, Rep. Pete Kott, Dave Matthews, Art and April Hackney, Laurie Gray and John Vince. The baby? She is Angelina Janae Munoz, the cutest, happiest little baby, who brought her mom Hazel Munoz from LCMF to enjoy the fun.

NKK has begun commercial production of world’s strongest line pipe. The Japanese steel producer announced it has received an order for 500 tons of X-100 tensile-strength steel line pipe from TransCanada, a leading Canadian energy company headquartered in Calgary.

NKK claims X-100 grade line pipe is the strongest in the world. TransCanada is a leading North American energy company that focuses on natural gas transmission and power generation. Its pipeline system transports most of western Canada’s natural gas production to markets in Canada and the United States.

According to NKK, X-70 line pipe has been the maximum tensile-strength grade used for line pipe but the advantages of the X-100 makes the new pipe even more attractive. The X-100 will enable natural gas transmission at higher pressures and offers cost savings — due to the lighter weight of the pipe — that improves efficiency for pipeline operators.

The company expects to play a leading role supplying the higher strength line pipe on the world market.

The development of the technology for X-100 began in 1987 when NKK decided to extend their steel plate production technology based on the NKK super-OLAC on-line accelerated cooling process.

This process helped the company achieve an ultra-high cooling rate immediately after the hot rolling. The rapid, uniform cooling throughout the plate results in superior line pipe strength without loss of toughness, and improved weldability.

The company also used highly accurate UOE pipe forming and high-quality seam welding technologies that controlled spring-back and peaking faults peculiar to higher-strength steels.

The first X-100 line pipe will be laid in September in Alberta.

Put a note on your calendar for the Alaska Miners Association annual convention. The show runs Nov. 4-8 at the Sheraton Anchorage Hotel. Short courses will be offered Nov. 4 and 5 with technical sessions and the trade show Nov. 6-8. The technical sessions will cover highlights from 2002 exploration activity in Alaska.

As a finale the gem and mineral show will be held on Friday, Nov. 8 from 4:00-8:00 p.m. and again on Saturday, Nov. 9 from 10:00 a.m. to 6:00 p.m.

For more information call (907) 563-9229.

Guess which Japanese companies are merging now? Kawasaki Steel Corp. and NKK Corp. to form the JFE Group. A new logo has been designed, an agreement written and a plan developed for upgrading some steel mills including blast furnace operations, integrating production facilities and consolidating production lines.

Stainless steel making and casting operations at Fukuyama Works will be integrated into the existing operations at Chiba Works and consolidating of rolling mills including sheets, shapes and pipes and tubes are being considered. It is rumored the merger will take place Oct. 1.

Seems the men to the west have taken a tip from the boys of the U.S. and merger-mania is fast approaching that country, too.

More money coming to Alaska….courtesy of the leaders of the U.S. House Transportation and Infrastructure Committee This little group expressed support for a provision of the Supplemental Appropriations conference agreement that restores $4.4 billion in federal highway aid, said a press release from the Fort Yukon representative to the hottest, muggiest city in the east.

This bill, H.R. 4775, is connected to bill H.R. 3694 which increases the level of highway funding. Who knows — there may be even more bills here — but the end result is lots more money for roads and road workers. The gentleman from Fort Yukon east said every state in the nation will get money along with “thousands and thousands of hardworking Americans.” Alaska could get $37,455,657 if — and this is a positive if — the agreement passes the House and Senate.

Get out your check book boys it looks like this bill is going to pass.

Oil Patch Insider is written by Petroleum News • Alaska columnist Wadeen Hepworth. The Insider appears three times per month. If you have news or a news tip for the Insider, Wadeen can be reached at (907) 770-3506 or via email at [email protected].