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The Oil Patch Insider ExxonMobil expects North Slope gas line to be built
ExxonMobil President Rex W. Tillerson told anaylsts March 10 he expects an Alaska gas pipeline to be built and delivering gas to the marketplace, “probably slightly beyond the end of this decade.”
This is the same timeframe ExxonMobil, BP and ConocoPhillips officials in Alaska have been targeting.
Although ExxonMobil has been criticized for allowing production levels to dip, company Chairman and CEO Lee R. Raymond said ExxonMobil will continue to take the conservative approach: “We are not going to invest in low-return projects.”
The company estimates a pipeline from Alaska’s North Slope to Lower 48 markets could cost $19-$20 billion, executives said at ExxonMobil’s annual meeting in New York.
“That’s just such a huge investment and would carry with it obviously a lot of risk. … Cost is the big issue. …We’ve got to find some way to try to reduce that cost or to deal with the risk,” Tillerson said.
ExxonMobil, BP and ConocoPhillips recently filed an application under the Alaska Stranded Gas Act to negotiate fiscal terms with the state for a North Slope gas commercialization project.
ExxonMobil wants favorable terms from those negotiations. It also wants the U.S. Congress to approve a streamlined permitting process as part of a pending energy bill, Tillerson said. Pioneer Suncor won’t keep on trucking Alberta oil sands pioneer Suncor Energy is hoping to eliminate the use of mammoth trucks at its northern Alberta mine sites to reduce operating costs and improve efficiencies.
Suncor Chief Executive Officer Rick George said that instead of operating the trucks from shovels to a crusher system the company is exploring ways to put the crushers on mobile platforms behind the shovels.
The change could take place within five years, he said, but the company has yet to estimate the cost savings it might achieve.
Other cost-reduction methods include efforts to lower natural gas consumption by injecting light hydrocarbons downhole with steam to loosen the bitumen deposits and force them to the surface.
George said Suncor will continue to “work hard on R&D to drive productivity and to drive costs down.” Denbury wants to sell 81 wells in Gulf of Mexico Small exploration and production independent Denbury Resources says it wants to sell its offshore properties in the Gulf of Mexico to better focus on its core operations, including CO2 tertiary recovery oil projects in Mississippi.
Denbury said March 10 that it has retained investment bank Credit Suisse First Boston to assist with the sale. The company owns interests in 81 offshore wells with average daily production during 2003 of 47.7 million cubic feet of natural gas equivalent. January production averaged just over 50 million cubic feet of equivalent per day.
So far, no buyer has been identified, Denbury said, adding that if its sales price is less than anticipated, it may withdraw the sales package. Denbury is looking to sell the properties by the end of June.
“Our long-term plan is to concentrate our energy and investment on our tertiary operations where we have lower risk, greater predictability, virtually no competition in our areas of operation and higher profitability,” Denbury CEO Gareth Roberts said. Tom Boggs to speak at Alliance annual meeting Want to get an insider’s view of Washington, D.C., as the country gears up for the November general election? Mark your calendar for the Alaska Support Industry Alliance’s Sept. 23 annual meeting.
Alliance General Manager Larry Houle told Petroleum News that Tom Boggs, a “Washington insider” and “one of the most powerful lobbyists on Capitol Hill,” will be the keynote speaker.
Boggs is a founding partner of the Patton Boggs law firm in Washington, the son of the late Hale Boggs (lost in a plane crash in Alaska in 1972 with Rep. Nick Begich, D-Alaska), majority leader of the U.S. House of Representatives and member from Louisiana’s second district in the 77th and 80th to 92nd Congresses, and Corinne Clairborne Boggs, member from Louisiana’s second district in the 93rd to 101st Congresses, and the sister of newswoman Cokie Roberts.
Houle said Boggs’ take is “totally irreverent.” ASRC subsidiary to work on GOM network Another connection between Alaska and the Gulf of Mexico comes with the announcement that ASRC Communications Ltd. will be teaming up with Gulf Fiber LLC on a subsea fiber optic network on the floor of the Gulf of Mexico.
The new fiber network will meet industry demand for reliable communications with remote installations on the continental shelf and in deep water.
The joint venture’s fiber network can be teamed with microwave and fixed satellite technology to provide enhanced reliability, ASRC said in a release March 10. The new venture, called Gulf FiberNet, will provide video, voice and data services to the industry and the government.
Gulf Fiber had already been awarded a contract to provide fiber optic connections to some BP deepwater platforms.
ASRC serves oil companies with an extensive network on the North Slope. It is a subsidiary of Arctic Slope Regional Corp., an Alaska Native corporation. U.S. Senate drops ANWR lease sale revenues from budget resolution The U.S. president’s attempt to start counting revenue from oil and gas leases in the Arctic National Wildlife Refuge has been dropped from the federal budget resolution, expected to come up for a final vote in the Senate on March 12.
President George W. Bush included projected revenue from ANWR lease sales in his budget proposal to Congress last month, although few expected the provision would remain in the resolution. The president’s proposal merely counted ANWR leases in federal revenue totals and would not have actually opened the area’s coastal plain to drilling. That would have required a separate piece of legislation.
Filibuster threats by opponents of opening ANWR to oil and gas exploration have repeatedly blocked the Senate from removing the 24-year-old congressional ban on leases in the environmentally sensitive area, which the Department of the Interior believes could contain several billion barrels of economically recoverable oil.
The annual budget resolution sets caps for what the appropriation committees may give to each department, said Chuck Kleeschulte, spokesman for Sen. Lisa Murkowski, R-Alaska. “It is a blueprint for what the budget will contain.”
House members already have adopted their version of the budget resolution, with a House-Senate conference committee expected to settle the differences between the two versions. Congress faces an April 15 deadline to pass a single version in both chambers, Kleeschulte said. Actual spending bills would follow. The federal fiscal year starts Oct. 1. Canadian crude oil, gas prices take a dive Light and heavy crude and spot natural gas prices have taken a beating in Canada so far this year, while holding their own in the United States.
To the end of February, light crude in Edmonton averaged C$44.32 (US$33.24) a barrel at Edmonton, a drop of 15 percent from a year earlier; Flint Hills heavy crude averaged C$31.78 (US$23.84) a barrel, off 21 percent; and AECO-NGX spot gas prices averaged C$6.14 ($4.61) per gigajoule, a drop of 19 percent.
Editor’s note: Contributions to this week’s Oil Patch Insider came from Gary Park, Allen Baker, Kristen Nelson, Larry Persily, Ray Tyson and Kay Cashman.
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