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Chevron bullish on Alaska Company’s top man for Alaska expects Alaska North Slope gas to be commercialized, says Prudhoe Bay alignment agreement in the works Kay Cashman PNA Publisher
The company that drilled the only exploration well in the Arctic National Wildlife Refuge is expanding its presence in Alaska.
In the past six months, San Francisco-based Chevron USA Inc. has opened an Anchorage office, picked up an additional 120,000 exploration acres on the North Slope, and announced it is creating a separate business unit for Alaska.
“We decided Alaska needed its own business unit, more attention,” Chevron’s top man for Alaska told PNA June 25. “There are a lot of opportunities arising in Alaska, including exploration in NPR-A and elsewhere, and gas commercialization due to the ensuing gas pipeline.”
Bob Howard said Chevron, which is spending about $25 million on Alaska projects this year, has also increased its “focus and attention” on the Point Thomson unit. Chevron owns 25 percent of the undeveloped unit, which is adjacent to ANWR on the eastern North Slope.
Point Thomson operator ExxonMobil and working interest owners BP Exploration (Alaska) Inc. and Chevron are preparing an 18th plan of development for the unit which calls for development drilling by mid-2006, estimated to cost in excess of $300 million. (See story on page A16.) Anchorage office houses three Chevron’s Alaska business is handled out of its Houston offices, but until recently the company’s Alaska-based technical staff — geologist Steve Wright, geophysicist Mark Brokaw and reservoir engineer Darrell Rosiere — was housed in BP’s Alaska headquarters in Anchorage.
Now the three Chevron employees call suite 822 at the Frontier Building at 3601 C Street in Anchorage home. Alaska to get undivided attention Howard is currently vice president of Chevron Production Co.’s midcontinent business unit, which includes the company’s oil and gas properties in the Rocky Mountains, South Texas, Oklahoma and Alaska.
After the merger with Texaco, which is expected to be complete by October, Alaska will be split off into its own business unit.
Howard, 49, will be in charge of the unit. His official title will be vice president and general manager, Alaska SBU, ChevronTexaco North America Upstream.
“I will give my full time attention to Alaska, which I look forward to. Most of my attention is focused on the other areas right now,” Howard said.
Howard has been with Chevron since 1973 and has held his current position since 1999. He served a stint in Alaska in the 1980s and has a bachelors degree in petroleum engineering from the Colorado School of Mines.
The Alaska business unit, including Howard and its staff of “between 12 and 15 people,” will still be headquartered in Chevron’s Houston office. But that could change, he said.
“Right now it’s our intention to stay in a non-operative position in Alaska, but as projects like Point Thomson emerge we may see a need to increase the work force located in Anchorage — by one or two people. The business unit staff will stay here in Houston … at least starting out it will be managed out of Houston, but there are a lot of unknowns. Any large discovery or develop could change our perspective, could dictate the need to move our location north. We’re flexible,” he said. Alaska daily production at 10,000 barrels Chevron currently holds interest in approximately 430,000 exploration acres in Alaska. If the 120,000 acres the company successfully bid on in the May 9 state North Slope Foothills lease sale are awarded, Chevron will be the third or fourth largest oil and gas leaseholder in Alaska — depending on whether or not you include the Arctic Slope Regional Corp. lands leased by Anadarko Petroleum Corp.
In addition to its 25 percent interest in the Point Thomson unit, Chevron holds significant ownership interests in other promising undeveloped prospects, such as the National Petroleum Reserve-Alaska, the offshore McCovey prospect and the Slugger unit south of Point Thomson.
Chevron’s main exploration partners include Phillips, BP and AEC Oil & Gas (USA) Inc., a wholly owned subsidiary of Alberta Energy Co. Ltd.
Chevron is the operator and a 50 percent partner with BP in Arctic Slope Regional Corp. leases within the1002 area of the Arctic National Wildlife Refuge. In 1986, Chevron completed the KIC well, which is the first and only exploration well in the refuge.
The company has a small interest in producing units, including Kuparuk and Prudhoe Bay and their satellites, as well as a one-third interest in Cook Inlet’s Beluga River field.
Chevron’s daily production of oil in Alaska is 4,000 barrels plus 6,000 barrels of oil equivalent for a total of 10,000 BOE, Howard said. Interests in Mackenzie Delta, North Slope Commercialization of Arctic gas is a subject of “great interest” to Chevron, Howard said.
The 120,000 acres that the company successfully bid on in the May 9 North Slope Foothills lease sale was in an area that the state defined as highly prospective for gas plays. And the Point Thomson unit on the eastern North Slope next to ANWR is also thought to hold large gas reserves that might be the first to enter a gas pipeline, when, and if, one is built to carry North Slope gas to market.
While Chevron is not part of any formal North Slope gas commercialization group, Howard said the company “would like to be part of the big three North Slope producers gas group, but at this point we’re not.”
When PNA asked if he thought a gas line would be built from the North Slope, he replied, “Certainly North Slope gas will reach the marketplace. … Clearly we believe Alaska’s gas will play a role in meeting market demands by the end of the decade. Once everything gets sorted out in regard to routes, Chevron intends to play a role” in gas commercialization, Howard said.
“Our interest in Alaska and the Mackenzie Delta has risen very sharply in recent years,” he said.
Chevron Canada has a significant investment in exploratory plays in Canada’s Mackenzie Delta, where, unlike Alaska, it is also an operator.
When PNA asked if Chevron has a preferred gasline route, Howard said no, “but we are interested in looking at Arctic gas commercialization from Canada and Alaska in order to protect our interests on both sides. … I will say, however, that I hope Alaska will consider all alternatives in regard to routes versus favoring one certain route because of political interests.” Prudhoe alignment deal close In the heat of negotiations with the state of Alaska related to the sale of ARCO Alaska Inc.’s assets, the big three North Slope producers — BP, Exxon and Phillips — renegotiated ownership of the Prudhoe Bay oil field, giving each company an equal share of gas and oil.
Minority field owners Texaco and Chevron were not included in those negotiations, but have since entered into talks with the big three to realign their interests in Prudhoe. To date, no agreement has been signed.
“We’re all aligned to align. I feel confident of that…. I think we’ll have an agreement in place soon,” Howard said. Chevron owns 0.4 percent of Prudhoe’s gas and 0.67 percent of its oil.
Recent development activities at Polaris, a Prudhoe satellite field, prompted the parties to come to an agreement because although development has not been stalled, “the threat is if either alignment is not agreed to then each of these satellites would have to be developed under separate agreements,” Howard said.
The initial alignment proposal from the big three did not, in Chevron’s view, give fair value to Chevron’s leases on the western side of Prudhoe, a hot spot for satellite development.
“I think we’ve got Polaris pretty much behind us; we’re focusing now on Borealis, another Prudhoe satellite. DNR gave us guidelines and the parties are pretty much agreed on Polaris. … I expect we’ll have a settlement soon,” Howard said.
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