Petro-Canada breaks policy, crosses U.S. border into Alaska

Gary Park

Taking a leaf from the playbook of Alberta Energy Co., Petro-Canada has decided to get a foot in both Arctic camps by emerging as one of the leading bidders in the first North Slope Foothills Areawide Oil and Gas Lease Sale.

Through subsidiary Petro-Canada (Alaska) Inc. the Calgary-based integrated offered 56 apparent high bids totaling $2.24 million for 323,000 acres, extending its substantial Arctic interests from the Mackenzie Delta into Alaska for the first time.

A company spokesman said the purchase “is another card in our deck. We’re positioning ourselves for future exploration and development and the prospect of getting gas out of Alaska to the North American market.”

According to Chris Dawson spokesperson, for Petro-Canada in Calgary, the two key company executives responsible for Alaska exploration are Norm McIntyre, executive vice president for upstream, and Graeme Phipps, vice president, exploration and international.

Dawson told PNA after the foothills lease sale that Petro-Canada was “in midst of formulating plans on where we go from here with our Alaska leases. Ultimately we’d like to do preliminary seismic and position ourselves for exploration and development. The next step would, of course, be seismic.”

He said the company had “no definite plans at this point, no timeline established. We can hold the leases for 10 years without a work commitment, which gives us a very large window,” Dawson said.

Meanwhile, AEC, the first Canadian E&P company to take a position in Alaska, used the latest sale to reinforce its interest.

Along with 50-50 partner Anadarko Petroleum, it picked up 207,000 acres for $2.2 million, bringing its net Alaska position to 1.2 million acres.

Withdrew from plays outside Petro-Canada

Although not part of the Mackenzie Delta study group, consisting of Imperial Oil, ExxonMobil Canada, Shell Canada and Gulf Canada Resources and which is expected to release the results later this year of a study to determine the feasibility of a Mackenzie Valley pipeline, Petro-Canada is a vital stakeholder in the Delta.

It has also been one of the boldest players in recent months, kicking off Canada’s first Arctic exploration in 24 years in partnership with Anderson Exploration.

On top of a winter shooting 700 square kilometers of 3-D seismic, and despite a late freeze-up and early spring thaw, Petro-Canada and Anderson drilled their C$23 million Kurk M-15 well, 90 miles northwest of Inuvik, to a depth of 3,100 meters, about 400 meters deeper than the original target, before putting the rig in summer storage.

“The drilling operation couldn’t have gone more smoothly,” said Phipps. “Gas-saturated sands encountered by drilling were confirmed by the logs and are now safely behind pipe. The information we have is preliminary and still being evaluated, but we’re certainly encouraged.”

Once the evaluations have been completed, Petro-Canada may test the gas-saturated zones next winter with a service rig to determine “reserve potential and productivity,” Phipps said.

“We’re very excited to be part of Canada’s revived energy frontier,” said Kathy Sendall, vice president of Western Canadian development and operations for Petro-Canada, which views the Mackenzie Delta as a large portion of its future gas production growth.

Petro-Canada’s commitment involves spending C$234 million drilling two exploration wells per year over the next five years. “It’s an aggressive schedule, but one we feel will provide dividends for shareholders as well as the people who call this place home,” said Sendall.

With Anderson Exploration as a 40 percent partner, Petro-Canada picked up the property in 1999 for C$105.3 million near known gas discoveries such as Titalik and Niglintak — some of the keys in the known Delta and shallow Beaufort Sea reserves of about 9.2 trillion cubic feet.