Oil Patch Insider

Shell looks to shoot seismic in Beaufort; B.C. gains from U.S. heat

Shell Oil has been meeting with North Slope “leaders and residents” recently about a 3-D seismic shoot that the company hopes to do next summer on its Beaufort Sea leases.

According to a Petroleum News source from Barrow, “Western Geco is bringing a boat from the Gulf of Mexico to the Beaufort next summer that will move from east to west across Shell’s leases,” which extend from the Arctic National Wildlife Refuge on the east to the National Petroleum Reserve-Alaska on the west. “By doing it that way they can stay out of the way of the whalers.”

When asked about its plans, Shell spokeswoman Stacy Hutchinson provided a statement from Shell’s Alaska group: “With our commitment to engage stakeholders early and often, Shell representatives have been meeting with leaders and residents along the North Slope. In particular, in early August, we met with the Alaska Eskimo Whaling Commission and village whaling captains to negotiate a Conflict Avoidance Agreement, which is necessary to acquire permits to shoot seismic over our Beaufort Sea leases in 2006. “Detailed plans for the seismic acquisition will be a result of continued discussions with the whaling communities in the area of acquisition and any additional whaling communities that might be impacted by our operations.

“Shell is pleased with the negotiations and looks forward to continuing to engage and work with our key stakeholders.”

Shell returned to Alaska in March after an effective absence of 10 years, winning $44.4 million in leases in a federal oil and gas lease sale. The leases are in the outer continental shelf of the Beaufort Sea north of Alaska’s North Slope.

Shell opened an Alaska office in June, taking over EnCana’s Anchorage office and staff. (EnCana is selling all its conventional North America assets, but Petroleum News sources say Shell is not going to buy EnCana’s leases, which are also in the Beaufort Sea.) Earlier this summer another Shell spokeswoman told Petroleum News that the company was in the process of evaluating its new Beaufort Sea leases, which will likely initiate the beginning of the permitting process “during which we will ask for information from stakeholders in the area.”

—Kay Cashman

U.S. swelters; B.C. counts gains

The province’s coffers are on track for a C$600 million bonus this year due to higher natural gas sales at higher prices as Americans crank up their air conditioners.

September contracts for gas on the New York Mercantile Exchange have been selling this month at C$10.80 per gigajoule, close to double what the British Columbia government forecast four months ago in its 2005-06 budget.

Over the first one-third of the fiscal year gas on the Nymex has averaged C$8.83, pushing the province’s gas royalties for the period C$200 million over the budget.

The British Columbia Finance Ministry is hesitant about getting drawn into revenue projections, but Premier Gordon Campbell and Energy Minister Richard Neufeld never pass up a chance to talk about how their changes in royalties and regulatory processes have opened the doors to industry and put the province on an equal competitive footing with Alberta.

Well drilling has soared by almost 25 percent in the past two years and sales of government-owned exploration lands have remained strong in northeastern British Columbia, which offers some of the best prospects in all of Canada. The price outlook at a time of mounting supply pressure shows no signs of slackening. Calgary-based FirstEnergy Capital recently bumped its average gas price for 2005 at C$9.50 and expects a further increase before year’s end. The firm said that with “loads of new gas-fired power generation capacity in place in the United States, demand for natural gas is likely to grow.”

—Gary Park