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THE EXPLORERS 2004: ASRC buys into its first prospect In first year as an independent oil and gas company, Native corporation takes a 35% interest in Placer Kay Cashman Petroleum News
In early 2004, Arctic Slope Regional Corp. quietly entered into what was its first North Slope investment as an independent oil and gas company under its mentoring agreement with BP Exploration (Alaska).
The Native regional corporation that represents the business interests of 9,000 Inupiat Eskimos in Arctic Alaska appeared as a working interest owner on state documents for the Placer No. 1 well. Drilled in February 2004 by operator ConocoPhillips, the well was in a unit expansion area in the western part of the Kuparuk River unit, southwest of ConocoPhillips’ successful Palm discovery and development. BP, Unocal, ChevronTexaco, ExxonMobil and unit operator ConocoPhillips are partners in the Placer area. ASRC farmed into BP’s acreage, assuming a portion of the cost of the well in exchange for a 35 percent working interest.
ConocoPhillips negotiated unit expansions to include leases believed to contain oil and gas, with the proviso that wells must be drilled by certain dates or the tracts would contract out of the unit. If that happened, the state would be owed a penalty to make up for what the leases might have earned in bonus bids at a lease sale had they not been incorporated into the unit extending the term of the leases.
Drilling was under way at Placer No. 1 on March 4, 2004 (surface casing had been run and was below 3,000 feet), when Rick Mott, ConocoPhillips Alaska’s vice president of exploration and land, told Petroleum News the company had permitted a second well at Placer as a contingency.
ConocoPhillips “would try and expedite a development there … if we possibly could,” he said. If it has encouraging results at the first well, it could go ahead with a second well.
“We could cut a whole year off the cycle time by doing that.”
A second well was drilled, then plugged and abandoned as a confidential well on April 8, 2004. But Placer No. 1 was suspended April 11; its status was also confidential. It had a true vertical depth of 6,289 feet and a measured depth of 7,761 feet.
ConocoPhillips has until 2007 to either relinquish the Placer leases back to the state or get them into a participating area and submit a plan of development.
The mentoring agreement In July 2003, ASRC announced it was expanding its scope to become an independent oil and gas producer on the North Slope and had entered into a “mentoring” agreement with North Slope producer BP. The agreement, signed March 20, 2003, includes sharing information on unit and near-unit oil and gas investment opportunities, ASRC and BP told Petroleum News.
BP said the mentoring arrangement would help get unit and near-unit North Slope prospects explored and developed that might not get approved by BP’s board in London due to stiff competition from investment opportunities outside Alaska.
For ASRC, the deal was expected to provide badly needed jobs close to home for its shareholders.
A slice of Alpine line
Teresa Imm heads up both ASRC’s E&P interests and is president of ASRC Pipeline Co.
A royalty owner in the Alpine field, the Alpine leases include an option for ASRC to purchase a portion of the transportation system.
ASRC acquired 16.667 percent of Alpine Transportation Co., the entity which owns the 34 mile, 14 inch pipeline connecting ConocoPhillips’ Alpine field (in the Colville unit) to the main North Slope pipelines to the east.
The deal, which cost ASRC $15.9 million, was announced in November 2003 but was effective Jan. 31, 2003.
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