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THE EXPLORERS 2005: Armstrong sells Alaska acreage to Eni Denver-based independent will continue to put together oil and gas exploration prospects in Alaska Kay Cashman Petroleum News
Armstrong Alaska, the small independent instrumental in bringing three new oil companies to Alaska in less than three years, sold all of its oil and gas assets in Alaska in mid-August 2005 to the last of those three new companies, Eni Petroleum Exploration Co.
“We were not capitalized enough to do the things our North Slope partners Pioneer Natural Resources and Kerr-McGee wanted to do,” Armstrong Oil & Gas President Bill Armstrong told Petroleum News after the sale. “They’ve both been incredibly great partners for us. It was important to me not to slow them down and be a drag on development at Oooguruk and Nikaitchuq, so we sold our assets to Eni.”
Armstrong Alaska is an affiliate of Denver-based Armstrong Oil and Gas, and Bill Armstrong is president of both companies. Eni Petroleum, an affiliate of Italy’s Eni SpA, “will be a great asset to Alaska,” he said.
Track record of success Armstrong Alaska track record to date on the North Slope has been three out of four — i.e. in three out of four North Slope prospects drilled by its first two partners discoveries have already been announced — first at Oooguruk by Pioneer in 2003 and then by Kerr-McGee at Nikaitchuq in 2004 and again by Kerr-McGee in 2005 at Tuvaaq and nearby Kigun, a well in the Kuparuk unit that essentially confirmed the Tuvaaq discovery.
There has been no news yet from Kerr-McGee on drilling this past winter at the Two Bits prospect, which is also referred to as Ataruq. The company has said it was still evaluating well results.
Pioneer and Kerr-McGee are moving toward development of Oooguruk and Nikaitchuq, respectively. If sanctioned by both companies (and their new partner Eni), Nikaitchuq is expected to begin production in the first half of 2006 and Oooguruk in early 2008. One of the last hurdles for both projects is securing royalty relief from the State of Alaska.
The lead players in Armstrong’s Alaska team were Bill Armstrong, Vice President of Operations Stu Gustafson, Vice President of Geoscience Matt Furin, and Vice President of Land Ed Kerr.
Armstrong set records on the North Slope for the shortest time to permit exploration and development projects, initially working closely on exploration with both Pioneer and with both exploration and development permitting for Kerr-McGee. Armstrong also encouraged both companies to use pipe-in-pipe and production in a box technology, which it said both improved environmental protection on the North Slope and cut costs for the operator (see Kerr-McGee article in this issue).
The company’s philosophy in Alaska was summed up by Gustafson in a 2004 speech in Anchorage when he said Armstrong’s mantra was, “Smoother, faster, better, cheaper: everyday that’s what we try to do.”
Plans for the future What are Armstrong Alaska’s plans for the future?
“We’re definitely not leaving Alaska,” Bill Armstrong said.
He said Armstrong Alaska will stay in the state and continue to put together exploration prospects.
The company, he said, will continue to focus on northern Alaska. “We still see huge opportunities on the North Slope. … It’s a great place to be and it’s a great petroleum system.
“There are certain things we’re pursuing. We’re really looking forward to continuing our relationship with all the players on the North Slope and the State of Alaska,” Bill Armstrong said.
“There were a lot of companies interested in what we had in Alaska. I think you’ll see more companies coming to the North Slope” in the near future.
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