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THE EXPLORERS 2004: Alaska key area for EnCana? Calgary independent evaluating several Beaufort Sea, North Slope, Foothills prospects Kay Cashman Petroleum News
The headline in a November 2003 Petroleum News story about EnCana carried the same headline as this story, but without the question mark — a question mark that may prove premature.
The Calgary-based independent, which first entered Alaska as Alberta Energy in 2000, did not drill in Alaska last winter and it won’t be drilling in the winter of 2004-2005.
But Tom Homza, EnCana Oil and Gas (USA) Inc.’s Alaska manager, told the Resource Development Council Nov. 20, 2003, that Alaska was one of EnCana’s key international exploration provinces, and that EnCana was “optimistic about the resource potential that remains in Alaska.
“That’s why we’re here investing,” he said, “and we’re investing in lands, wells and in the community.”
Homza was reiterating what his boss had said earlier that year.
Just three days after EnCana notified the U.S. Minerals Management Service it was plugging and abandoning its McCovey No. 1 exploration well in the Alaska Beaufort Sea, EnCana’s President and CEO Gwyn Morgan told analysts at a Feb. 5, 2003 energy summit that Alaska — along with the Gulf of Mexico, Australia and North Africa — was among his company’s “high-impact opportunities to be drilled.”
In a conference call with analysts later in that month, Morgan pledged to continue exploration in Alaska, despite the fact the company’s first well in the state had been a duster.
Morgan backed up his words with dollars.
EnCana was the only bidder in the state of Alaska’s May 7, 2003 North Slope Foothills areawide sale where it bid $36,576 for a single tract. (The 5,760-acre tract was adjacent to a large Anadarko Petroleum-EnCana lease block south-southwest of Sagwon on the Dalton Highway and west of Anadarko’s Dolly Varden prospect.)
Offshore NPR-A And EnCana was the second highest bidder at the Sept. 24, 2003 U.S. Minerals Management Service Beaufort Sea sale. The company paid $3,550,158 at that sale, taking all 24 tracts on which it bid, including a block of 19 tracts north of NPR-A in the Smith Bay area, adjacent to six existing ConocoPhillips-Anadarko Petroleum leases.
EnCana spokesman Alan Boras told Petroleum News Sept. 25, 2003 that the 24 tracts the company took included about 100,000 acres on the western Beaufort and about 20,000 acres approximately 20 miles northeast of Prudhoe Bay.
Prior to this sale, he said, EnCana had 675,000 net acres in Alaska. Asked what the company had planned for its newly acquired acreage, Boras said EnCana would “evaluate existing seismic data and do exploration evaluation with that existing data, as well as looking at whether the company might acquire additional seismic in the future.
“It’s very early days,” he said, but the company will evaluate the prospects on its new leases, along with the rest of its Alaska portfolio, and plan work in due course.
“They’re working away” Boras had less to say in an October 2004 statement to Petroleum News. He said, “EnCana continues to evaluate its Alaska assets and opportunities in comparison to other investment opportunities across the company’s portfolio.”
When asked when that evaluation would be complete, he couldn’t give a definite time frame, but he did say, “They’re working away.”
The main areas that Alaska must compete with for EnCana’s exploration dollars in 2005 include North America onshore (Boras said targeting primarily resource plays like its Cutbank Ridge discovery), the North Sea, Gulf of Mexico, offshore Canada’s East Coast, Brazil, Chad and some of the Gulf Coast states in the Middle East.
Alaska is competitive Homza said in 2003 that Alaska can and does successfully compete within EnCana for exploration funding, evidenced in the 2002 Beaufort Sea McCovey exploration project and the lease sale acquisitions EnCana made in Alaska through 2003.
State and federal agencies have allowed access “to quality lands on reasonable terms.” But Homza said EnCana could not have competed for Beaufort Sea Minerals Management Service tracts without the incentives offered in the fall 2003 lease sale.
He said EnCana was looking at several other prospects in the Beaufort and multiple prospects onshore, in addition to the Brooks Range Foothills where EnCana holds a substantial block of gas-prone acreage in anticipation there will be a natural gas pipeline built from the North Slope in the foreseeable future.
“We continue to pursue opportunities on all of our lands,” Homza said. Many of those opportunities “have been enhanced by the facilities’ operators, who have farmed out acreage, shared technical expertise and data.”
And, he said, EnCana is “confident we can reach other mutually beneficial arrangements in the future.”
EnCana’s partners at McCovey were ChevronTexaco and major North Slope operator ConocoPhillips.
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