Petro-Canada keeps lid on Alaska North Slope, Mackenzie Delta plans

Gary Park & Kay Cashman

Petro-Canada plans to invest C$445 million in 2005 developing “long-term” natural gas supply opportunities on Alaska’s North Slope, the Mackenzie Delta/Corridor and a liquefied natural gas project in Quebec.

But a spokeswoman for the Calgary-based company told Petroleum News it was not ready to disclose any details of the spending.

The C$445 million is part of a C$760 million budget for North American gas and an overall C$3.2 billion capital and exploration program.

Other gas spending targets include C$485 million to replace reserves in Western Canada and C$230 million for new unconventional growth opportunities, such as coalbed methane and tight gas in Western Canada and the U.S. Rockies.

Chief Executive Officer Ron Brenneman told a conference call Dec. 16 that 2005 will be a “building year” as Petro-Canada puts its emphasis on production growth over the next three years.

During the transition, the company is projecting average output of 415,000-440,000 barrels of oil equivalent per day, down from its estimated 445,000-460,000 boe per day in 2004.

The decline stems mainly from operations in Syria, Northwest Europe, turnarounds at the Hibernia and Terra Nova oilfields offshore Newfoundland and North American gas.

But Brenneman is confident there will be a rebound in 2005 and 2006 as new projects come on stream.

Petro-Canada has been building its land position on Alaska’s North Slope since the mid-1990s and participating in some drilling and exploration activities in the Mackenzie Delta, in anticipation of gas lines from both areas.

As of Oct. 15 the company had a North Slope oil and gas lease position of almost 700,000 acres. But the company has said it is waiting on two things to happen before it decides what to do with that acreage, which lies in two areas — the gas-prone Brooks Range Foothills and the oil-prone area close to the Arctic coast in the northeastern quadrant of the National Petroleum Reserve-Alaska.

In the foothills Petro-Canada has said its exploration plans are on hold as it waits for a definite signal that a gas pipeline will be built from the North Slope, giving the company an outlet for any gas it discovers.

In NPR-A, Petro-Canada is waiting on the outcome of a lawsuit filed by environmentalists against the U.S. Bureau of Land Management that involves the planning area in which it won leases at a U.S. Bureau of Land Management lease sale in June.

Its LNG plans include a joint venture with TransCanada to build a C$660 million regasification terminal on the St. Lawrence River in Quebec.

The proposal calls for projected volumes of 500 million cubic feet per day, starting operation in 2009.