No deal on Prudhoe Bay alignment

Kay Cashman

During the negotiations with the state related to the sale of ARCO Alaska Inc.’s assets, the big three North Slope producers — BP Exploration (Alaska) Inc., ExxonMobil and Phillips Alaska Inc. — renegotiated ownership of the Prudhoe Bay oil field, giving each company an equal share of gas and oil. The deal was finalized in April 2000.

Minority field owners Texaco and Chevron were not included in those negotiations, but later entered into talks with the big three to realign their interests in Prudhoe.

The initial alignment proposal from BP, ExxonMobil and Phillips did not, in Chevron’s view, give fair value to Chevron’s leases on the western side of Prudhoe, a hot spot for satellite development.

To date, no agreement has been signed, Fennel said.

“Nothing is final; hopefully this year, but when — or if, because there are no guarantees — is unknown. Negotiations are ongoing.”

The two legal entities in Alaska, Chevron U.S.A. Inc. and Texaco Exploration and Production Inc. have not yet formally combined, although the merger of the two parent companies was approved by the feds Oct. 9. Chevron owns approximately 0.67 percent of the Prudhoe Bay Oil Rim and 0.48 percent of the Gas Cap, while Texaco owns approximately 0.55 percent of the Oil Rim only.

Chevron also currently owns 6 percent of the Polaris participating area and 2 percent of the Borealis participating area.

Chevron, Texaco and the big three have come to agreement on Polaris and Borealis, Fennel said: “A participating area application has been submitted to the state for their approval.”