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AVCG: Kansas oil men partner to explore leftovers on North Slope Bo Darrah, Bart Armfield start with acreage from wildcatter Fred James, amass 108,000 acres on slope Karen Aho PNA Contributing Writer
Alaska Venture Capital Group LLC was formed in mid 1999 by two experienced oil men and longtime acquaintances Bo Darrah and Barton Armfield. Darrah had 30 years of experience managing a privately held oil company based in Wichita, Kansas; Armfield had extensive, and recent, history on Alaska’s North Slope with Alaska Petroleum Contractors.
The other owners in AVCG were all privately held, independent oil and gas companies that were actively exploring and operating in the Lower 48.
Although the other owners considered the North Slope one of the few remaining domestic regions with the potential of generating commercially viable prospects for independents, they were not comfortable with the idea of venturing into the harsh Arctic environment on their own.
So they hooked up with Darrah and Barton, who, in turn, connected with Alfred “Fred” James, a Wichita-based geologist and independent explorationist with a solid reputation for his knowledge of North Slope geology.
AVCG purchased a small acreage position that James held on the North Slope and signed James to a two-year, exclusive contract as a geologic consultant. In the next two and a half years AVCG amassed a total of 108,000 acres of leases that it either owns or controls on the North Slope.
Currently, AVCG has five distinct prospect blocks: Cronus, East Cirque, Itkillik River, Ocean Point and the Sakonowyak River unit (Gwydyr Bay).
Charter makes slope access possible At the time of its formation, Darrah and Armfield thought opportunities would become available as a result of the proposed BP-ARCO merger. However, the final merger resulted in far different opportunities than expected.
“Namely, a massive divestiture of acreage didn’t occur,” Armfield said. But the Charter for Development of the North Slope that was signed Dec. 2, 1999, by the state, ARCO, Phillips Petroleum Co. and BP gave smaller oil companies such as AVCG reason for hope because it contained provisions that made access to BP and Phillips’ controlled facilities on the North Slope possible for small oil and gas producers. Drilling postponed one year AVCG is working with BP Exploration (Alaska) Inc. in the Sakonowyak River exploration unit.
The 11,520-acre unit contains five state oil and gas leases, offshore and onshore at the mouth of the Sakonowyak River in Gwydyr Bay. The unit abuts the western border of the Northstar unit and is three miles north of the Prudhoe Bay unit boundary.
BP holds approximately 62 percent of the working interest while AVCG holds the remaining 38 percent. AVCG will fund the program and BP will retain a working interest in the prospect after the test well is drilled.
The Sak River No. 1’s surface location will be onshore in a lease owned by BP and Phillips Alaska Inc., which is not in the Sakonowyak River unit. The bottomhole location will be offshore in a unit lease owned by AVCG.
The well has a primary target in the Kuparuk C 1 sand at a total vertical depth of 8,500 feet and a measured depth of 12,500 feet. Estimated recoverable reserves in the core area are expected to range between 41 and 62 million barrels of oil equivalent with a geological chance factor of 51 percent.
In addition to the primary C 1 target, additional sections within the Kuparuk sands present an upside potential in excess of 300 million barrels of oil equivalent.
A second exploration well is to be completed by May 1, 2004.
The first well was supposed to be drilled this past season but has been rescheduled by BP for next season, Armfield said.
Drilling, he said, is contingent upon securing permits and final funding.
AVCG is currently acquiring additional partners to join it and BP in drilling in Sakonowyak River Unit No. 1 during the 2003 drilling season.
Editor’s note: See story in next week’s edition of Petroleum News • Alaska about the new technology from Pangaea Geochemical Technologies that AVCG has been using when doing its hydrocarbon survey.
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