Although some of the bidders in the State of Alaska’s Dec. 7 North Slope and Beaufort Sea areawide lease sales appear to have been consolidating existing lease positions, some companies were establishing new positions in known areas of interest.
ConocoPhillips, for example, picked up an east-west fairway of leases to the south of the Badami oil field, to the east of the central North Slope. In October Alaska Venture Capital Group relinquished a number of leases in the area, and some Anadarko leases in the area expired this year.
“That’s acreage that we have looked at in the past and when it became available we chose to bid on it,” ConocoPhillips Exploration Manager Michael Faust told Petroleum News after the lease sale.
ConocoPhillips
The region is prospective for oil — to the north of ConocoPhillips’ new leases Alaska Venture Capital Group operating company, Brooks Range Petroleum, is hoping to develop some known oil resources in AVCG leases between the Point Thomson and Badami oil fields.
ConocoPhillips is the largest producer and, historically, the most active explorer in Alaska. But several years ago it dropped almost all of its State of Alaska exploration acreage, in favor of larger targets in federal lands and waters. But since 2009 the company has faced roadblocks as it attempts to explore, develop and produce its federal leases.
However, Faust said that the Dec. 7 purchase of state onshore leases to the east of Prudhoe Bay does not mark some new strategic direction for the company — the lease purchase was simply a case of snapping up some attractive acreage that became available, he said.
The company will now evaluate the leases, identifying drillable prospects that can be added to the company’s worldwide portfolio of exploration opportunities, Faust said. The company already owns 3-D seismic data for the area, said ConocoPhillips Land Manager David Brown.
Faust said that funding to drill in the leases would depend on how the prospects in the leases compare with exploration opportunities elsewhere, and that the state’s ACES production tax would be a factor in that comparison — ConocoPhillips wants to see changes in the progressivity elements of ACES.
“One of the things that certainly weighs into that (funding) decision is the fiscal regime in Alaska,” Faust said. “That is a strong component of how competitive they will be as overall opportunities.”
Shell
Shell, the company at the center of a drive to open up exploration on the federal outer continental shelf of northern Alaska, raised some eyebrows by picking up a substantial block of leases in state waters on the west side of Harrison Bay.
The tracts were previously leased by FEX, the Alaska subsidiary of Talisman Energy, but were dropped by that company in 2010 as part of a strategic move to exit northern Alaska exploration. The leases are in a particularly prospective area near the crest of a major geologic structure called the Barrow Arch, a structure associated with most of the North Slope oil fields.
After the lease sale Shell spokesman Curtis Smith told Petroleum News that Shell is completely focused on plans to drill on the outer continental shelf in 2012, but that the Harrison Bay leases presented an opportunity that might eventually have some synergies with the company’s outer continental shelf program — the new leases lie about 60 miles to the west of the company’s most westerly federal leases in the Harrison Bay area.
“We like the geology of the (state) leases that we purchased,” Smith said. “So much so, that we were curious enough to take a closer look.”
Smith said that Shell had obtained from the state information about the leases that FEX had given to the state when the leases were relinquished.
The new Harrison Bay leases give Shell a new exploration opportunity in a region where the company is already familiar with the regulatory regime, Smith said. And being in state waters, any development in the lease would bring significant financial benefit to Alaska — Shell views revenue sharing as the fairest way to compensate energy producing states like Alaska, he said.
Royale Energy
Alaska newcomer Royale Energy Inc. bought a series of leases that fill hitherto unleased gaps in a swathe of territory thought to have potential for shale oil development in the North Slope’s prolific source rocks, lying to the south of the main North Slope oil fields.
Great Bear Petroleum, the company that has been pioneering the North Slope shale oil play, also purchased some new leases in vacant land tracts in the shale oil fairway, with Royale and Great Bear making competitive bids for some tracts.
Mohamed Abdel-Rahman, Royale’s vice president for exploration and production, told Petroleum News that his company is based in San Diego, Calif., and has interests primarily in the Sacramento basin and San Joaquin basin of California. The company also has interests in Utah and Texas, he said.
According to Royale’s website, the company markets about 15 million cubic feet per day of natural gas from its gas wells.
Abdel-Rahman said that a few years ago his company had production from the Monterey shale, a Californian shale oil and gas resource, before selling its interests in that play to Occidental Petroleum. And having somewhat missed out on oil shale in the Lower 48, the company wanted to try its hand at this type of play in Alaska.
“I believe in the oil shale opportunities here (in Alaska), so we decided to give it a shot and I’m happy that it looks like we have succeeded,” Abdel-Rahman said.
The company will now need to figure out its strategy for exploring its leases.
“We’ve got a lot of homework to do and we’re going to start right away,” Abdel-Rahman said.
Woodstone Resources
Houston, Texas, based Woodstone Resources LLC, another newcomer to the Alaska oil industry, picked up some leases on a couple of prospects towards the southern end of the North Slope lease sale area.
The company has been assessing prospects in that area for the past year or so, Woodstone President Warren McFatter told Petroleum News Dec. 8.
McFatter said that, with the prospects lying in remote areas of the Slope, Woodstone hopes that the state can help with the construction of access infrastructure. In fact, the state’s proposal to build a road to Umiat, to the west of Woodstone’s prospects, piqued the company’s interest in the area — the proposed road route would run close to the prospects.
“It’s a risky proposition at the moment because of the lack of roads and so forth, but we believe the prospects have an excellent chance of success if we can just get the infrastructure in place,” McFatter said. Woodstone hopes to see some activity in its leases within the next two to three years and is interested in seeking both oil and gas, he said.
Woodstone is a privately owned company that has oil production in shale plays in the Bakken and the Eagle Ford, and that is also engaged in Gulf Coast exploration in Texas and Louisiana, McFatter said. The company looked into the possibility of shale oil exploration in Alaska but decided to pursue conventional resources for the time being.
“We elected not to pursue the shale in Alaska right now,” McFatter said.
Nordaq Energy
Nordaq Energy Inc., the company that has caught recent attention with what appears to be a large gas find on the Kenai Peninsula, signaled an interest in Arctic exploration by purchasing a block of leases in the shallow waters of Smith Bay.
Although situated offshore the western end of the North Slope, many miles from the nearest support infrastructure, Smith Bay is highly prospective for oil and, like Harrison Bay, sits on the Barrow Arch.
There are several well known surface oil seeps at the nearby Cape Simpson.
