ConocoPhillips’ participation in the State of Alaska’s Dec. 7 North Slope and Beaufort Sea areawide lease sales raised eyebrows since by 2002 the newly merged ConocoPhillips, which had picked up ARCO’s Alaska assets two years earlier through Phillips, had begun concentrating on finding “new” oil in its legacy units in the state, such as Prudhoe and Kuparuk. The company was still exploring, but on federal acreage, looking for big fields and dropping its state exploration acreage unless it was close to one of its producing units.
Over the next decade ConocoPhillips dropped even its Beaufort Sea federal leases and pulled back from wildcat exploration in the National Petroleum Reserve-Alaska, concentrating on its step-out development of the Colville River unit into NPR-A.
It looked to its federal leases in the Chukchi Sea for its next giant oil discovery in Alaska.
So, given its position on Alaska’s current production tax, ConocoPhillips participation in the latest lease sales was a bit of a shocker.
The company bid unsuccessfully in partnership with Exxon on just one tract in the Beaufort Sea sale, but was high bidder on 35 tracts in the North Slope sale, with the bulk of the tracts in a large block south of Point Thomson and Badami on the eastern North Slope in the Slugger/Jacob’s Ladder area. (In October, Alaska Venture Capital Group, or AVCG, relinquished a number of leases in the area from its proposed Greater Bullen unit, and some Anadarko leases in the area expired this year.)
Subject to economic evaluation
Although some of the bidders in the sale appear to have been consolidating existing lease positions, ConocoPhillips was clearly establishing a new position in known, but undeveloped, areas of interest.
“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 senior reporter Alan Bailey after the lease sale.
The region is prospective for oil — to the north of ConocoPhillips’ new leases AVCG’s operating company, Brooks Range Petroleum, is hoping to develop some known oil resources between the Point Thomson and Badami oil fields.
But Faust said the acquisition of state onshore leases to the east of Prudhoe Bay does not mark some new strategic direction for ConocoPhillips — the lease purchase was simply a case of snapping up some attractive acreage that became available.
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, ConocoPhillips Land Manager David Brown told Bailey.
Faust said that funding to drill 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.
—Kay Cashman
