Anadarko, AEC Swap Holdings, Prepare for Arctic Pipe
For the third time this summer, Canadian natural-gas producers
have underlined the urgency of their quest for new supplies by
moving into position to tap Arctic discoveries that have been
allowed to lie fallow for a quarter of a century.
This time, Alberta Energy Co. and Anadarko Petroleum Corp. both
increased their northern holdings by buying into each other's
interests on Alaska's North Slope and Canada's Mackenzie
Delta-Beaufort Sea region. AEC is Canada' s top gas producer with
about 1 Bcf/d, while Anadarko ranks 17th with about 280 MMcf/d as a
result of its merger with Union Pacific Resources after its
takeover of Canada's Norcen Energy Resources.
Alberta Energy's wholly-owned AEC Oil & Gas (USA) Inc.
picked up a one-third interest in a 3.1 million acre lease held by
Anadarko in a foothills region south of Prudhoe Bay. At the same
time, Anadarko bought a 37.5% interest in a 530,000-acre
Delta-Beaufort prospect held by AEC. The deals were described as
separate transactions rather than a straight property swap, and no
financial terms were disclosed.
Both companies indicated they want to be in a position to take
advantage of whatever transportation project emerges as the victor
from a developing contest over northern routes. The rivalry
involves multiple variations on two main themes: reviving the
dormant Alaska Natural Gas Transportation System, and bringing back
to life proposals for a Mackenzie Valley route. Anadarko chairman
Robert Allison said "we believe Arctic gas will find its way to
Canadian and American consumers through one or more of the
pipelines being proposed from Canada and Alaska."
While both variations on the Arctic gas theme propose eventually
to hook up all the U.S. and Canadian supplies, the ANGTS sponsors
want to take Alaskan production first and the Mackenzie scheme puts
top priority on deliveries from the Delta-Beaufort. Allison said
"this purchase puts us in a better position to have gas available
for delivery into whatever pipeline is ultimately built, whether
from Alaska or Canada or both."
AEC pointed out that the combined gas resources of the North
Slope and the Canadian Arctic are estimated at about 40 Tcf so far,
with exploration still in early stages by standards of established
production basins. The deal follows two successful summer auctions
by Canada's federal government of new drilling prospects in the
Delta-Beaufort and Mackenzie Valley regions. Canadian producers
took on 5,685 square miles of resource leases, paying C$523 million
(US$355 million) in exploration work commitments over the next
Farther south, PanCanadian Petroleum Ltd. also underlined the
urgency of the supply quest with a C$702 million (US$475 million)
purchase of assets from Montana Power Co. (see related story this
issue). The package --- primarily located along the Alberta-Montana
border, with side interests in Colorado, Wyoming and Oklahoma ---
included reserves of 550 Bcf of gas, associated processing plants
and pipelines, and 984,000 acres of resource lands.
PanCanadian, heir to vast 19th-Century land grants to parent
Canadian Pacific for building a transcontinental railway, is
already Canada's second-ranked gas producer with 850 MMcf/d and
owns enough drilling prospects to ramp up its output significantly.
But the company said it regarded this as the time to grow even
bigger in gas when Montana Power put up for sale its holdings
beside PanCanadian's land spreads across southern Canada.
Gordon Jaremko, Calgary
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