Alaska’s North Slope has long been a mecca for oil exploration, but the region’s natural gas reserves are getting a long look by several producers as they await a final decision on the long-proposed gas pipeline.
With only an oil pipeline to carry supplies south, North Slope gas wells up to now have been drilled mostly to supply Alaska markets. However, a partnership headed by Anadarko Petroleum Corp. has tentative plans for this winter to begin exploring for gas in the Gubik field of the North Slope.
The U.S. Geological Survey estimates the total recoverable gas resources in the North Slope area at more than 200 Tcf. The Gubik field, located near the southeast boundary of the National Petroleum Reserve-Alaska (NPR-A), sits on about 20,000 acres of the Brooks Range Foothills. It was discovered by the U.S. Navy in the early 1950s, and the Department of Interior’s Minerals Management Service estimates Gubik holds 600 Bcf of recoverable gas; the field has tested at a rate of 50 Mcf/d.
Anadarko spokesman Mark Hanley confirmed that the producer and its partners London-based BG Group plc and Calgary’s Petro-Canada have ordered a lightweight drilling rig and a remote camp from Nabors Alaska Drilling, both of which are expected to arrive in December. However, the company could not confirm whether the trio will move forward with a drilling plan this winter.
The partnership holds an extension option for the rig and camp, and Alaska’s Division of Oil and Gas (DOG) said Anadarko holds drilling permits for Gubik and several other Brooks Range Foothills prospects that are due to expire in about a year. To keep the lease options, Anadarko would have to drill in the very near future.
“We think they’re valuable leases, so that’s one of the motivations,” Hanley said. Earlier this year Hanley told Alaska lawmakers that there was “a lot of risk” associated with prospecting for oil and gas in Alaska, and the company doesn’t want to spend too much money on its gas program unless the pipeline is approved.
Producers “don’t want to strand a lot of capital” without a gas pipe, Hanley said. Anadarko has some “pretty well defined prospects” in the gas-rich Brooks Range. However, it will take more than one well to determine the potential. If Anadarko and its partners drill a well this winter, and “if it looks like a pipeline open season’s going to happen, we may decide to get a couple of rigs and try and delineate that thing as fast as we can and get into the initial open season.” In any case, it would take three or four years before a decision to move forward is made.
Anadarko and its partners hold about 2.2 million net acres between the Canning and Colville rivers along the southern boundary of the North Slope. Anadarko, ConocoPhillips, FEX LP and Petro-Canada Alaska Inc. last year submitted bonus bids totaling $13.86 million for the rights to develop 81 lease tracts on nearly one million acres in the northwestern corner of the NPR-A (see Daily GPI, Sept. 28, 2006).
BG, which is the largest liquefied natural gas (LNG) transporter to the United States, drilled its first North Slope well in early 2006, and subsidiary BG Alaska E&P Inc. partnered on the 2.2 million acres with Anadarko and Petro-Canada Alaska Inc. last year (see Daily GPI, Feb. 8, 2006). A few months later, BG made another deal with Anadarko to acquire a 40% equity share in 208,000 acres located along the Eastern North Slope (see Daily GPI, May 16, 2006).
BG vice president David Keane said his company would like to participate in shipping gas south to U.S. markets via a pipeline. However, Keane noted that BG’s LNG business also could move gas out of Alaska. In any case, BG and its partners hope to be producing gas from the Prudhoe Bay area by early 2015, Keane said — the estimated date of when the gas pipe might be ramped up.
“We want to be able to gain access to pipeline capacity and want to be able to move our gas to market once we find some,” Keane said.
Besides the Anadarko-led partnership, several other producers are considering exploration this winter. According to the DOG, producers that are considering drilling programs include ConocoPhillips, Chevron Corp., Pioneer Natural Resources and several small independents.
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