Reserves

Alaska and a trio of oil companies that want to develop the state’s North Slope natural gas reserves have agreed on the “fiscal certainty” portion of a controversial draft contract for a $20 billion natural gas pipeline. Lawmakers, who have been reviewing the draft pipeline contract, now have a version that includes fiscal terms.

Barely three years after a handful of producers began booking small reserves additions, the infant Canadian coalbed methane sector has earned respect in a new report on the national gas endowment by industry elders. The Canadian Gas Potential Committee, a powerhouse composed of veterans from agencies such as the Geological Survey of Canada and the Alberta Energy and Utilities Board, recognized 26 Tcf of CBM as “marketable,” up from zero in the group’s last report in 2001.

Former Alaska Gov. Walter Hickel on Wednesday once again urged state legislators to impose a tax on undeveloped natural gas reserves to encourage North Slope producers to agree to begin building the long-proposed North Slope gas pipeline.

Last summer’s hurricanes, increasing interest in unconventional reserves and high natural gas prices all figure in the outlook for natural gas production and consumption in the preliminary report of the Energy Information Administration’s (EIA) latest long term energy outlook released Monday.

Moody’s Investors Service has launched a review of Burlington Resources Inc.’s debt ratings, which it said was prompted by the producer’s success in replacing reserves and increasing production. Burlington’s “trend of operational success” and “strong financial profile,” has been aided by financial discipline and a “buoyant oil and natural gas price environment.”

The good news for growing U.S. natural gas demand is that declining traditional reserves can be replaced by a combination of Rocky Mountain unconventional supplies and increased imports of liquefied natural gas (LNG), but the bad news is the fact that permitting for new supply projects in these two sectors may be difficult to obtain, a panel of energy lawyers told an industry conference Thursday in Santa Fe, NM. Ultimately, Uncle Sam or neighboring Mexico could hold the keys to unlocking these supplies.

Bonavista Energy Trust said it is buying about 39.6 million boe of natural gas and oil reserves in northeast British Columbia from an unnamed group of sellers for $414 million. The properties, which are mainly natural gas, are expected to increase Bonavista’s production by 25%. They include current production of 10,600 boe/d, including 44 MMcf/d of natural gas, 2,830 bbl/d of associated natural gas liquids and 440 bbl/d of light oil. After the deal, Bonavista will produce about 53,000 boe/d, 58% of which will be natural gas. “The assets, which will establish a new core region for Bonavista in northeastern British Columbia, are highly concentrated, natural gas-weighted and are geographically located within a 100-kilometer radius northwest of Fort St. John, BC,” Bonavista said. The deal will be funded through a combination of bank debt, an issuance of trust units and an issuance of convertible debentures. Bonavista has entered into an agreement to sell 10.9 million subscription receipts at a price of $25.85 each for $281.7 million, and $135 million of convertible extendible unsecured subordinated debentures to a syndicate of underwriters.

Bonavista Energy Trust said it is buying about 39.6 million boe of natural gas and oil reserves in northeast British Columbia from an unnamed group of sellers for $414 million. The properties, which are mainly natural gas, are expected to increase Bonavista’s production by 25%. They include current production of 10,600 boe/d, including 44 MMcf/d of natural gas, 2,830 bbl/d of associated natural gas liquids and 440 bbl/d of light oil. After the deal, Bonavista will produce about 53,000 boe/d, 58% of which will be natural gas. “The assets, which will establish a new core region for Bonavista in northeastern British Columbia, are highly concentrated, natural gas-weighted and are geographically located within a 100-kilometer radius northwest of Fort St. John, BC,” Bonavista said. The deal will be funded through a combination of bank debt, an issuance of trust units and an issuance of convertible debentures. Bonavista has entered into an agreement to sell 10.9 million subscription receipts at a price of $25.85 each for $281.7 million, and $135 million of convertible extendible unsecured subordinated debentures to a syndicate of underwriters.

In an effort to put its reserves revaluation scandal behind it, Royal Dutch/Shell kicked off a major asset sale program, putting its InterGen global power joint venture with Bechtel on the auction block last week along with the previously announced potential sale of its liquefied petroleum gas (LPG) business.