Vol. 7, No. 22 $1 • www.PetroleumNewsAlaska.com Alaska’s source for oil and gas news Week of June 2, 2002 I N S I D E Foothills halts gasline permitting 7 Gas pipeline office closing up shop 7 Naval ship used by Phillips in 1953 8 Utility abandons Fairbanks pipeline plan 4 Governments plan cross-border cooperation 3 “The statesman’s duty is to bridge the gap between his nation’s experience and his vision.” —HENRY KISSINGER, YEARS OF UPHEAVAL, 1982 ■ EXPLORATION & PRODUCTION ■ EXPLORATION & PRODUCTION NEW CLASSIFIEDS SECTION INSIDE NEW CLASSIFIEDS SECTION INSIDE ■ WORLD OIL Ready to drill Independent Forest Oil Corp. has prospects ready to drill in Cook Inlet. See story on page 9. Talks continue to establish a ‘true’ North American energy market Officials from U.S., Canada, Mexico to deliver findings this year; objectives are to remove obstacles to cross-border projects and reduce need for unreliable supplies By Gary Park PNA Canadian Correspondent W ithout the fanfare and urgency of a year ago, broader integra- tion of North America’s ener- gy markets is still being quiet- ly pursued in the backrooms of govern- ment. At some point in the “coming months” an Energy Working Group of officials from the United States, Canada and Mexico will submit its findings, said a Canadian government official. Initially talk of a continental policy was driven by natural gas prices sky- rocketing to unheard of heights, setting off an energy crisis in California, all reinforced by a sense of vulnerability following the Sept. 11 attacks. That sense of public panic has diminished without in any way remov- ing the desire at the highest levels for closer ties between the United States, Canada and Mexico. Tom Huffacker, first energy secre- tary at the U.S. Embassy in Ottawa, said President George W. Bush In the first part of the three-part series, which consists of three sepa- rate articles, PNA’s Canadian correspon- dent Gary Park exam- ines the debate over a continental energy poli- cy and the rising ten- sions over Arctic gas development and pipeline routes. see MARKET page 13 Evergreen files for coalbed exploration project at Pioneer unit near Wasilla Company plans two pilots of four wells each to depths no greater than 2,999 feet in 12 months beginning July 15 to test for coalbed methane By Kristen Nelson PNA Editor-in-Chief E vergreen Resources Alaska Corp. is permit- ting a project to drill an eight-well exploration project to test the ability of the coals in the company’s 72,000 acre Pioneer unit in the Matanuska Valley to produce natural gas. In a 12-month operations plan filed with the state the company said it is proposing to drill, com- plete and test the wells in two areas called pilots. In each pilot the wells will be laid out with one well in the center, a second well 1,000 feet to the north of the center well, a third well 1,000 feet to the see EVERGREEN page 17 Jumpstarting coalbed methane Test coalbed methane well planned at Chignik this year; in addition to gas, DGGS, USGS looking at small-scale GTL plants to provide rural energy By Kristen Nelson PNA Editor-in-Chief S tate and federal agencies have been trying to jumpstart coalbed methane as a source of local energy in rural Alaska and plan to drill a well near Chignik Lake on the Alaska Peninsula this summer to test coals for gas content. But long-term possibilities for rural energy are not necessarily limited to methane, Charlie Barker, a senior research geologist with the U.S. Geological Survey and Jim Clough, a geologist with the Alaska Department of Natural Resources’ Division of Geological and Geophysical Surveys, told PNA May 21. Gas-to-liquids technology, converting natural gas into clean diesel, has been proposed for large strand- ed gas accumulations such as that on Alaska’s North Slope. Large-scale GTL is, with very limited exceptions, still in the technology development stage. BP’s pilot Charles Barker, USGS Jim Clough, DGGS Forrest Crane Forrest Crane see METHANE page 11 BLM planning for full field development in NPR-A Federal land managers overseeing current exploration and antic- ipated development work in the National Petroleum Reserve-Alaska need to “catch up” with industry’s interest in tapping oil and gas on the western part of the North Slope. That’s according to Bob Schneider, field manager for the Fairbanks office of the Bureau of Land Management, which is responsible for permit- ting and monitoring sur- face activities in the National Petroleum Reserve-Alaska. He said he anticipates BLM will receive a full field development pro- posal this fall from Phillips Alaska Inc., one of three companies that have drilled a total of 13 exploration wells in NPR-A in the last three years. “We have to catch up, because there’s been a lot of activity since 1999,” he said, referring to the first NPR-A lease sale, during a pre- sentation to the agency’s NPR-A Research and Monitoring Team in Fairbanks on May 29. “Just from an agency perspective, we’re a lit- tle behind.” BLM needs to augment the few baseline environmental studies ongoing or slated to begin this summer in the northeast portion of NPR-A to prepare for a development proposal expected from Phillips Petroleum, he added. “They have found a commercial discovery,” Schneider told the RMT group, in his presentation about NPR-A’s current activity level. He later told PNA that he was referring to the exploration success announced in 2001 by Phillips and their partner Anadarko Petroleum. The two companies publicly revealed about a year ago Bob Schneider anticipates BLM will receive a full field development proposal this fall from Phillips Petroleum, one of three companies that have drilled a total of 13 exploration wells in NPR-A in the last three years. see NPR-A page 9 Evergreen’s drill rig in the Raton Basin Courtesy Evergreen Resources Alaska Corp.
Transcript
Vol. 7, No. 22 $1 • www.PetroleumNewsAlaska.com Alaska’s source for oil and gas news Week of June 2, 2002
I N S I D EFoothills halts gasline permitting 7
Gas pipeline office closing up shop 7
Naval ship used by Phillips in 1953 8
Utility abandons Fairbanks pipeline plan 4
Governments plan cross-border cooperation 3
“The statesman’s duty is to bridge the gapbetween his nation’s experience and his vision.”
—HENRY KISSINGER, YEARS OF UPHEAVAL, 1982
■ E X P L O R A T I O N & P R O D U C T I O N
■ E X P L O R A T I O N & P R O D U C T I O N
NEW CLASSIFIEDS SECTION INSIDE
NEW CLASSIFIEDS SECTION INSIDE
■ W O R L D O I L
Ready to drill
Independent Forest Oil Corp. has prospects ready to drill in Cook Inlet.See story on page 9.
Talks continue to establish a ‘true’North American energy marketOfficials from U.S., Canada, Mexico to deliver findings this year; objectives are toremove obstacles to cross-border projects and reduce need for unreliable supplies
By Gary Park PNA Canadian Correspondent
Without the fanfare and urgencyof a year ago, broader integra-tion of North America’s ener-gy markets is still being quiet-
ly pursued in the backrooms of govern-ment.
At some point in the “comingmonths” an Energy Working Group ofofficials from the United States,Canada and Mexico will submit itsfindings, said a Canadian governmentofficial.
Initially talk of a continental policywas driven by natural gas prices sky-rocketing to unheard of heights, settingoff an energy crisis in California, allreinforced by a sense of vulnerabilityfollowing the Sept. 11 attacks.
That sense of public panic hasdiminished without in any way remov-ing the desire at the highest levels forcloser ties between the United States,Canada and Mexico.
Tom Huffacker, first energy secre-tary at the U.S. Embassy in Ottawa,said President George W. Bush
In the first part of thethree-part series, whichconsists of three sepa-rate articles, PNA’sCanadian correspon-dent Gary Park exam-ines the debate over acontinental energy poli-cy and the rising ten-sions over Arctic gasdevelopment andpipeline routes.
see MARKET page 13
Evergreen files for coalbed explorationproject at Pioneer unit near WasillaCompany plans two pilots of four wells each to depths no greater than2,999 feet in 12 months beginning July 15 to test for coalbed methane
By Kristen Nelson PNA Editor-in-Chief
Evergreen Resources Alaska Corp. is permit-ting a project to drill an eight-well explorationproject to test the ability of the coals in thecompany’s 72,000 acre Pioneer unit in the
Matanuska Valley to produce natural gas. In a 12-month operations plan filed with the
state the company said it is proposing to drill, com-plete and test the wells in two areas called pilots. Ineach pilot the wells will be laid out with one wellin the center, a second well 1,000 feet to the northof the center well, a third well 1,000 feet to the
see EVERGREEN page 17
Jumpstarting coalbed methaneTest coalbed methane well planned at Chignik this year; in addition to gas,DGGS, USGS looking at small-scale GTL plants to provide rural energy
By Kristen NelsonPNA Editor-in-Chief
State and federal agencies have been trying tojumpstart coalbed methane as a source of localenergy in rural Alaska and plan to drill a wellnear Chignik Lake on the Alaska Peninsula this
summer to test coals for gas content. But long-term possibilities for rural energy are not
necessarily limited to methane, Charlie Barker, asenior research geologist with the U.S. GeologicalSurvey and Jim Clough, a geologist with the AlaskaDepartment of Natural Resources’ Division ofGeological and Geophysical Surveys, told PNA May21.
Gas-to-liquids technology, converting natural gasinto clean diesel, has been proposed for large strand-
ed gas accumulations such as that on Alaska’s NorthSlope.
Large-scale GTL is, with very limited exceptions,still in the technology development stage. BP’s pilot
Charles Barker, USGS Jim Clough, DGGS
Forr
est
Cra
ne
Forr
est
Cra
ne
see METHANE page 11BLM planning for full field development in NPR-A
Federal land managers overseeing current exploration and antic-ipated development work in the National Petroleum Reserve-Alaskaneed to “catch up” with industry’s interest in tapping oil and gas onthe western part of the North Slope.
That’s according to Bob Schneider, field manager for theFairbanks office of the Bureau of Land Management, which isresponsible for permit-ting and monitoring sur-face activities in theNational PetroleumReserve-Alaska.
He said he anticipatesBLM will receive a fullfield development pro-posal this fall fromPhillips Alaska Inc., oneof three companies that have drilled a total of 13 exploration wellsin NPR-A in the last three years.
“We have to catch up, because there’s been a lot of activity since1999,” he said, referring to the first NPR-A lease sale, during a pre-sentation to the agency’s NPR-A Research and Monitoring Team inFairbanks on May 29. “Just from an agency perspective, we’re a lit-tle behind.”
BLM needs to augment the few baseline environmental studiesongoing or slated to begin this summer in the northeast portion ofNPR-A to prepare for a development proposal expected fromPhillips Petroleum, he added.
“They have found a commercial discovery,” Schneider told theRMT group, in his presentation about NPR-A’s current activitylevel.
He later told PNA that he was referring to the exploration successannounced in 2001 by Phillips and their partner AnadarkoPetroleum. The two companies publicly revealed about a year ago
Bob Schneider anticipates BLMwill receive a full field
development proposal this fallfrom Phillips Petroleum, one of
three companies that have drilleda total of 13 exploration wells in
NPR-A in the last three years.
see NPR-A page 9
Evergreen’s drill rig in the Raton Basin
Cou
rtes
y Ev
ergr
een
Res
ourc
es A
lask
a Cor
p.
RIG REPORT2 Petroleum News • Alaska Week of June 2, 2002
Rig Owner/Rig Type Rig No. Rig Location/Activity Operator or Status
North Slope - Onshore
Doyon DrillingDreco 1250 UE 14 (SCR/TD) W-203, W-Pad BPSky Top Brewster NE-12 15 (SCR/TD) Stacked, Endicott Is. BPDreco 1000 UE 16 (SCR) Stacked AvailableDreco D2000 UEBD 19 (SCR/TD) CD2-22 Production drilling at Alpine PhillipsOIME 2000 141 (SCR/TD) Milne Point Drilling on MPS-25 BP
Nabors Alaska DrillingTrans-ocean rig CDR-1 (CT) Stacked, Prudhoe Bay AvailableDreco 1000 UE 2-ES (SCR) Prudhoe Bay, D-22B BPMid-Continent U36A 3-S Prudhoe Bay, X-35L1 BPOilwell 700 E 4-ES (SCR) On F-66A BP(Not Available) 7-ES Being repaired, under contract BPDreco 1000 UE 9-ES (SCR/TD) Prudhoe Bay, V-102 BPOilwell 2000 Hercules 14-E (SCR) On V-102 AnadarkoOilwell 2000 Hercules 16-E (SCR/TD) Stacked, Teshekpuk Lake PhillipsOilwell 2000 17-E (SCR/TD) Stacked, Point McIntyre AvailableEmsco Electro-hoist -2 18-E (SCR) Stacked, Deadhorse AvailableOIME 1000 19-E (SCR) Stacked, Deadhorse AvailableEmsco Electro-hoist Varco TDS3 22-E (SCR/TD) Stacked, Milne Point AvailableEmsco Electro-hoist Canrig 1050E 27-E (SCR/TD) Stacked, Prudhoe Bay BPEmsco Electro-hoist 28-E (SCR) Stacked, Deadhorse AvailableOIME 2000 245-E Kuparuk, 1D-103 Phillips
Nordic Calista ServicesSuperior 700 UE 1 (SCR/TD) Kuparuk, moved to drill site #15
well #30 on May 23. PhillipsSuperior 700 UE 2 (SCR) Moved to Prudhoe to start
conversion to Coil Tubing Pending, BPIdeco 900 3 (SCR/TD) Moved to 2P-427, Meltwater Phillips
North Slope - Offshore
Nabors Alaska DrillingOilwell 2000 33-E (SCR/TD) Northstar Is., NS-06 BP
Petroleum News • Alaska and its supplement, Petroleum Directory, are owned byPetroleum Newspapers of Alaska LLC. The newspaper is published weekly. Several of theindividuals listed above work for independent companies that contract services to PetroleumNewspapers of Alaska LLC or are freelance writers.
Petroleum News Alaska, ISSN 10936297, Week of June 2, 2002Vol. 7, No. 22
Published weekly. Address: 5441 Old Seward, #3, Anchorage, AK 99518(Please mail ALL correspondence to:
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ARCTIC GASGovernments, industry plan cross-border cooperation
Gov. Tony Knowles plans to sign a memorandum of understanding with his coun-terpart from Alberta on June 4 in Anchorage. At the same time, industry groups fromboth sides of the border will sign a similar agreement. Both are general statements offriendship and cooperation, but they are also aimed at laying the groundwork for work-ing together on an Arctic gas pipeline. (See related stories on page 1, 13 and 14 of thisissue.)
That project could require an internationaltreaty to make the work proceed smoothly,according to Chuck Becker, director of theAlaska Export Assistance Center, a federalagency. Becker is also chairman of the interna-tional committee for Alaska Support IndustryAlliance.
Border issues
“One of the issues is crews working on thepipeline crossing borders,” he noted. Whilemuch of the construction of a pipeline will bedone by Canadian crews working in Canada and U.S. crews working in Alaska, it maybe more efficient for more specialized work to be done by crews with expertise thatcan work on particular tasks, such as building compressor stations, on both sides of theborder.
“One of the executives at BP noted that there would have to be significant cooper-
The industry groups, theAlaska Support Industry
Alliance and the PetroleumServices Association of
Canada, came up with anagreement that will be signedthe same day the governments
sign theirs. Becker says thePSAC is “an almost mirror
image” of the alliance.
see COOPERATION page 4
ON DEADLINE4 Petroleum News • Alaska Week of June 2, 2002
ation between companies here and inCanada to get a pipeline constructed,”Becker said. “Meanwhile, the governmentsof Alaska and Alberta were pursuing acomparable track.”
Industry groups align
So the industry groups, the AlaskaSupport Industry Alliance and thePetroleum Services Association of Canada,came up with an agreement that will besigned the same day the governments signtheirs. Becker says the PSAC is “an almostmirror image” of the Alliance.
For now, the industry organizationsdon’t have any formulas for what can bedone to minimize border problems forpipeline companies and their workers.
“We’re just now at the point where thememorandum of understanding is beingsigned,” Becker said. “Once we’ve agreedwe have things in common and commonobjectives, then we go after them.”
The draft memorandum notes that thetwo organizations each promote responsibledevelopment of oil and gas resources andwork to improve public understand of therelationship of political decisions on theirrespective economies.
“(The) compatibility of these goals andobjectives of the Petroleum ServicesAssociation of Canada and the AlaskaSupport Industry Alliance, coupled with thepotential development of a cross-borderpipeline to carry Arctic gas to market, makebilateral cooperation between the two orga-
nizations desirable and warranted,” the draftagreement says.
The agreement closes with a pledge bythe two organizations to work togetherclosely to achieve common objectives.
The focus of the memorandum betweenthe two governments is a bit more general,though the oil and gas industry is the chiefcommon area for the two jurisdictions.
The administrations of Knowles andAlberta Premier Ralph Klein want to for-malize the relationship between Alberta andAlaska, said Bob King, a spokesman for thegovernor.
The state already has close ties with itsimmediate Canadian neighbors, BritishColumbia and the Yukon, he noted.
“The memorandum of understandingwill set up a council involving the two gov-ernments that will meet on a regular basison the gas line, but on other issues as well,”King said.
Knowles to Canada
The day after the agreement is signedKnowles will head to Dawson, in theYukon territory, where Western Canadianleaders are meeting. The Yukon premierwill host premiers from Nunavut, theNorthwest Territories, Manitoba,Saskatchewan, Alberta and BritishColumbia.
Alberta Premier Klein is stopping off inAlaska to sign the agreement with Alaskaon his way to that meeting.
The two leaders and the two industrygroups will sign their memorandums ofunderstanding at noon on June 4 at theHilton Anchorage Hotel.
—Allen Baker, PNA contributing writer
continued from page 3
COOPERATION
GOVERNMENTKnowles signs two coastal zone bills
Gov. Tony Knowles signed two bills May 29 changing the state’s coastal zone man-agement program. Senate Bill 308 amends the Alaska Coastal Management Programto allow the state to make consistency determinations in separate phases for a NorthSlope natural gas pipeline project that parallels the trans-Alaska oil pipeline and theAlaska Highway or a route that runs to Alaska tidewater.
The governor also signed House Bill 439 which eliminates project-specific petitionsto the Coastal Policy Council.
The governor’s office said that while the council will no longer hear petitions onspecific projects it will “focus on whether a pattern of problems or abuse exists, andtake necessary action to ensure proper future decisions.”
Utility abandons pipeline planA plan to build pipelines linking the two refineries in North Pole to the Fairbanks
International Airport and the Sourdough Terminal has been shelved. Golden Valley Electric Association had sought a right of way along the Tanana
flood control dike west of the Richardson Highway for the lines, one 4.5 inches indiameter and the other 3.5 inches.
“We have backed away from that project,” Kate Lamal, vice president of powersupply for the Fairbanks-based electric utility, told PNA May 21. “It’s just somethingthat didn’t fit in with our business plan.”
The two potential customers were Williams Alaska Petroleum Inc. and Petro StarInc. But Jeff Cook of Williams said his company’s participation would have been con-tingent on the line being an economical alternative for Williams.
“We don’t send a whole lot of product over to the airport,” he said. While it seems odd for an electric utility to be in charge of a pipeline, Golden Valley
already owns the 2.3-mile line that brings crude oil from the trans-Alaska oil pipelineto the two refineries.
—Allen Baker, PNA contributing writer
PIPELINES & DOWNSTREAM
Week of June 2, 2002
FINANCE & ECONOMY
Petroleum News • Alaska 5
CALGARYConoco Canada Resourcesto acquire Gulf Indonesia
Conoco Canada Resources Limited, a wholly owned subsidiaryof Conoco Inc., and Gulf Indonesia Resources Ltd. said May 28 thata special committee of the board of directors of Gulf Indonesia willrecommend that the full board of directors of Gulf Indonesiaapprove a proposal by Conoco Canada to acquire all common sharesof Gulf Indonesia not owned by Conoco Canada or its affiliates at aprice of US$13.25 per common share in cash or US$329 million inaggregate.
Conoco Canada currently owns approximately 72 percent of theoutstanding common shares of Gulf Indonesia. Conoco Canada’sacquisition of the minority shares of Gulf Indonesia will allowConoco to optimize its operations in Southeast Asia.
Conoco Canada’s proposal represents a 23 percent premium tothe closing price of Gulf Indonesia common shares on May 24,2002, and a 21 percent premium over Gulf Indonesia’s average clos-ing price for the 30 days prior to the proposal.
The proposal also represents a 74 percent premium over GulfIndonesia’s closing price on May 25, 2001, one day prior to the dateConoco publicly announced its acquisition of Gulf Indonesia’s par-ent, Conoco Canada, formerly Gulf Canada Resources Ltd., whichat that point held approximately 72 percent of the outstanding com-mon shares of Gulf Indonesia.
—Petroleum News • Alaska
■ S W E D E N
Oil experts draw fire for warningglobal crude supplies could peakDispute at oil depletion conference in Sweden centers on predicting datewhen consumption of oil exceeds production and discoveries
By Bruce Stanley Associated Press Business Writer
The world’s supply of crude oil could begin todecline in less than a decade, according to agroup of petroleum specialists. The forecastdrew fire from other experts who say the peak in
world output is decades away. Supplies will start falling after peaking as early as
2010, ushering in an era of soaring energy prices andeconomic upheaval, said participants in a two-dayconference on oil depletion that ended May 24 atUppsala University in Uppsala, Sweden.
They said they hope to persuade oil-dependentcountries like the United States to stop what theyview as squandering the planet’s finite bounty of fos-sil fuels. Americans, the biggest consumers of ener-gy, could suffer a particularly harsh impact on theirlifestyle, they said.
“There is no factual data to support the generalsense that the world will be awash in cheap oil forev-
er,” said Matthew Simmons, an investment bankerwho helped advise President Bush’s campaign onenergy policy. “We desperately need to find a newform of energy.”
Colin Campbell, a retired geologist who helpedorganize the conference, said governments are tooinvolved in short-term issues to focus on the threat ofdepleted oil reserves. Oil companies prefer not to talkabout it for fear of upsetting their investors, he said.
More common review that reservesplentiful
The warning defies the more commonly held viewthat global crude reserves will remain plentiful fordecades. Critics say similar predictions of scarcity atthe time of the 1973-74 Arab oil embargo didn’tcome true.
“There’s a lot of phony baloney in there,” saideconomist Michael Lynch of the U.S. business fore-casting firm DRI-WEFA. “A lot of prominent geolo-
Group warns 50,000 jobscould be lost in UK industry
Up to 50,000 jobs could be lost in the British oil industry over thenext decade because of tax law changes announced in the govern-ment’s latest budget, an industry group warned May 23.
The U.K. Offshore Operators Association said that tax proposalsannounced last month by treasury chief Gordon Brown could costthe industry up to 8 billion pounds ($11.6 billion) by 2010. Thechanges include a 10 percent increase to 40 percent in the tax onprofits.
The organization said investors would be deterred from explor-ing for oil and would look for new or emerging markets elsewherein the world.
“Billions of pounds will be taken out of the industry and willaffect the funds available to reinvest in the U.K.,” said the associa-tion, which represents the United Kingdom’s offshore oil and gasindustry.
“We expect a sharp blow over the next eight years and the grad-ual erosion of activity. This decline of the industry will put up to50,000 jobs at risk across the U.K., a significant percentage inScotland.”
LONDON ■ M O S C O W
U.S. to decide by June 14 whetherRussia is market economyMove could boost oil imports from Russia, world’s second-largest oil producer
By Angela Charlton Associated Press Writer
The U.S. Commerce Department will decidewithin three weeks whether to declare Russiaa market economy, according to a declarationMay 24 that boosted Russian hopes of win-
ning a status that would dramatically improve itsaccess to world markets.
At a presidential summit in Moscow May 24,U.S. officials also expressed interest in significant-ly increasing imports of Russian oil, a boon for theworld’s second-largest oil producer, RussianEconomics and Trade Minister German Gref said.
U.S. President George W. Bush and RussianPresident Vladimir Putin signed a declaration say-ing that the Commerce Department would decideby June 14 on whether to call Russia a market
economy, Gref said, adding “I hope the decisionwill be in our favor.”
“Major opportunities will open up for exportingRussian goods to the United States,” he said.
Old economy shed more than a decade ago
Russian officials have long complained aboutthe U.S. refusal to recognize their nation as a mar-ket economy despite having shed their communist-era command economy more than a decade ago,especially since other ex-Soviet republics havebeen granted the honor.
The step is crucial before Russia can join theWorld Trade Organization. Russia is the largesteconomy still outside the WTO, which it has been
see WARNING page 6
see RUSSIA page 6see JOBS page 6
By Randolph E. Schmid Associated Press Writer
Leaking oil tankers produce dramaticphotos, but a new study says the vastmajority of the human-related petrole-um released into U.S. coastal waters
comes from consumers, not the ships thatcarry the oil.
The National Research Council reportedMay 23 that about 29 million gallons of oilenters the oceans around North Americaeach year as a result of human activities. Ofthat, the largest share, 15.6 million gallons,comes from rivers and runoff, largely fromsuch things as street runoff, industrial waste,municipal wastewater and wastewater fromrefineries.
In addition, 1.6 million gallons of the pol-lution comes from recreational vessels,where two-stroke engines that mix oil andgas are often used in personal watercraft andas outboard engines.
“Oil spills can have long-lasting and dev-astating effects on the ocean environment,but we need to know more about damagecaused by petroleum from land-basedsources and small watercraft,” commentedJames M. Coleman of Louisiana StateUniversity, chairman of the committee thatprepared the study.
East Coast accounts for more than half
The heavily populated coastline fromMaine to Virginia accounts for more thanhalf of the land-based oil pollution in U.S.waters, with another 20 percent in the Gulf
of Mexico. The report urged that federal officials
work with state agencies to better monitoroil discharges and suggested that theEnvironmental Protection Agency work tophase out two-stroke engines.
Another significant source of pollutionwas “atmospheric deposition,” that is oil thatis deposited on the ocean surface as a resultof emissions into the air from motor vehi-cles, power generating facilities, industrialplants and similar sources. That was esti-mated to total 6.1 million gallons.
Spills from tankers accounted for 1.5million gallons of pollution and 551,000 gal-lons came from pipeline spills, the reportfound.
Natural seeps largest source
The single largest source of oil in theoceans bordering North America is naturalseeps from undersea oil sources, releasingan estimated 46.4 million gallons annually.
Worldwide, vessel and pipeline spillswere blamed for release of 32.5 million gal-lons annually into the oceans. Runoff addsanother 41 million gallons and internationaloperational discharges from vessels, such asfrom cargo washing, was listed as producingan added 78 million gallons of pollution.Such discharges are illegal in NorthAmerican waters.
The National Research Council is anarm of the National Academy of Sciences, aprivate organization chartered by Congressto advise the government on scientific mat-ters. ◆
gists just laugh at this.” “There are wolves out there, but if
you keep crying wolf and no wolvesshow up, you start to lose credibility,”Lynch said by phone from his office inLexington, Mass.
The dispute centers on the precisetiming of what is variously described as“peak oil” or “the big rollover” — thepredicted date when existing oil produc-tion, together with new discoveries ofcrude, can no longer replenish theworld’s reserves as quickly as consum-ing countries are depleting them.
Fifty countries past peak
Roger Bentley, head of The OilDepletion Analysis Center in London,insisted that the predictions made in the1970s were basically correct. About 50countries, including the United States,have already passed their point of peakoil output, he said.
The world’s total reserves of crude,excluding oil found in shale and tarsands, are estimated to exceed 3 trillionbarrels, according to the U.S. GeologicalSurvey and other conventional sources ofdata.
Campbell insisted the true figure forreserves is closer to 2 trillion barrels, duepartly to what he described as overstatedreserves reported by Saudi Arabia andother OPEC nations.
He played down the significance ofnew oil discoveries in the Caspian Searegion of central Asia and in deep watersoff the coasts of Brazil and West Africaand in the Gulf of Mexico. Now thatgeologists have effectively surveyed the
globe for crude, Campbell and others atthe conference said they doubted that anygiant new oil fields still await discovery.
Also, unlike Lynch, Campbellbelieves that improvements in the tech-nologies used to explore and drill for oilwill increase production by only modestamounts.
Peak in 2010? Or 2036?
As a result, Campbell forecast thatoil output would peak by 2010 — atleast 26 years sooner than the rolloverpoint predicted in a U.S. governmentstudy prepared in 2000.
“It’s not a cataclysmic event,” hesaid. “But oil will become scarcer andmore expensive. That’s undeniable.”
Campbell estimates peak-year pro-duction at about 87 million barrels aday, compared to daily output lastmonth of 74.5 million barrels, as calcu-lated by the International EnergyAgency, a watchdog group created bythe world’s wealthiest nations.
Simmons, the banker, predicted thatthe United States would suffer an ener-gy scare even sooner, due to a 10 per-cent decrease he foresees in U.S. pro-duction of natural gas this year.
“If it’s only 10 percent, we’vedodged a bullet,” he said. “And 10 per-cent is a disaster. It could be 20 per-cent.”
Simmons, based in Houston, saidAmericans will have to embrace coaland even nuclear power once fossil fuelspass their global peak in production.Higher and more volatile prices are sureto accompany the transition period, hesaid.
“You couldn’t get serious peoplefocusing on this issue, and we’re goingto pay dearly for it.” ◆
trying to join for seven years. The centerpiece of the Bush-Putin
summit was a nuclear arms control dealshrinking each country’s arsenal by two-thirds.
Both presidents spoke for the end oftrade restrictions against Russia under theJackson-Vanik amendment, a 1974 lawthat ties Moscow’s trade privileges to itspolicies on Jewish emigration and otherhuman rights. But Bush has faced resis-
tance at home, and the U.S. Senate refusedagain May 22 to lift the restrictions.
Russian rabbi urges lifting ofrestrictions
Russia’s chief rabbi, Berel Lazar,urged a lifting of the restrictions May 24,saying Jews enjoy “full support” fromtoday’s Russian authorities. Lazar was tomeet with Bush and other Russian reli-gious leaders later May 24.
Meanwhile, Bush and Putin signed anenergy agreement for joint work inextracting, transporting and selling fuel.They agreed to boost investment inRussia’s growing but dilapidated oil andgas sector. In a joint statement, they point-ed out the need “to expand access to worldmarkets for Russian fuel.”
The United States, the world’s biggestoil consumer, has been increasingly look-ing to Russia as a key alternative source ofoil. The United States is keen to reduce itsdependence on OPEC, given the unrest inthe Middle East and uncertainties overIraq. ◆
FINANCE & ECONOMY/SAFETY & ENVIRONMENT6 Petroleum News • Alaska Week of June 2, 2002
■ W A S H I N G T O N , D . C .
Most oil polluting NorthAmerican coastal waters fromrunoff, rivers, small boatsHuman activities account for 29 million gallons — 15.6 milliongallons from rivers and runoff, 1.6 million gallons fromrecreational vessels, 1.5 million gallons from tankers
Expenditure projected to fall
According to the organization, the U.K.oil industry supports 265,000 jobs throughoil and gas sold in the U.K. and 70,000through exports.
The association estimated that explo-ration and production expenditures inBritain, currently 8 billion pounds a year,could fall by up to 20 percent in the next
eight years as a result of the tax changes. The association, which is made up of 30
companies licensed to explore and produceoil and gas off the coast, said that despitethe North Sea being a “mature basin” whereabout half of the oil reserves have beenused, there are still opportunities for explo-ration.
The treasury department said May 23 thebudget changes should not cut jobs becausemost companies will benefit from the newinvestment allowances.
On May 24, Foothills Pipe Lines Alaska Inc., on behalf ofAlaskan Northwest Natural Gas Transportation Co., asked the stateof Alaska’s Gas Pipeline Office to temporarily stop processing itsright of way application for the construction and operation of anAlaska Highway gas pipeline.
“We gave our 90 day notice to terminate the agreement we madewith the state last year when we resumed processing our (1981) rightof way application for state lands,” Foothills spokesman RoccoCiancio told PNA May 28. That agreement reimburses the state forthe cost of processing the application. (See related story this page.)
Waiting for deal with producers
“We’re temporarily deferring work on our right of way applica-tions; the permits are not being withdrawn. … We’re allowing timefor other aspects of this project to catch up with where we are withthe right of way application.”
The “key” missing component, Ciancio said, is a commercialarrangement between the ANNGT and the three major North Slopeproducers and gas owners — BP, ExxonMobil and Phillips.
“The producers are awaiting the outcome of the energy bill inWashington. That will have some impact on this project,” he said.
“We don’t believe our discussions with the producers can beadvanced until the legislative agenda can be completed inWashington, D.C. It would appear that that is not going to happenbefore the New Year,” he said.
In 1980, ANNGT received a grant of right of way across the 434miles of federal lands in Alaska, but the state application on approx-imately 200 miles of state land was put on hold due to natural gasmarket conditions in the Lower 48.
ANNGT is working on getting right of way on approximately 110miles of private land.
Ciancio said Foothills expects no ANNGT layoffs connected withthe suspension of the state right of way application.
The four-legged stool
The spokesman for BP Exploration (Alaska) Inc.’s gas group toldPNA, “I think everyone recognizes how important a good federalenergy bill is to moving an Alaska gas pipeline project forward. Aswe’ve said many times before, federal enabling legislation is a ‘musthave,’” Dave MacDowell said.
In addition to passage of federal enabling legislation, he said therehas to be “progress on three other areas for movement to the nextphase of project engineering,” including “state of Alaska fiscal pre-dictability; development of an efficient governmental regulatoryframework in Canada (federal, First Nations, provinces and territo-ries); technology-based project cost reductions.”
The four elements represent what MacDowell has been referringto in media reports as a “four-legged stool.”
At this time, he said, project risks outweigh potential rewards:“Delivery of the four legged stool will reduce risks. Reducing riskswill help move a project forward.
■ A N C H O R A G E
Gas pipeline office closing up shop,Britt leaving for unrelated reasonsNo funding for GPO anticipated from state, North Slope producers orpipeline group, so office will close end of August
By Kristen NelsonPNA Editor-in Chief
Bill Britt, the state’s Gas Pipeline Coordinator,told PNA May 28 that he informed his staff lastweek that he would be leaving the Gas PipelineOffice June 14, a move
he had planned for some time. Later that same day, Britt
said, he found out that FoothillsPipe Lines Inc. would be with-drawing funding for the office.GPO staff were informed May23, he saida.
Foothills was acting onbehalf of the AlaskanNorthwest Natural GasTransportation Co., a consor-tium of pipeline companies thatwants to build a gas pipeline to carry North Slope gasto market along a route that would track the trans-Alaska oil pipeline to Delta Junction, then follow afederally approved route along the Alaska Highwayto northern Alberta.
Most of the GPO funding came from Foothills,Britt said, with some fiscal year 2002 money from thestate general fund and some from the producers’ con-sortium.
But no money is anticipated in FY 2003 fromeither the general fund or the producers, so the GPOwill go away.
“We started the office to expedite permitting andexpedite the process,” Department of NaturalResources Commissioner Pat Pourchot told PNAMay 29.
“It was working, but you need applicants to makeit work. We’re not going to spend time and money onsomething the applicant is not ready for,” he said.
“Foothills involved the termination clause in thereimbursement MOU and that’s a 90-day clause, soit’s actually closer to the end of August” that theoffice needs to be closed, Britt said.
Fourteen state employees impacted
About 14 state employees are affected. The num-ber is not precise because GPO has had portions oftime from Department of EnvironmentalConservation and federal Department ofTransportation employees.
The employees will be job hunting and Britt saidhe will be looking for other jobs for them. “It’s cer-tainly my hope that I can create soft landings forevery one of them,” he said.
Britt will be leaving to do what he and his wifehave had planned, he said: he will manage a remodelof their home, watch their son and do some consult-ing on the side.
What’s lost
The governor still believes this resource on theslope won’t be bundled up forever, the governor’sspokesman Bob King told PNA May 29.
“It will find its way to market, but only whenthere’s a project that pencils out,” King said.
“Ramping up an agency like this is not an easything to do and we have a considerable investment ofenergy into this … and much of that investment willdisappear ... and have to be recreated,” Britt said.
The governor authorized the GPO about a yearand a half ago, he said, and it actually got goingtoward the end of last summer.
The agency started with four employees. A fullorganization would have been around 70.
Foothills Pipe Lines Alaska Inc. is the successorand agent for the entity that began the right of waypermitting process some 20 years ago and Britt said alot of effort has been determining which of those oldrecords still have meaning and which are just historic.
Bill Britt
see GPO page 17
Want to know more?If you’d like to read more about the state’s GasPipeline Office, go to Petroleum News • Alaska’s Website and search for these articles.
Web site:www.PetroleumNewsAlaska.com
2001■ August Notice goes out on highway route ■ July Foothills, state, sign MOU for review of right ofway application■ July Gas Pipeline Office gets temporary quarters;sends MOU to ANS producers ■ February Governor asking for state pipeline coordi-nator
Note: The above articles appeared in PNA when thenewspaper was still a monthly publication. PNA beganpublishing weekly in September.
HISTORY8 Petroleum News • Alaska Week of June 2, 2002
■ K A T A L L A - Y A K A T A G A
Naval ship used during Phillips’ first years in AlaskaWorld War II landing ship tank ideal forIcy Bay camp equipment in 1953
By Jen RansomPNA Staff Writer
When the first geological exploration party forPhillips Petroleum Co. traveled to Alaska in1953, the supplies they needed were not readilyavailable in the Katalla-Yakataga region they
were studying. While the geologists
flew into the area via smallaircraft, the prefabricatedcabins, trucks, fuel andgeologic equipment had toarrive by boat. But in theiceberg-rich area 50 mileseast of Cordova, getting aboat close enough to taxithe equipment to shore wasa problem.
The solution to theequipment problem wasdesigned only a decadebefore, during World WarII. Landing ship tanks, orL.S.T. crafts, were used byboth American and Alliedforces to invade Europeand Japan. Three hundredtwenty-eight feet long and50 feet wide, the L.S.T.could carry 2,100 tons. The largest of the Amphibian land-ing craft, the L.S.T. could hold 29 tanks and hundreds ofmen. One thousand fifty one L.S.T.’s were commissionedin December of 1942. By 1947, many of the L.S.T.’s wereeither sold to other countries or scrapped. A few remainedin the United States as merchant vessels.
The large holding capacity and easy landing made the
L.S.T. the ideal vessel to use to move equipment into IcyBay. Once stricken from the Naval Vessel Register, themerchant-used L.S.T. Pacific Islander came up theAlaskan Passage in the spring of 1953, loaded with thesupplies needed to set up the Phillips camp. But associategeologist Al Schlottman, a member of the explorationparty, said the boat still had trouble landing in the ice-rid-den waters of the Gulf of Alaska.
According to Schlottman, the Pacific Islander had to
wait outside the bay a couple of days before the icebergsfreed up enough space to allow the vessel to come ashore.Once landed, the Pacific Islander remained beached at IcyBay through the summer, used as a storage unit for fuel. ◆
This is the first of a group ofexcerpts from a special publi-cation that Petroleum News •
Alaska is releasing inSeptember celebrating PhillipsPetroleum Corp. first 50 years
in Alaska.
Third in a series
● The photos in this story were taken from OrloChilds “Pictorial Report on Phillips PetroleumCompany Geological Exploration in Alaska.”
Landing ship tanks like this one were used during World War II to carry troops and supplies onto shore in occupied Europe.
Accumulation of ice on the beach is from icebergs broken up by wave action. The L.S.T. PacificIslander is shown lined up to the beach with the remnants of beach ice in the foreground.
Week of June 2, 2002
EXPLORATION & PRODUCTION
Petroleum News • Alaska 9
NORTH AMERICAEleven rigs active in Alaska
Baker Hughes reported May 24 that the U.S. rig count of 859active rigs was up 30 from the previous week, and down 403 froma year ago. The Canadian rig count, at 134, was up 36 from the pre-vious week and down 129 from a year ago.
Including 107 rigs in the Gulf of Mexico, 993 rigs were workingin North America, up 66 from the previous week but down 532 froma year ago.
Alaska had 11 rigs active May 24, the same as the previousweek, and down two from a year ago. Ten of the Alaska rigs wereonshore and one offshore (Cook Inlet), the same as the previousweek. The Alaska rig count has been the same throughout May.
Baker Hughes has issued rotary rig counts since 1944. U.S.active rigs peaked at 4,530 in December 1981. The lowest U.S. rigcount, 488, was in April 1999. Canadian rig activity peaked at 558in January 2000. The lowest Canadian rig count was 29 in April1992.
■ C O O K I N L E T
Forest Oil focuses on growthin Cook Inlet oil productionAfter Redoubt comes on line at the end of this year, the independent willbecome the inlet’s largest oil producer; looking to drill eight prospects
By Kay CashmanPNA Publisher
While some of the big oil companies havebeen laying off personnel in Alaska, thereis an independent oil company that hasbeen steadily increasing staff, increasing
production and increasing the number of prospectsit plans to develop.
Forest Oil Corp. currently has 27 employees inAlaska.
“We’re growing by one or two positions everyfew months,” Gary Carlson, senior vice president,Alaska business unit,told PNA in lateMay.
“Over the nextsix months we’regoing to be hiringfield people to oper-ate Redoubt. Wewill take some andintegrate with ourWest McArthurRiver unit. I wouldenvision another 10-12 employees, withone or two of thosein our Anchorageoffice.”
Redoubt Shoal, anew offshore oilfield under develop-ment by Forest innorthern Cook Inlet,has recoverablereserves of approximately 100 million barrels ofoil, Carlson said, although state of Alaska officialshave put the number closer to 200 million barrels.Redoubt’s Osprey platform was the first platformto be set in Cook Inlet since 1986.
Headed for 25,000 bpd
The company’s net production from Cook Inletis 10,000 barrels a day. Shortly after Redoubtcomes on line at the end of this year, Forestexpects its total Alaska production to climb to20,000-25,000 barrels a day, Carlson said, whichwill represent 30 percent of the Denver-based
independent’s total worldwide production. Redoubt production will also make Forest the
biggest oil producer in Cook Inlet. Second runnerup, Unocal Corp., produces about 13,000 barrelsper day from the inlet.
“We hope to eventually get up to 25,000 barrelsa day with Redoubt, but how our other plays holdup is part of this equation. We have had some suc-cess recently in the Trading Bay unit,” Carlsonsaid.
In July, Forest’s partner Unocal said the K-13well at the King Salmon platform in McArthurRiver field (in the Trading Bay unit) was produc-ing at 7,100 barrels a day, the highest rate of anywell in Cook Inlet history.
In January, the well was still producing at 5,900barrels a day. That well confirmed a structure inthe Hemlock formation on the northern flank of thefield that Unocal said could contain more than 35million barrels of oil in place.
A follow up well in the same fault block isexpected to produce 3,200 barrels a day Forest saidin its first quarter financial results.
that five of six wells drilled in 2001 hit oil or gas and condensates.Flow rates from two of the wells were also announced then.
The two companies remain tight-lipped about results from thefour exploration wells drilled in NPR-A this year.
“I don’t even know — I can’t get my guys to tell me where theywant to put our own well until the last minute,” said Robert Elder,staff environmental advisor at Anadarko, an alternate member of theBLM oversight team.
Phillips representatives have said that a commercial decision hasyet to be made regarding the five successful exploration wells drilledlast year.
BLM expects proposal in October
Yet the company is moving forward, said Schneider, at BLM.“We have a potential development scenario,” he said.
Schneider told PNA that the agency had anticipated a discoveryannouncement and correlating full field development proposal fromPhillips this summer, but that decision has been pushed back, possi-bly until the merger between Conoco and Phillips is completed,which company officials have said should be final in September. Inthe meantime, federal law prohibits Conoco and Phillips employeesfrom talking about exploration plays and development plans.
“At this point, they’re moving forward. Their engineering peopleseem to think it will go,” Schneider said. “But until they dig the dirt… we won’t know. And we don’t know exactly where it will be, andwe need to be ready if it happens.”
BLM already has a person working with the development team,Schneider said. “We anticipate getting a development proposal inOctober, if it comes,” he added.
—Patricia Jones, PNA contributing writer
continued from page 1
NPR-A
This story is an abridgedversion of a 2,500 word arti-cle about Forest Oil Corp.taken from a special publica-tion about independent oilcompanies that PetroleumNews • Alaska is releasing inlate July.
First in a series
Pictured here is a recent photo of Forest Oil’s Ospreyplatform the first platform to be set in Cook Inlet since1986. The platform has 28 slots with 20,000 barrels aday capacity. Fifteen of the 28 will be producers, 10water injectors and 3 gas producers.
Judy
Pat
rick
see FOREST page 10
EXPLORATION & PRODUCTION10 Petroleum News • Alaska Week of June 2, 2002
Eight hot prospects
Robert S. Boswell, Forest’s chairman ofthe board and CEO, told shareholders in aMarch 12 letter thathis company has“eight high potentialdrilling prospectsgenerated by Forestthat are expected tocommence drilling in2003” in Cook Inlet.
“Our Alaska busi-ness unit continues tobe a highlight in ourcorporate portfolio,”Boswell said. “TheAlaska business unit will “dominate ourcapital activity in 2002.”
Looking for partners
Forest is looking for 50 percent partnersfor six of the eight prospects, five of whichCarlson said are “drillable” and all are “lowrisk exploratory plays.” Some of theprospects, he said, might not be drilled until2004.
The eight prospects are: Corsair, Raptor,Tutna, Valkyrie, Viggen, Olsen Creek,Sabre and Kokanee. Of those, Olsen Creekis not yet drillable, Carlson said.
Forest is already partnered with Unocalon Sabre and Kokanee.
Corsair, 100 percent owned by Forest,has estimated original oil in place of 243million barrels and 193 billion cubic feet ofgas.
Raptor, 100 percent owned by Forest, hasestimated OOIP of 221 million barrels and178 billion cubic feet of gas.
Tutna, strictly a gas play and also 100percent owned by Forest, has estimated 36billion cubic feet of gas in place.
Valkyrie, 100 percent owned by Forest,has estimated OOIP of 49 million barrelsand 175 billion cubic feet of gas.
More information on these plays can befound on Forest’s web page atwww.forestoil.com/
Aside from the locations on the mapwithin this story, Forest had no informationit was willing to make public on Viggen andOlsen Creek at this time.
No plans – yet – for second platform
In response to rumors that Forest is look-ing at a second platform for its Redoubtfield, Carlson said it’s premature to be talk-ing about a second platform.
“We need to get these wells online andsee how they perform. We have more fielddefinition work to do. But a second plat-form is something we’d like to need,” hesaid. ◆
continued from page 9
FOREST
The above map is designed to show readers the prospects Forest Oil Corp. is looking for 50 percent partners to develop. The exception to that isthe Cosmopolitan unit, which is pictured on the map. Forest is not seeking a partner in Cosmopolitan where it has a 25 percent working interestand where an exploration well was drilled by partner and operator Phillips Alaska Inc. last year. The map does not include two prospects in whichForest has a partial interest — Sabre and Kokanee. The company is not looking for partners for these prospects as it is already partnered withUnocal Corp. in both. Both prospects will likely be drilled in 2003. Forest has a 70 percent interest in Sabre; Unocal a 30 percent interest. Theprospect is located half way between the shore line and Trading Bay unit due west of the Dolly Varden platform. Sabre could be drilled either fromshore or from the platform. Kokanee is a play off the Monopod platform. Forest has a 46.8 percent interest in it, the same percentage it owns inthe Trading Bay unit where Unocal is the operator.
Gary Carlson, seniorvice president,Alaska business unit,Forest Oil
GTL plant at Nikiski, for example, will pro-duce 70 barrels of diesel a day.
That pilot is a test for technologies thatcould be scaled up.
But what about scaling down and puttingsomething much smaller in Alaska vil-lages?
“There are now plans to take 200,000cubic feet of gas per day and convert it to 10barrels of diesel, which is 420 gallons, moreor less, of diesel,” Barker said.
Solves gas storage problem
It isn’t a technology that can be boughtoff the shelf, but if it became available com-mercially it would provide diesel in areasthat now have to ship it in — and solve atechnical natural gas production problem.
With a GTL plant running year round,using existing diesel storage facilities,“you’re able to get over the problem we’vealways had: there’s no natural gas storageand so you’d have to have a lot of wells toassure production in mid-winter,” Barkersaid.
Clough said Fort Yukon, with about 700people, uses roughly 500,000 gallons ofdiesel a year, about half for electricity andabout half for home heating.
“And in Btu equivalent that translates to34.5 million cubic feet of gas per year. Andthat comes out to, rounding the numbers,about 94,000 cubic feet per day.
“That’s really low volume,” Cloughsaid.
Because of cold ground temperaturesand some moisture in the gas, you wouldhave freezing problems in the pipeline.
With a small-scale GTL plant, you notonly have the advantage of the diesel pro-duced, but the volume of gas needed to pro-vide feedstock for the plant would helpkeep the gas flowing, he said.
Economics crucial
What would it all need to cost? Fort Yukon contracts for the 500,000
gallons of diesel it uses at about a dollar agallon, Barker said, so the goal is to reducethat half a million dollar a year cost. The lifeof a coalbed methane well is about 15 years,“so if we’re looking at a productive life of15 years to displace half a million dollarsper year for fuel, that gives you an operatingbudget of about $7-$8 million.”
Replacing existing diesel purchases,“gives you the outer dimensions of whateverything could cost and be reasonable,economically reasonable. That’s the wholekey to this,” Barker said, “keeping the costsdown.”
GTL could also extend the local market,he said, because if gas production and theGTL plants were in larger rural communi-ties like Fort Yukon, the diesel could beprovided to smaller villages in the area.
There would also be jobs in the commu-nity for local people.
“Instead of exporting a net export of halfa million dollars per year to pay for thediesel,” Barker said, “you’re keeping itlocally. And so you’re going to have thatleverage effect in terms of jobs.”
Between rural experience with dieselengines and local electric plants, and work-ers trained for the North Slope oil fields,there is applicable experience availablelocally, he said.
First core test in 1994
But before you can turn coalbedmethane into diesel, or even use it for localpower, you have to develop the gas — andthat’s the immediate focus.
DNR’s DGGS, the USGS and the U.S.Bureau of Land Management are part of along-term coalbed methane developmentproject which saw a state test well drilledand cored in 1994 in the Matanuska-SusitnaBorough by a USGS rig in the state to drilla climate test at Fort Yukon and seismicshot at Fort Yukon after DGGS cut a coop-erative research agreement with the KansasGeological Survey in 2000 for a shallowseismic study to evaluate the extent andthickness of coal beneath the community.
Fort Yukon, Chignik and Wainwrightare the rural areas identified for coalbedmethane test drilling.
The current project, a test well atChignik Lake (see map) is possible becausea Native health consortium water drillingrig is in the area to drill a water well andbecause the Bristol Bay Native Corp. hasshared well log data from 1970s test holes.
Coal long known in Chignik area
The goal of the project is alternative
energy sources, Barker said, and while “alot of villages … have coal, only a few haveit in the right position relative to the villageto use it easily.”
The local village of Chignik Lake is“strongly behind this project,” he said,“because they would like to be able to havelocally produced energy” and the coal isclose enough to the village that a pipelinecould be economic.
Coal was mined at Chignik in the early1900s for steamship use, and early recordsshow that the coal was gassy, Clough said.
The Bristol Bay Native Corp. is alsobehind the project, and has shared confi-dential logs from wells drilled in the area inthe 1970s by a mining company evaluatingthe area as a coal mine, Barker said. “Theyfound very spotty coal occurrences,” but
because of the data from the 1970s drilling,he said, “we know exactly where to drilland hit the coal and at what depth becausethey have the logs from those wells.”
Coal visible at the river
Coal beds in the Chignik area are dis-continuous, Barker said.
“But fortunately this one pod of coal cutsacross the Chignik River, which is justbelow the village of Chignik Lake … andthat’s where we’re planning to drill.”
The outcrop at the river has bands of vol-canic ash and relatively pure coal bands andalso shales, he said: “But overall this is a15-foot thick coalbed.”
The beds dip probably 20 degrees to theeast in the outcrop.
“And that forms our prospect. So we’retrying to pick this coal up down and riverand drill it at about 500-feet depth,” Barkersaid, so it can be tested for gas content.
In addition to the early records indicat-ing gassy coal, tests from another coal in thearea indicate that, “at the depth we’re goingto be drilling, we’re going to be looking atcoals that are capable of holding about 200-300 standard cubic feet per ton of gas,methane, which is comparable to severalproducing basins in the Lower 48,” he said.
Rig makes project possible
Data on the well is one thing that makestesting Chignik coal this year possible.
The other is the presence of a waterdrilling rig capable of going to 500 or 600feet.
The rig belongs to the Alaska NativeTribal Health Consortium, Clough said, andis used to drill water wells in the area. Therig is barged back and forth, he said, to drillin Perryville, Chignik Lagoon, ChignikLake, and will go elsewhere when they fin-ish this project.
Clough said he and Barker and Art Clark
EXPLORATION & PRODUCTIONPetroleum News • Alaska 11Week of June 2, 2002
continued from page 1
METHANE
Coal outcropping behind the fish weir at the Chignik River near the village of Chignik Lake. Thebeds here dip some 20 degrees to the east, USGS geologist Charlie Barker told PNA. The 15-footthick coalbed is the prospect and the goal of this year’s drilling program is to pick up the coaldown river and drill it were it lies at a depth of some 500 feet, core the coal, place it in desorp-tion canisters and measure the gas content of the coal. Pictured are Ron Tingook of Arctic SlopeRegional Corp. and Art Clark of USGS.
U.S
. G
eolo
gica
l Sur
vey
see METHANE page 12
EXPLORATION & PRODUCTION12 Petroleum News • Alaska Week of June 2, 2002
of the USGS spotted the water well rigwhen they were at Chignik Bay looking atcoal. Clough got in touch with the healthconsortium and there were plans to use therig two and a half or three years ago, butthen it broke down.
“So they refurbished the whole thing andthey’re ready to go again,” Clough said.
The state is able to transfer some moniesto the village safe water program so that therig can be used to drill the coal test.
Clough said he also looked at getting amineral rig out to Chignik, but the trans-portation costs were just too high and “ide-ally we would want to helicopter lift a rigright onto one of the better spots.”
The better spots are actually off the roadsystem at Chignik, Barker said, but theaccess problems and the fact that the waterdrilling rig is not portable by helicopter lim-its drilling to the road system.
USGS special equipment
The USGS, Barker said, will supply thecore barrel and the core desorption canisterequipment. “And then we take if from thereand do further coal analyses to measure ashcontent and the gas consumption,” he said.
They’ll be drilling carefully. “When weget close to where we think the coal is, we’lldrill maybe one or two feet and then circu-late until we get coal cuttings up and thenwe’ll pull out, put the core barrel on and godown and core that coal and bring that up.
“Then you break up the coal core intoone-foot pieces and put then in … core can-isters.”
Project economics
Taking advantage of the rig on sitesaves mobilization fees on the order of$20,000 to $40,000, and allows the rig to
be drilled “sort of on a shoestring,” Barkersaid.
Clough estimated that drilling theChignik well would probably be in therange of $75,000, compared to a cost ofabout $150,000 to drill at Chignik with amineral rig that had to be brought in.
Drilling costs will be significant inmaking coalbed methane economic todevelop as a rural energy source.
While the water well rig at Chignikprovides an opportunity to test coal forgas content, this project really needs a bet-ter rig, one that can be transported by air,and, Clough said, money to get a drill rigto the other prospects — Fort Yukon andWainwright.
A slim hole mineral rig would be ideal.It is inexpensive and lightweight and candrill several thousand feet with minimal
surface disturbance, Barker said: “Weobserved it operating at the Red Dogmine where it’s evaluating the shaleprospect.”
It would be less expensive to transportand far less expensive to operate, he said,and would reduce the cost of a well fromon the order of a million dollars per wellto a few hundred thousand dollars.
What’s next?
The casing for the USGS well at FortYukon is still in place, Barker said, “andwe want to re-enter that well with one ofthese light-weight slim-hole rigs that weHerc up on a regular shipping run intoFort Yukon.”
They’d drill back down to the lignitethe USGS rig encountered and get it intocanisters so the gas content can be mea-sured.
“When they drilled it before, they hadno canisters, unfortunately, and so theyweren’t able to measure the gas content,”Barker said.
Other tests, he said, suggest the coal atFort Yukon would have a capacity ofabout 100 standard cubic feet per tons,good capacity for a lignite coal, comparedto developed Powder River coals, whichaverage about 50 standard cubic feet perton.
But, Barker said, “Wainright’s thejewel of the coalbed methane game.”
Because of wells drilled there by thenavy, 100 feet plus of coal is known in theWainwright area. And the coals areknown to be gassy because there were gaskicks on the mud logs.
“We think we can drill the entire coal-bearing section of the Nanushuk (forma-tion) within 2,000 feet below Wainwright,which is the ideal coalbed methanerange,” Barker said.
“And we’re going to hit a thick net coalsection underneath the village.” ◆
continued from page 11
METHANE
Tom
Sm
ith,
Ala
ska
Dep
artm
ent
of N
atur
al R
esou
rces
Above, the USGS rigdrilling in theMatanuska-SusitnaBorough in 1994. TheDNR AK-94 well wascored and the coalplaced in canisters sogas content could bemeasured. This rig issimilar to the waterwell rig which will bedrilling the Chignikwell. At left, the loca-tion of planned AK DNRChignik Lake 1 corehole on the AlaskaPeninsula.
believes there is still “upside in terms ofdevelopment” for the North American mar-ket.
He said the working group is not a nego-tiating session or policy-making body “todispose of anyone’s resources, or brokeranyone’s deals.”
Goal is North American energymarket
The mandate, instead, is to facilitate thedevelopment of a “true North Americanenergy market, to deliver the citizens ofNorth America reliable, affordable energy,”Huffacker said.
The Bush administration believes “we
can move toward an ever more seamless,transparent, energy relationship, withtremendous benefits,” he said.
For Canada, the hopes are still pinned onthe U.S. government’s sweeping energyplan first announced a year ago that gavepriority to an integrated market to weanAmerican dependence on shaky oil sourcesin the Middle East.
With Saudi Arabia’s current rulersalways in danger of losing power to a fanat-ical regime, Iraq’s leader Saddam Husseinspooking markets by threatening to suspendoil exports until Israel withdraws from theWest Bank and Venezuelan supplies vulner-able during internal unrest, vital sources ofU.S. crude hang by a thread.
When the U.S. policy was released,Canadian producers, along with the federal
WORLD OILPetroleum News • Alaska 13Week of June 2, 2002
Canada hardens resistance toprospect of U.S. gasline subsidiesIndustry, political leaders keep watchful eye on outcome of U.S.energy bill; urge legislators to give priority to market-based decisions
By Gary Park PNA Canadian Corespondent
How resolutely the Canadian and U.S.governments cling to their avowed“route neutral” positions on the ship-ment of Arctic gas will become more
apparent in the next few weeks, but pendingthe outcome industry and political leaders inCanada are actively denouncing any movesby the United States to subsidize an AlaskaHighway pipeline.
In the past couple of weeks the tempera-ture has climbed, with Canadian NaturalResources Minister Herb Dhaliwal declar-ing on two occasions that Canada will dropits neutrality on the choice of routes if theU.S. government approves legislation offer-ing loan guarantees and tax credits to linefrom the North Slope.
His warnings were issued regardless ofassurances to a Canadian Association ofPetroleum Producers delegation toWashington, D.C., that the administration ofPresident George W. Bush wants to let themarket decide which pipelines should bebuilt and where.
But as the politicking intensifies, CAPPis uneasy about the outcome when Senateand House of Representatives energy billsgo to conference, a process that is “going tobe a significant trade off process ... we willbe watching it closely,” said GregStringham, CAPP’s vice president of mar-kets and fiscal policy.
Dhaliwal message blunt
On a separate trip to Washington,Dhaliwal delivered a blunt message to U.S.legislators, Alaska Sen. Frank Murkowskiand Texas Rep. Joe Barton.
“If the American government positionchanges as a result of (Senate) amendmentsand a result of the final legislation, Canada’sposition on being route neutral and havingthis decision be market driven, we wouldhave to reconsider our position,” he saidMay 15.
“We need to ensure, first of all, that ourgas (in the Mackenzie Delta) is not stranded.
“We also have to evaluate the effect, interms of distortion of the market, when yousubsidize one gas field over another becauseit is no longer a level playing field,”Dhaliwal said.
He also reproached Congress forattempting to meddle in private sector deci-sions about what route a pipeline should fol-low.
Northwest Territories Premier StephenKakfwi has been the most outspoken criticof U.S. actions and what he alleges isCanadian inaction.
He fears the volume of subsidized Alaskagas would remove any reason for continuedgas exploration on the Mackenzie Delta.“We are just going to shut down the indus-try in the NWT,” he said.
Some argue slow demand growth
Peter Eglington, a former chief econo-mist with Canada’s National Energy Board,is in no doubt that setting a floor price forAlaska gas would even undermine exportsfrom Alberta and British Columbia.
He argued there is no demand for morethan 2.5 billion to 3 billion cubic feet per dayof northern gas by 2020 and less than 2 bil-lion by 2010.
If Alaska producers ever pushed aheadwith their most ambitious schemes to ship 4billion to 6 billion cubic feet per day, therewould be sharp downward pressure onprices and no immediate future forMackenzie Delta gas, Eglington said.
Roland George, with the consulting firmPurvin & Gertz Inc. said that annual vol-umes of 2 trillion cubic feet from Alaskawould see U.S. taxpayers potentially payingUS$1 billion a year in subsidies for 30 years.
The resulting collapse in prices wouldsee the long-term destruction of currentlyeconomic non-Alaska gas and those produc-ers pulled back from investing in new pro-duction, he said.
The Texas Independent Producers andRoyalty Owners Association believes subsi-dies would divert capital to Alaska fromother regions of the U.S. or Canada and thatconsumers would eventually pay the price.
“The point is that supply and demand arein exceedingly delicate balance for this mostvolatile of all commodities,” the groupwrote to U.S. Senate Majority Leader TomDaschle. “Sudden government action thatskews investment decisions among regionscould be disastrous.”
That concern is widely echoed in theindustry on both sides of the border, withPetro-Canada chief executive officer RonBrenneman insisting that subsidized Alaskagas would interfere with two decades of freemarket trading in gas.
Opposing view sees fast demandbuild
Amid such tensions, J. Bennett Johnston,a former U.S. Senator from Louisiana andnow a consultant and board member ofChevronTexaco Corp., sees no reason forirreparable harm to Canada-U.S. relationseven if the Senate energy bill gets passed insome form.
He said competition and some irritationhave occasionally marked energy trade
Taking Canada’s energy pulseOver the next three weeks Petroleum News • Alaska will examine Canada’s ener-
gy outlook — the prospects, the problems and the projects — at a time when the UnitedStates is increasingly viewing its next-door neighbor as part of the alternative to itsgrowing dependence on oil from the volatile parts of theworld. Alberta’s oil sands alone contain enough recover-able oil using current technology to meet U.S. importneeds for 60 years or more.
But not all is peace and harmony between two coun-tries who lead the world in two-way trade, with energyexports accounting for almost two-thirds of Canada’s oil and gas production while gen-erating C$58 billion in revenues 2001.
The wave of mergers and acquisitions by U.S.-based companies in recent years hasstirred anxiety over the loss of Canadian control and decision making in the oil and nat-ural gas sector.
Moves by the U.S. Senate to provide loan guarantees and tax credits for a gaspipeline from Alaska are widely opposed in Canada, where such incentives are viewedas meddling in the marketplace.
Even so, governments and the industry on both sides of the 49th parallel are striv-ing to find common ground and to strengthen continental strategies to avoid turningirritants into outright conflict.
continued from page 1
MARKET
see MARKET page 14
see RESISTANCE page 14
and provincial governments, greeted theproposals as a carte blanche to raise produc-tion, certain they’d have buyers.
Call for relaxation of rules
As well as a continental marketplace, thepolicy called for an easing of regulatoryrestraints on new pipelines and electricity-transmission lines, relaxing the rules to getthe presidential permits required for cross-border projects, making it easier forCanadian oil and natural gas to reach U.S.markets.
The plan also directed the U.S. govern-ment to work with Canada to expedite a gaspipeline from Alaska to the Lower 48.
The key for Canada is gaining evengreater access to U.S. capital to achieve ahuge increase in supplies within a handful ofyears.
Already there is much developmentunder way, especially in northern Alberta’soil sands where recoverable reserves arerated at 300 billion barrels using currenttechnologies, but nothing compared to whatcould occur if the United States got behindexploitation.
Canada, by even the most conservativeestimates, could match Saudi Arabia’s out-put if investment was backstopped byWashington.
North American consolidation a factof life
For now, Canada is by far the leadingexporter of oil and gas to the United States,with close to two-thirds of its productiondestined for southern markets.
Long before Bush took up residence inthe White House, the Canadian oil patch hadbought into the concept of a continental
energy policy, despite polls showing that upto two-thirds of Canadians are convincedgreater energy exports will result in higherdomestic prices with half certain the exportswill result in domestic energy shortages.
But within the industry, North Americanconsolidation has become fact of life inrecent years as U.S.-based companies havespent unprecedented billions of dollarsacquiring Canadian assets.
A continental energy policy doesn’t needmany changes to the North American FreeTrade Agreement, says the CanadianAssociation of Petroleum Producers, whichspeaks for about 150 companies who pro-duce 95 percent of Canada’s crude oil andgas.
Don’t change NAFTA
“Our message is don’t change (NAFTA)too much,” said CAPP vice president GregStringham.
A CAPP position paper, delivered to theU.S., Canadian and Mexican governments,urged the three countries to build on existingfree trade policies and to resist any return tothe protectionist and price-setting policies ofthe 1960s and 1970s.
“It is important to remember that policiessupporting free trade and competition inenergy emerged from the failures of inter-ventionist, command-control governmentpolices,” said CAPP.
Instead, it said the focus should be onregulatory practices that “facilitate responsi-ble, market-driven resource activity.”
That would include timely developmentof frontier resources, such as Arctic gas, andcooperation among the jurisdictions on thedevelopment front, including uniform, con-sistent environmental rules.
CAPP also wants tax and royalty regimesthat are competitive with other jurisdictions,reflecting actual risk and the natural declineof finite resources.◆
WORLD OIL14 Petroleum News • Alaska Week of June 2, 2002
Enbridge touts alternative to massive single gasline from North Slope Proposes twin 36-inch diameter lines rather than a single 52-inch sysytem to reduce financing costs, speed up deliveries, allow pipeto be made in North America; convinced there are no technical obstacles to offshore route to maximize Arctic potential
By Gary Park PNA Canadian Correspondent
Calgary-based Enbridge Inc., con-vinced about the looming need for gasfrom the U.S. and Canadian Arctic, ismaking a quiet, yet persistent case for
an offshore delivery system as cost projec-tions for the Alaska Highway project haveclimbed.
Wayne Sartore, vice president of north-ern pipeline development at Enbridge, told aGasfair Power 2002 conference in mid-Maythat from a technical perspective an over-the-top route is “absolutely constructableand operable ... end of story.”
He said Enbridge and other pipelinecompanies have studied several options foroffshore pipe.
“It’s been done all over the world,”Sartore said. “If we don’t have a solution forthis, then there’s a lot of exploration in thefuture that will never come to market.”
If an offshore pipeline is ruled out fortechnical reasons “you can write off theArctic Islands and I certainly not about to dothat and I don’t think we are as an industry.”
Offshore Canadian Arctic vital
He told the conference that the U.S. andCanadian Arctic (including Alaska, theArctic Islands and Mackenzie Delta) is oneof three frontiers — in addition to the Gulfof Mexico and Canada’s east Coast offshore— that are vital to North America’s futuregas supplies.
He said it is “pretty common knowledge”that the continent’s traditional gas basins are“having a tough time keeping up,” becauseof annual decline rates of 20 percent to 25percent on new wells. “You have to do a lotof work just to stay even.”
Sartore said the industry is certain“there’s a lot of gas” in the Arctic Islandsand, although estimates are still preliminary,the Canadian Gas Potential Committee saidthe region gas 31 trillion cubic feet of gas inplace.
Of the rival groups proposing a northernpipeline, he said the Mackenzie Delta Grouphas achieved noticeable progress.
“This group has been pretty steady.They’ve taken steps forwards ... for the lasttwo years and moved from a feasibilitystudy to a project-definition study,” by com-
mitting C$250 million to develop a regula-tory application which h expects will befiled about mid-2003.
Northern pipeline will take longer
But he warned anyone against applyingsouthern models to the northern environ-ment, where a pipeline project could take upseven years, including planning, regulatoryhearings and construction, to completeagainst the more normal two years in the restof North America.
“These are complex, difficult pipelineprojects, and expensive, with lots of risk,”Sartore said.
He does not expect gas to be flowingfrom either the North Slope or Delta before2008, given the harsh environmental chal-lenges of constructing and operating a sys-tem.
To that end, Enbridge is advocating twin36-inch diameter lines, rather than a single52-inch system.
They would be built consecutively, link-ing the North Slope and Mackenzie Deltabasins, with capacity up to 5.2 billion cubicfeet per day.
Single line would use more steel
In contrast Enbridge said the Alaska GasProducers Group, with capacity of 5.6 bil-lion cubic feet per day, would need 3 milliontons of steel compare with 2.4 million tonsfor the smaller twins and would have walls1.128 inches thick, nearly double the thick-ness of the smaller twins.
The company said two pipes could notonly be produced in North America, butconstruction would be staged, with the firstline taking two years to build and availablefor deliveries, while a 52-inch line would
take at least three years of construction. As a result, the project sponsors would
pay less interest in the money raised tofinance the project.
Line would be in shallow water
On the environmentally-sensitive issueof a pipeline across the Beaufort Sea,Enbridge has proposed a line in about 15feet of water and 6.5 feet below theseabed, rather than the ArctiGasResources Corp. plan for a line in 88 to150 feet of water. It claims that wouldreduce the risk of “scouring” from largemasses of ice which can scour the seabedin deeper waters, but it usually broken upby the time it reaches the shoreline.
Enbridge, which operates the world’slongest crude oil pipeline across NorthAmerica, bases its arguments on 17 yearsof building and operating the only majorpipeline out of the Northwest Territories.
Sartore also made a case for closeexamination of shipping tolls on a north-ern pipeline, arguing that the proposedC$2 per thousand cubic feet would be a“huge chunk” of the overall cost given thecyclic nature of gas prices.
Enbridge chief executive officer PatDaniel has previously challenged thosewho have rejected an over-the-toppipeline is unsafe and environmentallydangerous.
“We have taken a careful look at theoffshore route and believe it is feasibleand safe,” he said.
A Salomon Smith Barney report lastyear concluded that “successful pipelinesare currently operating off the coasts ofFinland and Russia in similar Arctic con-ditions,” said Daniel. ◆
continued from page 13
MARKET
issues, but the two sides always find away to work out their differences.
Johnston holds the view that gasdemand is building so fast in the U.S. thatthat both the North Slope and MackenzieDelta basins will find a market.
By the time an Alaska Highway
pipeline is built, he is certain gas will bewell above the US$3.25 per thousandcubic feet floor price , below which taxcredits would be offered under the Senateplan.
Within a decade, the U.S. will need anextra 10 billion cubic feet per day of sup-plies, removing any suggestion that onesource of Arctic gas could displaceanother, Johnston suggested. ◆
continued from page 13
RESISTANCE
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AK oil & gas basemaps, welldata, geology maps 8.5”x11”& 11”x17” plat maps(1:250,000). (303)573-8958.G. D. Bechtold.
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Consultants
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AVALON DEVELOPMENTCORP. Mineral ExplorationConsulting Services PropertyEvaluations, Exploration Design& Management, FieldExploration and Logistics CurtFreeman, Cert. Prof. Geologist#6901 P.O. Box 80268Fairbanks, AK 99708 Phone907-457-5159 Fax 907-455-8069 email [email protected] site www.avalonalaska.com
Employment
Avalon Development is seek-ing personnel interested in antic-ipated 2002 field positions.These are no-nonsense geologyoriented field positions in remotecamps. Positions are as follows:Senior Geologists: +5 yearsexperience, Alaska experiencepreferable, expertise in PGE,Rare Metal or gold explorationrequired. Salary DOE.Junior Geologists: Bachelorsdegree in Geology required,Alaska experience preferable,experience in PGE, Rare metalor gold exploration helpful.Salary DOE.Geotechnicians: Experiencein gridding, sampling, powerauger drilling drill sampling andGPS navigation preferable.Salary DOE If you are interestedin learning more aboutEmployment opportunities inAlaska with Avalon Development,submit a resume along withreferences.Resumes may be emailed to:[email protected], Faxed to907-455-8069 or mailed toAvalon Development, attn:AV-Jobs2002, PO Box 80268,Fairbanks, Alaska 99708mAll oil jobs Canada-wide.Over 1,000 job possibilities.Many types of positions avail-able. http://www.jobs-canada.ca403-394-1706
Employment
Udelhoven CurrentImmediate Openings: 4NICET level 2 and 3 CertifiedTechnicians. Work Site: NorthSlope send resumes toJ g i l b e r t @ u d e l h o v e n . c o mPositions we are alwaysaccepting applications forinclude: Administrative, clerical,As built, Material Handler,Carpenter, Electrician, ElectricalInspector, Engineer, EquipmentOperator, FCO Technician,HVAC, Instrument Technician,Laborer, Millwright, NICET,Operator, Pipe fitter, Plumber,Project Control, ProjectManager, Quality Assurance,Safety, Surveyor, Welder. Pleasee-mail your resume to:R F R O N T D E S K @ U D E L -HOVEN.COM or fax to: (907)522-2541 Attention: Lisa
Alaska Steel has an openingfor the position of AnchorageBranch Manager. We offer com-petitive salary, a lucrative incen-tive plan and excellent benefits. Ifyou have a minimum of 5 yearsof successful management expe-rience in the metals industry,send your resume to: HoraceGriffith, Alaska Steel Co., 1200W. Dowling Rd., Anchorage, AK99518
Employment
Cost Controller TemporaryNorth Slope Position 2/2Rotation 9-Month AssignmentResponsibilities: Develop &maintain commitment system tohelp budget holders understandactivity based forecastingprocess. Assist with SAP imple-mentation, including InformationEdge BRO Forecasting Tool.Assist with the 2003 budgetprocess. Work closely withbudget holders in all aspects ofanalyzing costs, forecasting, andbudgeting. Requirements:General Accounting Skills, exp.in budgeting, forecasting andvariance analysis. Strong inter-personal and team skills with theability to work independently.Background in oil and gas indus-try preferred, bachelor’s degreein business with 5 years of rele-vant experience. Send Resumeto: Accenture - People Matters900 E. Benson Blvd.,Anchorage, AK 99508, or fax to907 564-4575, or e-mail [email protected]
Confined Space $15.00Anchorage-based remediationcompany seeks candidates withcerts in Hazmat / Hazwop /Confined Space. Temporary toPerm positions avail. Call SunniLaine @ Personnel Plus:563-7587 No fees
Employment
Field Operator North Slope –Milne Point. Operating, trou-bleshooting, and providing forthe maintenance of wellhead,well pad production and supportequipment (e.g., automation,test separation, chemical injec-tion, gas compression, hydraulicand pneumatic systems) are keyresponsibilities of this position.The successful candidate willalso be responsible for operat-ing, troubleshooting, and opti-mizing gas lifted wells or electri-cal submersible pumps (ESP)installed in wells. This position isbased on the North Slope andwill work a field-based, rotationalschedule. Applicants must haveat least five years of field operat-ing experience or relevant oilfieldproduction experience. ESPexperience preferred. Mustunderstand and be able to trou-bleshoot all equipment andprocess loops in field opera-tions. All applications must bereceived by 5:00 p.m. on May30, 2002.To apply, all applicantsare REQUIRED to submit aBPXA job application to: BPExploration (Alaska) Inc., HumanResources, Attn: JoAnne Efta,MB 10-2, P. O. Box 196612,Anchorage, AK 99519-6612.Phone: (907) 564-5393and fax:(907) 564-4920.Applications for solicited posi-tions can be picked up at the fol-lowing locations: AlaskaEmployment Services, BPXAAnchorage Office, BPXA NorthSlope Base Operations Camps.For recorded employment infor-mation with current BPXAvacancies and requirements, dial564-4999 in Anchorage. BPXAis an equal opportunity employerand encourages all interestedand qualified persons to applyfor consideration of this position.BPXA new hires whose worklocation is Alaska must becomeAlaska residents and must main-tain Alaska residency as a condi-tion of employment. The suc-cessful applicant must submitand pass a drug screening testprior to employment and may berequired to participate in a ran-dom drug screening program.
PNA CLASSIFIEDS15 Petroleum News • Alaska Week of June 2, 2002
Integrity Analyst and Planning Corrosion, Inspection, & Chemicals Group This position is responsible for the devel-opment of inspection programs and the analysis of data generated by the programs for the purpose of determining risk, reli-ability, and life of the process piping and pipelines. This position will work within a multi-functional team setting that develops
strategies and tactical plans; assesses mechanical integrity of equipment; measures the effectiveness of the corrosion management pro-gram; and provides feedback to operations, new development teams, regulatory agencies, and networks throughout the company. Thisposition is based in Anchorage. Position Requirements: Minimum of 10 years direct experience in upstream oilfield corrosion and inspec-tion activities. Thorough understanding of the applicability and limitations of various NDE methods and the ability to interpret that data as itrelates to integrity assessment. Current or previous certification and experience as ASNT Level II in RT, UT, PT, MT is highly desirable.Knowledge of basic corrosion types and corrosion mitigation. Knowledge of ANSI 31.3, 31.4, 31.8, ASME VIII, API 1104, API 653, andAPI 570 design and inspection codes. Knowledge of fitness-for-service criteria (e.g. ANSI 31G, RSTRENG, API 579)Ability to provide com-petent technical direction of programs. Good organizational, planning, and prioritization skills. Familiarity with BPXA computer systems andsoftware, in particular MIMIR. Good interpersonal and communication skills and the ability to work effectively in a team setting are essen-tial. A high level of computer proficiency is required (e.g., MS Excel, Word, PowerPoint). All applications must be received by 5:00 p.m. onMay 31, 2002. To apply, all applicants are REQUIRED to submit a BPXA job application to: BP Exploration (Alaska) Inc., Human Resources,Attn: JoAnne Efta, MB 10-2, P. O. Box 196612, Anchorage, Alaska 99519-6612. Phone: (907) 564-5393 and fax: (907) 564-4920.Applications for solicited positions can be picked up at the following locations: Alaska Employment Services, BPXA Anchorage Office,BPXA North Slope Base Operations Camps. For recorded employment information with current BPXA vacancies and requirements, dial564-4999 in Anchorage. BPXA is an equal opportunity employer and encourages all interested and qualified persons to apply for consid-eration of this position. BPXA new hires whose work location is Alaska must become Alaska residents and must maintain Alaska residen-cy as a condition of employment. The successful applicant must submit and pass a drug screening test prior to employment and may berequired to participate in a random drug screening program.
Experienced applicants are being sought for the following BPAlaska positions.Instrument/Turbine Technician North Slope - Endicott Thesuccessful candidate will be responsible for maintaining processcontrol instrumentation to include turbine controls, programmablelogic controllers, distributed control systems, pneumatic and elec-tronic transmitters and control valves, vibration monitoring equip-ment, compressor anti-surge controllers, and fire and gas detec-tion systems. The ability to use electrical, logic, and electronicwiring diagrams; schematics, loop diagrams; relay ladder dia-grams; and piping and instrument drawings to troubleshoot andrepair industrial instrumentation is essential. This position is basedon the North Slope and will work a field-based, rotational sched-ule. Minimum Requirements: Five years maintenance experienceas an instrument technician in the oil or chemical industry.Graduation from a two-year technical school will be accepted inlieu of two years of work experience. Familiarity with Allen-Bradleyand Gould-Modicon PLC’s, Fisher PRoVox DCS, GE Mark IV andRustronics gas turbine controls is essential. State of Alaska/NICETpermit for fire system maintenance is desired. External Corrosion Project Lead The successful candidate willprovide leadership for the management and execution of projectsas they relate to the Corrosion, Inspection, Chemicals (CIC)External Corrosion Management Program. The ability to lead in across-functional team environment, set project priorities, controlcosts, and improve productivity in a safe work environment are allcritical qualifications for this position. The successful candidate willbe an active member of the CIC Leadership Team, helping to meetkey performance targets for the department and company. Thisposition is based in Anchorage, although frequent trips to PrudhoeBay will be required to interface with the CIC North Slope Team.Required qualifications and knowledge: Bachelor’s degree in engi-neering or business. Minimum of 10 years of work experience anda min. of 7 years of experience planning, implementing, and com-pleting complex projects, preferably petrochemical or upstream oiland gas related. Previous project management and budgetaryresponsibility in excess of $5MM A solid understanding of corro-sion mechanisms and NDE techniques. Proven ability to commu-nicate effectively with all levels of an organization and externalgroups (e.g., regulatory agencies, third-party contractors, engi-neering professionals, etc.) Knowledge of North Slope logistics,procurement, supply, and contractor management. Supervision oftechnical and non-technical staff with direct responsibility for a staffof 20+. Familiarity with Corrosion Management and MechanicalIntegrity Programs and Prudhoe Bay pipelines and facilities Highlevel of computer proficiency using MS Excel, Word, andPowerPoint. Proven team building and leadership skills with anemphasis on performance in a high stress environment. All appli-cations must be received by 5:00 p.m. on May 31, 2002. To apply,all applicants are REQUIRED to submit a BPXA job application to:BP Exploration (Alaska) Inc., Human Resources, Attn: JoAnneEfta, MB 10-2, P. O. Box 196612, Anchorage, AK 99519-6612.Phone: (907) 564-5393 and fax: (907) 564-4920. Applications forsolicited positions can be picked up at the following locations:Alaska Employment Services, BPXA Anchorage Office, BPXANorth Slope Base Operations Camps. For recorded employmentinformation with current BPXA vacancies and requirements, dial564-4999 in Anchorage. BPXA is an equal opportunity employerand encourages all interested and qualified persons to apply forconsideration of this position. BPXA new hires whose work loca-tion is Alaska must become Alaska residents and must maintainAlaska residency as a condition of employment. The successfulapplicant must submit and pass a drug screening test prior toemployment and may be required to participate in a random drugscreening program.
Benefits Communication Specialist - Anchorage, Alaska Qualifications: Seeking a candidate with the following back-ground: *3-5 years of progressively responsible communications, human resources and/or benefits experience; *Stronginterpersonal and communication skills (both oral and written) necessary to work effectively as a liaison between employees,regional HR staff and vendors regarding benefit inquiries and problem resolution with a high level of maturity, discretion, tactand judgment; *Superior communication, problem solving, strategizing and planning skills, with ability to produce a suitable
final product; *Exceptional writing, proof reading and editing skills; *Ability to effectively organize,prioritize and complete projects underdeadline constraints, while working with minimal supervision in a busy environment; *Ability to be flexible in dealing with a variety of situ-ations and must demonstrate enthusiasm,initiative, creativity and pride in work; *Proven ability to maintain strict confidentiality of sensitiveinformation; *Well-developed analytical skills necessary to interpret legal rules/ regulations, benefit plan structure and internal policies towork independently and productively;*Knowledge and understanding of Microsoft Office and Publisher; and *Bachelor’s degree, prefer-ably in a related field. Primary Duties and Responsibilities: Individual will manage the benefit program communication strategy, includingdevelopment of tactics such as employee newsletters, the company’s intranet site, open enrollment packets, etc. Selected individual willact as liaison between regional Human Resources staff, employees and vendors to ensure consistent and appropriate administration ofthe cafeteria plan, 401(k), life, AD&D and disability benefit plans. Responses will be given utilizing knowledge of benefit-related laws toensure compliance with legal requirements. Issues will be researched with assistance of vendors and consultants and escalated to super-visor as necessary. This is a Regular / Full-Time Position, Anchorage Location. Submit resume and cover letter with salary history to:Fax (907)762-1040 or E-mail to [email protected].
Doyon Drilling is now hiring for: Electrician Summary:Installs, maintains and repairs drill rig electricalsystems, apparatus and electrical and electronic components of drill rig machinery and equipment.Essential Duties: Maintains and repairs the electrical and electronic equipment associated with drill rigtop drives, draw works, iron roughnecks, SCR’s AC motor controllers, DC motors, AC generators,air conditioners PLC’s and oilfield mud and gas monitoring systems. installs power supply wiring andconduit for newly installed machines and equipment such as mud pumps, motors and conveyors.Pitwatcher (Solids operator) Summary: Performs drilling fluid mixing operations, drilling fluid propertysampling, monitoring of well bore returns, maintenance of mud pumps and drilling fluid circulationsystem. Essential Duties: Maintain drilling fluid solids control and circulation equipment. Carry out rou-tine drilling fluid property sampling. Mixing of drilling fluid chemicals and maintenance of drilling fluidproperties. Cleaning and maintenance of rig drilling fluid pits. Follow DDI and customer operating andreporting procedures. Maintain clear communications with relief, mud engineer, Derrickman andDrillerMechanic Summary: Responsible for the operability, maintenance and repair of all drill-rig relatedmachinery and support equipment such as engines, motors, pumps, winches, pneumatic tools andconveyor systems as directed by the rig toolpusher. Essential Duties: Works on the following: Drill rigtop drive systems. Drill rig draw work systems. Drill rig mud pumps. SCR systems. Caterpillar andDetroit Diesel engines. Allison transmissions, air conditioners, glycol, hydraulic and pneumatic sys-tems. Drill rig heating and heat distribution systems including boilers and fans.Our mailing address is: Doyon Drilling, Inc. 101 W. Benson Blvd. Suite 503 Anchorage, AK 99503 Phone: 907-563-5530 Fax: 907-561-8986 Our email address is: [email protected] Attachments should be in one of the following standard formats: Microsoft Word (Windows),RTF
PNA CLASSIFIEDSPetroleum News • Alaska 16Week of June 2, 2002
Employment
CIVIL ENGINEER Seeking self-motivated civil engineers with 5 –10 years of utility, airfield, and/orroad design experience to workon unique projects throughoutAK. Successful applicants willbe responsible for designingurban and remote projects. Ruralexperience a plus. Applicantsmust be registered civil engi-neers (P.E.) in at least one state,and capable of registration inAlaska. Salary range: $50- $85K DOE per year.CIVIL ENGINEERINGDESIGNER/ DRAFTINGTECHNICIAN Seeking self-motivated civil engineeringdesign/drafting technician withat least 2 years AutoCAD experi-ence in a civil engineering envi-ronment.$12-$22 per hour tostart DOE. The benefits packagefor the above jobs includes: 3weeks paid vacation per year, 12paid holidays per year, excellentmedical/dental/vision/disability,and 401 (k) with matching con-tributions. Our corporate culturereflects a casual working envi-ronment amongst a team ofworking professionals.TEMP A/P/R CLERKAvailable 5/28-6/28. Desireapplicants with 2 years accountspayable experience. Receivableexperience preferred, but notrequired. $12 - $14 per hourDOE. Please send your resumeor direct inquiries to: LCMFIncorporated; 139 East 51stAvenue; Anchorage, AK; [email protected] (907) 273-1848; Toll Free: (800) 955-1830; Fax: (907) 273-1831
Equipment
CASH for SURPLUS EQUIP-MENT... Will buy 1-100 pieces....FOR SALE NEW generatormodule 750 KW and 300 KW,Diesel powered units. Also 30KW generator, Misc. Rolls ofelectric wire. Ferguson Roller,988F Cat Loader 1995, Newtires, excellent cond., D10N Cat,Etc. Call for more and prices.522-5876
20’ & 40’ Containers for Saleor Lease, contact Lee Petersenat Sourdough Express, Inc.907-452-1181.
CRAIG TAYLOR EQUIP-MENT CO. has been appoint-ed the exclusive dealer forKOMATSU Construction,Mining and utility equipment.Craig Taylor equipment willprovide SALES-PARTS andSERVICE from their four loca-tions state wide. Anchorage-Fairbanks-Soldotna andWasillaCall 1-800-279-5051 for moreinformation or visit our website www.craigtaylore-quipment.com
HEAVY CONSTRUCTIONEQUIPMENT FOR LEASECAT 245 Excavator, CAT D5BDozer, GROVE 25 ton HydraulicRT Crane, CASE 621B Loader,KELLY EQUIPMENT CO.907-566-2290
High Volume Cat Water Pump8”X6” 2000 gpm 1985 3306230hp Contact Tom Ulrich @(907)562-5420
Manlift, Grove AMZ 131XT,4WD, 4WS North Star Terminal(907)263-0117
InvestmentOpportunities
Alaska Independent needsoperator to explore and devel-op prime North Slope/Cook Inletprospects. Call Rick 907-456-2300 or email [email protected].
Leases/ProspectsAvailable
Alaska oil and gas leases,North Slope 17,500 acres,Cook Inlet Basin, 8,000 acres.Proven reserves, permitting inprogress. Call 907-452-5149,fax 907-452-5203.
AVCG looking for qualifiedpartners for 104,000 acres onNorth Slope.Call Bo 316-263-2243.
Five Cook Inlet leases forsale: The Redoubt Shoal arealeases include one off the north-eastern edge of Kalgin Islandand one directly south ofRedoubt. The other three leasesare (1) east of the North MiddleGround Shoal gas field (2) adja-cent on the east to Forest Oilleases south of the North CookInlet field in mid-Cook Inlet, and(3) adjacent to the North CookInlet unit.For more information contactDan Donkel at 305-438-1114,email: [email protected].
Five North Slope leases forsale: One lease is adjacent toBPX leases just southeast ofKuparuk; two leases are directlysouth of the Prudhoe Bay unitand two leases are adjacent tothe Prudhoe Bay unit nearDeadhorse. For more informa-tion contact Dan Donkel at 305-438-1114, email: [email protected].
Looking for partners for sixprospects in Cook Inlet -Corsair, Raptor, Tutna, Valkyrie,Viggen, Olsen Creek. Seewww.forestoil.com. Click onFirst Boston presentation; go toCook Inlet, page 14 for detailson four prospects. Contact: JimArlington, Land Dept., [email protected]. Seriousinquiries only.
Leases/ProspectsAvailable
Four North Slope leases forsale: Three south of PrudhoeBay and one west of the DaltonHighway near TAPS. Each tracthas an abandoned well: tract137 the Nora Federal No. 1 (a17,658 foot vertical holeplugged and abandoned in1970); tract 651 the SequoiaNo. 1 (an 8,910 foot vertical holdplugged and abandoned in1992); tract 658 the N. FranklinBluffs Unit No. 1 (a 3,500 footvertical hole plugged and aban-doned in 1973); and tract 663the Toolik Federal No. 1 (a10,814 foot vertical holeplugged and abandoned in1969). For more informationcontact Dan Donkel at 305-438-1114, email: [email protected].
In July, Petroleum News •Alaska is publishing a specialpublication about the independ-ent oil and gas companies doingbusiness in Alaska. "TheIndependents: Alaska's EnergyFuture" will contain in-depth pro-files about each of the independ-ents, as well as maps of theirlease holdings in Alaska. Thepublication will also have directo-ry information for each independ-ent, such as contact names andnumbers, web sites, emailaddresses, etc. Please callSusan Crane at (907) 770-5592for more details.
Petroleum News • Alaskaclassified ads are an
affordable and effective wayto reach people in the oil and
Resource DevelopmentCouncil 27th Annual Meetingon Wednesday, June 5, 2002Sheraton Anchorage HotelDoors open 11:30 a.m.,Program begins promptly atNoon Native Corporations: TheFuture Face of Alaska’sEconomy Jacob Adams,President, Arctic Slope RegionalCorporation Carl Marrs,President, Cook Inlet Region,Inc., Marie Greene, President,NANA Regional CorporationModerator: Janie Leask, AlyeskaPipeline Service Co., FormerPresident, AFN $30 per personPlease RSVP to RDC online atwww.akrdc.org or 276-0700,ext. 4 by Friday, May 31, 2002Sponsors listed below havereserved seating and advancesign up for their employees.Please check with your officecoordinator before placing yourreservation. Alaska Airlines,Alaska Interstate Construction,Alaska Rural ElectricCooperative Association,Anadarko Petroleum Company,AT&T Alascom, CarlileTransportation Systems, TheChevron Companies, DoyonLtd., Doyon Drilling, DoyonUniversal Services, Era Aviation,ExxonMobil, Foothills Pipe LinesAlaska Inc., Koniag, Inc.,Lynden, Inc.,NANA/TeckCominco, PeakOilfield Service Company,Peratrovich, Nottingham &Drage, Inc., Phillips Alaska, Inc.,Teamsters Local 959, Unocal,Veco Alaska, Inc., Wells Fargo,Agrium Kenai NitrogenOperations, Air Logistics ofAlaska, Alaska IndustrialDevelopment & Export Authority,Alaska Railroad Corporation,Alaska USA Federal CreditUnion, Aleut Corporation,Alyeska Pipeline ServiceCompany, Anchorage Sand &Gravel, Arctic Slope RegionalCorporation, AssociatedGeneral Contractors, At-SeaProcessors Association, BPExploration (Alaska) Inc.,Bradley/Reid Communications,Bristol Bay Native Corporation,Calista Corporation, ChugachAlaska Corporation, ChugachElectric Association, Cook InletRegion, Inc., CSX Lines, FirstNational Bank Alaska, Forest OilCompany, Golder Associates,Inc., Harbor Enterprises/PetroMarine Services, Hartig,Rhodes, Hoge & Lekisch, PC,Hawk Construction Consultants,H.C. Price Company, Key Bank,Koncor Forest Products,Laborers Local 341, MarathonOil Company, MarketingSolutions, Nabors AlaskaDrilling, Nanuq, Inc., Natchiq,NC Machinery, NetworkBusiness Systems, Northern AirCargo, Northrim Bank, PlacerDome America, SealaskaCorporation, Security Aviation,Schlumberger Oilfield Services,Sheraton Anchorage Hotel,SKW/Eskimos Inc., SoutheastStevedoring, Tesoro AlaskaPetroleum Company, The 13thRegional Corporation, UsibelliCoal Mine, Westward Seafoods,Williams Alaska PetroleumCompany.
Alaska Support IndustryAlliance EventsFriday, June 7The Alliance Golf TournamentAnchorage Golf Course DoubleShotGun For information/regis-tration,please call 563-2226Saturday, July 20The AllianceKenai Chapter Golf TournamentKenai Golf Course. For informa-tion / registration, please call(907) 563-2226Wednesday, August 8The Alliance Fairbanks ChapterGolf TournamentFairbanks Golf Course For infor-mation /registration,please call(907) 563-2226
Legal Notice
Notice of Public Hearing STATE OF ALASKA Alaska Oil and Gas Conservation Commission Re:Wolf Lake #1RD Section 29, 7N, 9W, Seward Meridian Marathon Oil Company by letter dated April26, 2002, has applied for a Spacing Exception under 20 AAC 25.055(a)(4) to drill and complete anoth-er gas well in a governmental section and that will be closer than 3000’ to another well drilling to orcapable of producing from the same pool. Surface Location: 994’ FSL, 1901’ FWL, Sec. 29, 7N, 9W,SM Anticipated Productive Interval (Tyonek): 819’ FSL, 1526’ FWL, Sec. 29, 7N, 9W, SM BottomHole: 819’ FSL, 1526, FWL, Sec. 29, 7N, 9W, SM The Commission has tentatively set a public hear-ing on this application for June 13, 2002 at 9:00 am at the Alaska Oil and Gas ConservationCommission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska 99501. A person may request thatthe tentatively scheduled hearing be held by filing a written request with the Commission no later than4:30 pm on June 1, 2002. If a request for a hearing is not timely filed, the Commission will consider theissuance of an order without a hearing. To learn if the Commission will hold the public hearing, pleasecall 793-1221. In addition, a person may submit written comments regarding this application to theAlaska Oil and Gas Conservation Commission at 333 West 7th Avenue, Suite 100, Anchorage, Alaska99501. Written comments must be received no later than 4:30 pm on June 10, 2002 except that if theCommission decides to hold a public hearing, written comments must be received no later than 9:00am on June 13, 2002. If you are a person with a disability who may need a special modification in orderto comment or to attend the public hearing, please contact Jody Colombie at 793-1221 before June 3,2002. Cammy Oechsli Taylor, Chair
Legal Notice
Right-of-Way Application Notice, AS 38.35.070, Kenai-Katchemak Pipeline, LLC Body ofNotice: State Pipeline Coordinator’s Office 411 West Fourth Avenue, Suite 2C Anchorage, Alaska99501 (907) 257-1300 Notice Of Application Under AS 38.35.070 Kenai-Kachemak Pipeline, LLCPipeline Right-Of-Way Lease Application, ADL 228162 The Commissioner of the Department ofNatural Resources, pursuant to AS 38.35.070, hereby gives notice that Kenai-Kachemak Pipeline, LLC(KKPL LLC) submitted a revised Pipeline Right-of-Way Lease Application dated May 10, 2002, super-seding the previous Pipeline Right-of-Way Lease Applications dated December 18, 2001, and March20, 2002, in accordance with the Alaska Right-of-Way Leasing Act, AS 38.35.050. A prior notice ofthe application dated March 20, 2002, was published on April 3 or 4, 2002. The revised May 10, 2002application reflects changes to the right-of-way legal description and the project description. KKPL LLCproposes to construct a pipeline to transport natural gas. The proposed Kenai-Kachemak Pipeline willextend from the most northern point of Kenai, at an existing ENSTAR facility located near Mile 12.4 ofKalifonsky Beach Road, to the most southern point that is approximately 13 miles north of the commu-nity of Ninilchik at Mile 128 of the Sterling Highway. The proposed pipeline may be up to 16 inches indiameter and will handle a future potential flow rate of up to approximately 444 million standard cubicfeet per day of natural gas at 1480 pounds per square inch gauge (psig). KKPL LLC requests a 60-foot wide right of way for construction of the pipeline with some exceptions: an additional constructionarea that is identified below; and for directional drilling under rivers and streams, a 100 foot-wide by300-foot long area on each bank. KKPL LLC requests a 20-foot wide permanent pipeline right-of-way.During construction, the applicant requests the use of approximately 230 acres of State lands andapproximately 77 acres for the permanent pipeline right-of-way. The proposed pipeline right-of-way pri-marily follows: Kalifonsky Beach Road, Sterling Highway, and section line easements. The proposedpipeline will be buried and approximately 32 miles in length, with approximately 31 miles of the pipelinelocated on State lands. State lands are described below starting with the most northerly segment andmoving in a southerly direction. Private lands planned for crossing will not be authorized by the Stateand are not listed below. The following is a general description of the State lands that KKPL LLCrequests for the proposed pipeline right-of-way lease. All land is located within the Seward Meridian,Third Judicial District, State of Alaska, and all milepost references are approximate. Kalifonsky BeachRoad—Mile 12.4 to Mile 0 This segment of the alignment begins at approximately Mile 12.4 KalifonskyBeach Road and ends at approximately Mile 0 of Kalifonsky Beach Road. Mile 0 is Kalifonsky BeachRoad’s intersection with Mile 108.8 of the Sterling Highway. The below-described lands are within theKalifonsky Beach Road right-of-way limits and described by township in a southerly direction: Sections30 & 31, Township 5 North, Range 11 West Sections 1, 12, 13, 24, 25 & 36, Township 4 North, Range12 West Sections 1, 13 & 24, Township 3 North, Range 12 West Sections 6, 7, 18, 19 & 30, Township3 North, Range 11 West At approximately Mile 2.4 to Mile 2.9 in the vicinity of the Kasilof Airport, KKPLLLC requests an additional 60-foot wide by approximately 2,693-foot long temporary construction areaparalleling the subject road right-of-way on the following State-owned parcel lying east of KalifonskyBeach Road: The SE1/4 of the NW1/4 AND the E1/2 of the SW1/4 AND the E1/2 of the W1/2 of theSW1/4, of Section 18, Township 3 North, Range 11 West. Sterling Highway—Mile 108.8 to Mile 109This segment of the alignment begins at approximately Mile 108.8 of the Sterling Highway from theintersection with Kalifonsky Beach Road, moves in a southerly direction ending at approximately Mile109 of the Sterling Highway within Section 30, Township 3 North, Range 11 West within the SterlingHighway right-of-way limits. Sterling Highway (Mile 109) to Lands under Kasilof River and CrookedCreek, and along Section Line Easements This segment of the alignment leaves the highway right-of-way limits at approximately Mile 109 of the Sterling Highway, moves in a southwesterly direction, enterson private lands, enters State-owned lands under Kasilof River and Crooked Creek, and runs southalong section line easements that are also used by the Homer Electric Association utility right-of-way.The alignment re-enters the Sterling Highway right-of-way at approximately Mile 111 of the SterlingHighway. The following lands within this segment are proposed for the pipeline: The proposed pipelinewill cross under Kasilof River for approximately 310 feet in length within SW1/4 of the SW1/4 ofSection 30, Township 3 North, Range 11 West. A 50-foot wide Section Line Easement approximately528 feet in length within Section 30, Township 3 North, Range 11 West, across Government Lot 9. A50-foot wide Section Line Easement approximately 53 feet in length, lying west of the Sterling Highway,within N1/2 of the NW1/4 of Section 31, Township 3 North, Range 11 West. A 50-foot wide SectionLine Easement approximately 4,066 feet in length traversing State land within N1/2 AND N1/2 of theS1/2 AND the S1/2 of the SE1/4 lying east of Cohoe Loop Road within Section 36, Township 3 North,Range 12 West. KKPL LLC proposes to cross under Crooked Creek for approximately 25 feet inlength near Mile 111 of the Sterling Highway within this Section. Sterling Highway—Mile 111 To Mile128 This segment of the alignment begins at approximately Mile 111 of the Sterling Highway and endsat approximately Mile 128 of the Sterling Highway, 13 miles north of the Ninilchik community. The below-described lands are within the Sterling Highway right-of-way limits and described in a southwesterlydirection: Section 36, Township 3 North, Range 12 West Sections 1, 12, 11, 14, 15, 22, 21, 28, 29 &32, Township 2 North, Range 12 West Sections 5, 6, 7 & 18, Township 1 North, Range 12 WestSections 13, 24, 23, 26, 27, 34 & 33, Township 1 North, Range 13 West Section 5, Township 1 South,Range 13 West At Mile 124.2 of the Sterling Highway, KKPL LLC requests an additional pipeline right-of-way that diverges from the main pipeline to the G. Oskolkoff gas well pad site. The line extends westfor approximately 290 feet within the highway right-of-way limits. This proposed line is located withinW1/2 of the SE1/4 of Section 23, Township 1 North, Range 13 West. The public may obtain copiesof the application at cost or view the application at the following location: State Pipeline Coordinator’sOffice 411 West 4th Avenue, Suite 2C Anchorage, AK 99501-2343 Open Monday thru Friday Hours:7:30 AM to 5:00 PM Copies of the application will also be available for viewing at the following loca-tions: Anchor Point, Public Library, Homer, Public Library, Kasilof, Public Library, Kenai, CommunityLibrary, Ninilchik, Community Library, Soldotna, Public Library, In accordance with AS 38.35.200(a), aperson will have standing to seek judicial review of a decision of the Commissioner of the Departmentof Natural Resources on this application only if: (1) the person is an applicant, competing applicant ora person who has a direct financial interest affected by the lease that is subject of this notice of appli-cation; and (2) the person delivers a written objection to the application to the State PipelineCoordinator’s Office not later than 60 days from the date of initial publication of this notice. The Stateof Alaska, Department of Natural Resources, State Pipeline Coordinator’s Office complies with Title IIof the Americans with Disabilities Act of 1990. Individuals with disabilities who may need auxiliary aids,services, or special modifications to participate in this review may call (907) 257-1300 or 269-8411TTY/TDD. Please provide sufficient notice in order for the Department to accommodate your needs.The State Pipeline Coordinator’s Office reserves the right to waive technical defects in this publication.John Kerrigan State Pipeline Coordinator
PNA CLASSIFIEDSPetroleum News • Alaska 17Week of June 2, 2002
Meetings/Events
IADC annual meeting Mark thedate for the annual meeting of theInternational Association of DrillingContractors, Sept. 25-27, in theHyatt Regency Hotel, 123 LosoyaSt. on the Riverwalk, San Antonio.This event is the premiere gather-ing of drillers and drilling servicecontractors throughout the world.Conference fee is $500. ContactLeesa Teel 281-578-7171 ext21([email protected]) for moreinformation or to make anadvanced reservation. From itsHouston base, IADC strives tosecure responsible standards,practices and regulations that pro-vide for safe, efficient and environ-mentally sound drilling operationsworldwide. The association edu-cates its members through pro-grams and publications and devel-ops industry training standards,notably its WellCAP and rig floororientation program (RIG PASS).Founded in 1940, IADC hasoffices in Washington, UnitedKingdom, Netherlands and theMiddle East, and chapters in theUK, Venezuela, Brazil, Australasia,South Central Asia, SoutheastAsia, Middle East, North Africa andacross the United States. IADCmembership includes contractdrilling and well-servicing firms, oiland gas producers and manufac-turers and suppliers of oilfieldequipment and services. IADC’scontract drilling members ownmost of the world’s land and off-shore drilling units and drill the vastmajority of the world’s oil, naturalgas and geothermal wells. IADCholds “Accredited Observer” sta-tus at the International MaritimeOrganization and the InternationalSeabed Federation, branches ofthe United Nations. Paula Ruth,APR Paula Ruth & Company
Public Relations 11506 Del MonteDrive Houston, TX 77077-6412281-870-1717 281-870-9939 (fax)[email protected] www.paularuth.comContact: Paula Ruth (281-870-1717) or Mike Killalea (281-578-7171 Ext. 222) For more informa-tion, visit the IADC website athttp://www.iadc.org. al EstateClass A offices avail. bymonth or longer. Incl. phone,recept, & much more. Fax andinternet. Single offices from$500 View suites avail. PacificOffice Center: 877.264.6600.
Recreation/Lodges
Join us for the fly fishing tripof a lifetime! We specialize inguided flyfishing and multi-dayriver camping trips with gourmetriver cuisine. Float trips are in thepursuit of rainbow trout in theupper Susitna Valley, on riverslike the Talkeetna, WillowCreek, and more. We alsoenjoy salmon fishing for reds andsilvers on the Russian River, onthe Kenai Peninsula. We offercustom-designed trips forall of our guests. Whether it’sa day trip, or a 5-day fly-in fishingtrip, we can arrange the tripthat’s right for you. The best timefor fishing is from May tilOctober, with peak trout oppor-tunities during each salmon run.“Float trips are touted as thegreatest way to experienceAlaska’s wilderness. There issomething special about floatinga river and spending some timegetting to know it but still nothaving any idea of what thewater around the next bend willbring,” according to AnthonyRoute, author of FlyfishingAlaska. It’s never too early tostart planning that fishing trip toAlaska. Call us today! ExploringAlaska, One River at a Time(907) 333-2699 [email protected]
Supplies
A&J Supply (907)349-8017Distributor, oil eating microbes,hydrocarbons, gas, oil, etc.borco torch, 10,000degrees@tip fibers, concrete,asphalt, stucco, all in stock.
Training/Education
$1,200,000,000 PER YEARare available for small busi-nesses to conduct commercialresearch and developmentthrough the Small BusinessInnovation Research (SBIR)federal grant program. TheTechnology Research andDevelopment Center of Alaska(tr&d), a specialty center withinthe Alaska Small BusinessDevelopment Center, providestraining and assistance to helpAlaskan small business suc-cessfully compete for SBIRawards. For more info visitwww.trendalaska.org or con-tact tr&d at 1-800-478-7232.tr&d is a non-profit organizationpartially funded by the SBA.SBA’s funding is not anendorsement of any products,opinions, or services. All SBAfunded programs are extendedto the public on a nondiscrimi-natory basis.
In July, Petroleum News Alaskais publishing a special publica-tion about the independent oiland gas companies doing busi-ness in Alaska. "TheIndependents: Alaska's EnergyFuture" will contain in-depth pro-files about each of the independ-ents, as well as maps of theirlease holdings in Alaska. Pleasecall Susan Crane at (907) 770-5592 for more details.
PetroleumNews • Alaskaclassified adsare an affordableand effective wayto reach people in
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Legal NoticeNotice of Public Hearing STATE OF ALASKA Alaska Oil and GasConservation Commission Re: Susan Dionne #1 Well (FormerlyMcCoy Prospect #1 and Ninilchik #1) ADL #359242 Section 6, T1S,R13W, Seward Meridian Kenai Peninsula Borough, Alaska MarathonOil Company by letter dated April 18, 2002 has requested an orderallowing a spacing exception in accordance with 20 AAC 25.055(a)(2)for the testing of a an existing exploratory gas well within 1500 feet ofthe property line. Surface Location: 144 feet FSL and 1488 feet FEL,Section 6, T1S, R13W, SM Anticipated Productive Interval: 3583’ MD(3574’ TVD), 107’ FSL, 1687’ FEL, S.6, T1S, R13W, SM BottomHole: PBTD 7926’ MD (7369’ TVD) 286’ FSL, 2555’ FEL, S.6, T1S,R13W, SM. The Commission has tentatively set a public hearing on thisapplication for June 6, 2002 at 9:00 am at the Alaska Oil and GasConservation Commission at 333 West 7th Avenue, Suite 100,Anchorage, Alaska 99501. A person may request that the tentativelyscheduled hearing be held by filing a written request with theCommission no later than 4:30 pm on May 13, 2002. If a request for ahearing is not timely filed, the Commission will consider the issuance ofan order without a hearing. To learn if the Commission will hold the pub-lic hearing, please call 793-1221. In addition, a person may submit writ-ten comments regarding this application to the Alaska Oil and GasConservation Commission at 333 West 7th Avenue, Suite 100,Anchorage, Alaska 99501. Written comments must be received no laterthan 4:30 pm on May 27, 2002, except that if the Commission decidesto hold a public hearing, written comments must be received no laterthan 9:00 am on June 6, 2002. If you are a person with a disability whomay need a special modification in order to comment or to attend thepublic hearing, please contact Jody Colombie at 793-1221 before May15, 2002. Cammy Oechsli Taylor, Chair Published Date: April 25, 2002
southeast of the center well and the fourthwell 1,000 feet to the southwest of thecentral well.
“It is important to understand that wecurrently propose an exploration programdesigned to test the coal’s ability to pro-duce natural gas,” Evergreen told thestate.
“Exploration pilots incorporate a podof wells being produced within close
proximity to one another. In a develop-ment program, wells will be spaced atgreater distances,” the company said.
Unit formed by Unocal
Evergreen bought the Pioneer unit, 30miles north of Anchorage betweenWasilla and Houston, from Ocean Energyand Unocal in May 2001. Unocal formedthe unit in 1997 to explore for coalbedmethane.
Evergreen said it would only drill twopilots, but would permit three.
“By having approval for more thantwo pilots,” the company said, “we helpensure that the unit’s well obligations canbe met even if land, permitting or otherproblems arise.”
The pilots are planned for an areanorth of the Parks Highway betweenWasilla and Houston. Evergreen said itselected the sites to meet geological andengineering considerations and also tominimize “possible impact on the sur-rounding community.” The pilots are all“away from residential houses and onlands where the owner has both the sur-face and the mineral rights.”
Different than previous plans
Evergreen said this plan is differentthan previous coalbed methane develop-
ment proposals at Pioneer. “For example, by utilizing our own
equipment, Evergreen will reduce welllocation, drilling and completion time by40 percent,” the company said.
The pilot No. 1 location is one and ahalf miles northwest of the intersection ofthe Parks Highway and Big Lake Road,on land where a private party owns bothsurface and mineral rights. The companysaid it is finalizing an agreement with theowner to drill on the property this sum-mer.
Pilot No. 2 and pilot No. 3 are alongChurch Road, two and a half miles northof the Parks Highway. Both the surfaceand the minerals are owned by the AlaskaDivision of Lands or the Mental HealthTrust.
Water injection well will be used
Ocean Energy drilled a water disposalwell and built facilities and Evergreensaid it will use the well and facilities.
Evergreen said it would begin buildinglocations and roads July 15 and begindrilling Aug. 1. Fracture stimulation ofthe Pioneer 1702 15DA water disposalwell and hook-up of existing facilitieswill begin July 25.
Evergreen said it will finish the workOcean Energy started at the water dispos-
al well. Ocean Energy partially construct-ed surface water-handling facilities anddrilled the water disposal well, set casingand perforated.
Evergreen said it plans to break downexisting perforations, place a hydraulicfracture treatment on those perforationsand hook up the existing surface disposalfacilities.
The company said it has no plans toplace other existing wells — the BLT No.1 reentry, the Pioneer 1702 15DD and thePioneer 1702 14CC — on production in2002, but plans to clean-up those sitesand secure them with gates and fences.
Air drilling planned
Evergreen will be drilling with airrather than with mud.
“Air is chosen because of its lowerimpact on the environment and becauseair imparts less damage to the coals,”Evergreen said.
“Since none of the specialized drilling,cementing and completion equipment,which is required for successful coalbedmethane development exists in Alaska,Evergreen will utilize its own equipmentand personnel to perform these opera-tions,” the company said.
Location and road building will aver-
continued from page 1
EVERGREEN
Foothills has also submitted infor-mation recently, and Britt said he willbe asking senior staff for status memoson what is where and what is signifi-cant.
“Now the exercise will be toarchive those files in such a fashionthat when this ramps up again the nextgas pipeline office won’t have to gothrough what we had to go through.”
“The work done to date will bevaluable when the stars come intoalignment,” King said. ◆
continued from page 7
GPO
see EVERGREEN page 19
ADVERTISER INDEX18 Petroleum News • Alaska Week of June 2, 2002
Companies involved in Alaska’soil and gas industry
ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS
All of the companies listed above advertise on a regular basis with Petroleum News • Alaska.
NEI FluidTechnology
NEI has been in operationsince the early 1980s. Reggieand Kathryn Russell purchasedNEI in January 1999 from theestate of the prior owners whohad been killed in a plane acci-dent. NEI specializes in petro-chemical fluid handling suppliesand equipment such as valves,filters, testing equipment andelectronic fluid monitoring equip-ment.
Kathryn has been working inthe petrochemical industry since1992. She and Reggie have an18-month old daughter, Haley,who is learning the business atthe office with her mother threedays a week. Kathryn enjoyspainting watercolor landscapesof local scenes and is an avidsalmon and halibut fisher.
North Star Terminaland Stevedore Co.
North Star Stevedore has along and proud history of provid-ing a variety of services withinAlaska, including module fabrica-tion support, heavy equipmentleasing, seafood handling andcargo stevedoring at five ports —Valdez, Anchorage, Homer, DutchHarbor and Seward. It has a liftcapacity nearly unequaled in thestate and can transport theircranes to construction locationsas needed. The Anchorage facili-ty occupies approximately 23acres.
Steve Post, sales manager,joined North Star Stevedore justover four years ago, bringing 17years of experience withHoneywell to his current position.Steve enjoys hunting and fishingin Alaska from his airboat.
BusinessSpotlight
Steve Post, sales manager
Kathryn Russell, owner
Fore
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age two to three days per site. Drilling theconductor will also take two to three daysper site.
Eight wells will be drilled in two pilotlocations in August. In each pilot area,Evergreen said it will core one of the fourwells. The company estimates it will take4.5 days to drill the cored well and 3.5days each to drill the other wells, includ-ing mobilization and demobilization, log-ging, running casing and cementing thesurface and production casings.
While site preparation will be done indaylight hours, drilling will be a 24-houroperation.
Production testing over thewinter
Completing the wells is estimated attwo to four days per well and includesrunning a cement bond log, remedialcementing if required, perforating,hydraulic fracturing and cleaning up thewell after fracturing. This work will bedone in daylight hours.
Production testing, including installa-tion of production equipment (tanks,down-hole pumps and measuring equip-ment) and placing the well on production,will begin in October and continuethrough July 15, 2003. The site will besecured with fences and locked gates.Equipment installation will average fourdays per well and unless a major prob-lems requires immediate attention workwill be done during daylight hours.
Wells may require additional workduring this phase — re-fracture treat-ments or changing the pump. Producedwater will be trucked from the site to thewater disposal well approximately sevenmiles from each pilot.
Coal in Tyonek formation
A local water well contractor will drilland set conductor casing to plus or minus20 feet below the gravel zone which is100 to 200 feet deep.
Evergreen’s drilling equipment willdrill the remaining sections of the hole:surface portion to at least 100 feet belowthe fresh water zone and production holeto a depth no greater than 2,999 feet.
Evergreen said its drilling equipmentis a truck-mounted highly modified waterwell rig.
In air drilling the well is being drilledunder-balanced, Evergreen said, and wellcontrol is a concern. “Fortunately, how-ever, for coal bed methane drillers, verylittle gas is produced during the drillingprocess. This is because the coals requiresignificant de-watering before gas is pro-duced.”
Gas produced during drilling is usual-ly from an adjacent sandstone formation,the company said. “In these cases, key toany under-balanced drilling operation isthe ability to keep the drilling area free ofexplosive concentrations of natural gas”and fortunately “very little gas is liberat-ed” during coalbed methane operations,Evergreen said.
The company said it will use a divert-er, a series of check valves in the drillstring and a cement truck on the site instand-by mode to manage any natural gasthat may emanate from the well.
Cement modified for Alaska
Evergreen has its own cementingequipment and uses proprietary cementblends designed for coalbed methane.The company said it is modifying thecements to work in Alaska’s colder cli-mate.
The company’s cementing equipmentis working in Ireland and the United
Kingdom for Evergreen Resources (UK)Ltd. and will be shipped to Alaska forwork at Pioneer.
After cementing, Evergreen uses itsown hydraulic fracture equipment tohydraulically fracture stimulate the targetcoal seams. In hydraulic fracturing,gelled water, surfactant (soap) and nitro-gen gas is pumped at pressures and rateshigh enough to crack the rock. After thefracture is established, Evergreen said,sand is mixed in and the slurry is pumpedinto the crack created, typically one-halfinch wide and 200 feet long.
Fracture treatments, the company said,“increase the cross sectional area that gasand water can flow from the formationand into the well bore” enhancing thewell’s ability to produce.
Nine-month production test
Evergreen said there will be a nine-month production test, with a progressivecavity pump installed to remove waterfrom the coals. Water rate, gas rate andpressures will be recorded and analyzed todetermine if the coals will produce eco-nomic quantities of gas.
A six foot by eight foot shed will beinstalled over the natural gas powered six-cylinder engine powering the pump toprotect the engine and to mitigate noise.
Gas produced during the productiontest will be vented or used to keep the pro-duced water and gas lines from freezing.
Water produced, estimated at 150 to400 barrels per day per well, will be pipedto two 500 barrel tanks and then trucked tothe injection well 1.4 miles south of theParks Highway on Vine Road, wheretanks and pumps are in a 60 foot by 36foot steel building. Evergreen said haulingwill most likely occur on a daily basis,although if the wells produce on the high-er end of the company’s water productionestimates, several trips per day may beneeded.
Pilot locations
Pilot No. 1 is on a 109-acre parcel insections 1 and 2 of township 17 northrange 3 west, Seward Meridian , 8.5 mileswest of the city of Wasilla and 3.5 milessoutheast of the city of Houston, 1.5 milesnorthwest of the intersection of the Parks
Highway and the Big Lake Turnoff. A pri-vate party owns both surface and mineralrights.
Pilot No. 2 is in the southeast corner ofsection 30 T18N R1W, SM, 2.5 milesnorth of the Parks Highway along thewest side of Church Road. Surface andminerals are owned by the state of
Alaska, Division of Lands; AlaskaMental Health trust lands adjoin thelease.
Pilot No. 3 is in sections 20 and 29 ofT18N R2W, SM, one-half mile east ofthe intersection of Church Road andPitman Road, approximately four milesnorthwest of Wasilla. Minerals and sur-face on the north 40 acres are owned bythe Division of Lands; minerals and sur-face on the south 40 acres are owned bythe Alaska Mental Health Trust.
Pad size for drilling and completingthe well is 175 feet by 200 feet. A total of12,200 barrels of water is needed fordrilling and completion; additional watermay be required during the production-testing phase of the plan for remedial welloperations.
During drilling and hydraulic fractur-ing of the Pioneer 1702-15DA water dis-posal well, all water will be purchasedfrom local suppliers. As wells are fracturestimulated and placed on production test,produced water will be used.
Evergreen estimates that roughly7,000 barrels of water will be purchasedand the remainder will come from pro-duced water. ◆
THE REST OF THE STORYPetroleum News • Alaska 19Week of June 2, 2002
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ADVERTISEMENT20 Petroleum News • Alaska Week of June 2, 2002
