ALASKA STEPPING UP STATE LAND EXPLORATION

March 18, 1991
Alaska has taken steps designed to spark more interest in oil and gas exploration on state owned land. Alaska's Department of Natural Resources (DNR) has asked oil and gas companies to participate in a series of stratigraphic test wells to identify potential hydrocarbon bearing areas for possible future leasing. Of special interest are Alaska's interior basins, notably the Holitna, Minchumina, Yukon Flats, and Kandik basins.

Alaska has taken steps designed to spark more interest in oil and gas exploration on state owned land.

Alaska's Department of Natural Resources (DNR) has asked oil and gas companies to participate in a series of stratigraphic test wells to identify potential hydrocarbon bearing areas for possible future leasing.

Of special interest are Alaska's interior basins, notably the Holitna, Minchumina, Yukon Flats, and Kandik basins.

The program would enable the state to high grade acreage it will choose under federal land conveyance clauses of the 1959 Alaska Statehood Act. Alaska is to choose 20 million acres by Jan. 2, 1994.

Northern Exploration Services (NES), Anchorage, has proposed a continuous slimhole coring program to cut costs of the stratigraphic test campaign. NES is an affiliate of Northern Geophysical of America (NGA), Englewood, Colo.

Meantime, DNR's Division of Oil and Gas (DOG) is advancing its 5 year oil and gas lease sale program, issuing a flurry of sale notices covering North Slope, Beaufort Sea, and Cook Inlet offerings. The first sales of the year, a simultaneous offering of Kuparuk uplands Sale 70A and Cook Inlet Sale 67A, brought in about $33 million.

STRATIGRAPHIC PROGRAM

DNR Commissioner Harold Heinze, a former president of ARCO Alaska Inc., last month sent a letter to oil and gas companies soliciting interest in a series of stratigraphic test wells in Alaska's interior basins.

"Several of the state's interior basins have never been drilled, and all are relatively poorly understood in terms of basin history, maturation I stratigraphy, and structure," Heinze wrote. "There may be other areas of Alaska also of interest. Given the potentially large benefits to the state, we are prepared to facilitate an aggressive program at this time."

DOG Petroleum Manager Bill Van Dyke said the program could generate interest in other Alaskan basins in addition to the four target areas: North Slope, western coastal Alaska, Brooks Range, onshore and offshore Gulf of Alaska areas, and along the Trans-Alaska Pipeline System (TAPS) haul road corridor.

Van Dyke said the state may help pay for the program, but most of funding would come from industry. Test data would be confidential.

Analysis of all data from the stratigraphic wells is due by December 1992.

The state plans a second solicitation of interest late this month to form a working group of all parties in the proposed program. Among those participating in the initial solicitation of interest late last month were Amerada Hess Corp., ARCO Alaska Inc., BP Exploration (Alaska) Inc., Chevron U.S.A. Inc., Conoco Inc., Exxon Corp., Marathon Corp., Texaco Inc., Unocal Corp., and Alaska native corporation Doyon Ltd.

SLIMHOLE PROGRAM

NES proposes a continuous slimhole coring program to evaluate frontier basins covered by the DNR proposal while avoiding the high costs of conventional drilling in the remote regions.

NES would use a continuous core slimhole rig rated to 10,000 ft to be provided by Longyear Drilling. It cites advances in slimhole technology-notably improvements in well control and bit design-in recent years, allowing better understanding of frontier basin analysis at a fraction of the cost of conventional drilling methods.

NES also would supply regional seismic and gravity data collected by NGA using portable high fold Poulter acquisition systems.

The drilling and seismic programs would be supported by low cost small to medium lift helicopters and fixed wing aircraft. Total mobilization time would be 131 days for drilling, 37 days for seismic surveys, and 30 days for gravity and magnetic surveys.

NES estimates a single basin program involving a 6,500 ft continuous core slim hole and 1 month's seismic program totaling about 70 line miles of 60 fold Poulter acquisition with supporting gravity and magnetics would cost $7.5 million. That compares with typical costs of $10-30 million for an Alaskan onshore wildcat.

ALASKA LEASING PROGRAM

DOG's oil and gas lease sale program was put back on track last year after being suspended in June 1989 when the state legislature eliminated funding for the program (OGJ, Oct. 30, 1989, p. 28).

Last fall, DOG proposed adding three more sales to the schedule for 1995 (see table). Beaufort Sea Sale 81 would reoffer offshore relinquished, expired, and unleased tracts from Sales 43 and 43A totaling about 400,000 acres between Cape Halkett and the Colville River. Icy Cape Sale 82 would offer about 275,000 acres of coastal tracts and 565,000 acres of Chukchi Sea tracts in the Point Lay-Icy Cape area south of Wainwright. Western Beaufort Sea Sale 83 would offer about 190,000 acres of tidelands in the Smith Bay area between Sale 65 and Sale 68, including relinquished and unleased acreage from Sale 52.

ARCO dominated the first sales of the current 5 year leasing program, 70A and 67A. ARCO apparently acquired 38 tracts for $14.3 million in Sale 70A, including the sale's highest per acre bid, $1,473, for Tract 136 along Gwydyr Bay. Conoco submitted the sale's apparent top bid, $3.03 million, for Tract 41 in the Kuparuk River area about 15 miles southwest of Deadhorse. Among other bidders, BP apparently acquired 34 tracts for about $3.5 million, Amerada Hess 20 parcels for about $1.5 million, and Conoco 20 tracts for about $7 million.

Sale 70A attracted apparent high bids of $27.7 million out of $31.8 million exposed for 109 tracts covering 420,568 acres in the Kuparuk uplands.

ARCO also dominated Sale 67A, apparently acquiring 22 tracts for about $4.37 million in a combine with Amoco Production Co. and Phillips Petroleum Co. Unocal was runnerup with 22 parcels for apparent high bids, alone or in a combine with Marathon, totaling about $800,000.

Total high bids were about $5.5 million for 55 Cook Inlet area parcels covering 191,588 acres.

SALE NOTICES

DOG gave notice of intent to issue a final decision, expected about June 18, on Cook Inlet Sale 74 scheduled for Sept. 24.

Sale 74 will offer 134 tracts covering about 605,953 acres in the Kenai Peninsula Borough.

It will cover acreage in Cook Inlet between Kalgin Island and the peninsula and onshore from Nikishka to Ninilchik.

DOG is seeking comments on proposed Cook Inlet Sale 78 scheduled for January 1994. The proposed sale area probably will cover about 600,000 acres, a fraction of the call area. Deadline for comments is Sept. 1. A sale decision is likely in October 1993.

DOG also is seeking comments on Beaufort Sea Sale 68, scheduled for May 1992. Deadline for comments is next May 29, and a decision is expected in November. Sale 68 would offer about 393,000 acres off the National Petroleum Reserve-Alaska (NPR-A)-including disputed acreage in Elson Lagoon, Dease Inlet, and Admiralty Bay-between Tangent Point and Nulavik.

Beaufort acreage offered but not leased in Sales 50, 52, and 55 may also be offered.

A decision is expected on White Hills Sale 61 next July and on North Slope foothills Sale 57 in June 1993.

Sale 61 will offer an unspecified amount of North Slope onshore acreage southwest of Prudhoe Bay between the Sagavanirktok River and the Colville River. It is scheduled for January 1992.

Sale 57 will offer about 1.1 million acres near the Brooks Range foothills about 35 miles south of Umiat village with the TAPS corridor on the east and the Gates of the Arctic National Park to the south and west.

It is scheduled for September 1993.

In addition, DOG reached a final decision on Kavik Sale 64 and Beaufort Sea Sale 65. Both sales are scheduled next June 4 in Anchorage.

Sale 64 will offer 140 tracts covering about 754,542 acres in the North Slope Borough between the Canning and Sagavanirktok rivers about 30 miles south of Mikkelsen Bay.

Sale 65 will offer 108 tracts covering about 489,416 acres in the North Slope Borough.

It will entail offshore acreage between Pitt Point off NPR-A and the mouth of the Canning River off the Coastal Plain of the Arctic National Wildlife Refuge.

Copyright 1991 Oil & Gas Journal. All Rights Reserved.