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Cook Inlet Sunfish development possible

Jan. 13, 1997

Phillips/ARCO Cook Inlet Drilling Activity [12572 bytes] Long-delayed development of the former Sunfish discovery in Alaska's North Cook Inlet is primed to move ahead. ARCO Alaska Inc. and Phillips Petroleum Co. agreed to new terms that essentially makes Phillips operator of the prospect, now renamed Tyonek Deep. Under terms of the deal, ARCO will convert its 60% working interest into a sliding-scale, overriding royalty interest on any future output. Phillips will drill a delineation well

Phillips/ARCO Cook Inlet Drilling Activity [12572 bytes]

Long-delayed development of the former Sunfish discovery in Alaska's North Cook Inlet is primed to move ahead.

ARCO Alaska Inc. and Phillips Petroleum Co. agreed to new terms that essentially makes Phillips operator of the prospect, now renamed Tyonek Deep.

Under terms of the deal, ARCO will convert its 60% working interest into a sliding-scale, overriding royalty interest on any future output.

Phillips will drill a delineation well in the deep oil zone beneath its Tyonek platform in first half 1997.

Development of the prospect stalled in 1994, after several wells were drilled that showed less oil than originally anticipated. ARCO had hoped the prospect contained about 750 million bbl; Alaska's Dept. of Natural Resources has now reduced the estimate to 25 million bbl.

But both ARCO and Phillips believe the future of the prospect lies in deep oil pay under Phillips' existing Tyonek platform.

"This agreement enables Phillips to move forward with appraisal of the Tyonek Deep formation in a manner that benefits both Phillips and ARCO," said Mike Coffelt, Phillips' vice-president of worldwide exploration. Added Michael Richter, vice-president of exploration and land for ARCO Alaska: "We have always believed this accumulation would be developed and produced from the existing Tyonek platform."

No funds changed hands in the deal, which terminates in 2007 if oil is not found in commercial quantities.

But a wider discussion between the companies led to two separate Alaska deals. In one, ARCO will acquire Phillips' working interest in the Warthog prospect, 2 miles off the Arctic National Wildlife Refuge on state leases in Camden Bay (OGJ, Nov. 27, 1995, p. 81). Also, Phillips will convert its working interest in West Pt. Thomson, on the North Slope east of Prudhoe Bay, into a sliding-scale, overriding royalty interest.