ConocoPhillips finishes winter exploration well in NPR-A, demobilizes rig


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ConocoPhillips has completed an exploration well in the National Petroleum Reserve–Alaska and is demobilizing the drill rig, a company spokeswoman said April 26.

Doyon Drilling Rig 141 drilled the Cassin test in the ConocoPhillips-operated Bear Tooth Unit in the northeast NPR–A. The location is about 38 miles west of the producing Alpine field that is also operated by ConocoPhillips, company spokeswoman Natalie Lowman said.

NPR-A is a 23-million acre federal reserve established in 1923 on the western North Slope for its oil potential, although no commercial production has yet been established.

Cassin is one of two exploration wells drilled this last winter season in NPR–A. The other is a test by Australian independent Linc Energy at Umiat, a small oil discovery made years ago on the southeast boundary of the petroleum reserve and south of where ConocoPhillips is exploring.

Linc Energy is now finishing its own winter exploration program, that company has said.

Cassin is part of a long-range exploration and assessment program ConocoPhillips has under way in the northeast NPR-A, Lowman said.

“We were under an obligation to the Bureau of Land Management to drill this well,” Lowman said. It was a commitment made to BLM when the Bear Tooth Unit was formed in 2009.

Bear Tooth is northwest of the Moose’s Tooth Unit in the reserve, where ConocoPhillips is also operator, Lowman said. The company is working on development of two oil and gas discoveries in the unit, “GMT-1”, formerly known as “Lookout,” that is about 17 miles west of the Alpine field, and GMT-2, formerly known as “Rendezvous,” about 25 miles west of Alpine.

Lowman said ConocoPhillips has begun regulatory, permitting and engineering work related to development of GMT-1, which is closest to the infrastructure of the Alpine field, as a result of the state Legislature’s passage of new state oil and gas tax legislation.

Alpine is a producing field on state lands on the Colville River delta west of the large Prudhoe Bay and Kuparuk River fields. The field borders the NPR-A on the east.

Even though NPR-A is federal land, the state’s tax authority on oil and gas production applies there, along with the state’s property tax on oil and gas facilities and pipeline.

Municipal taxes imposed by the North Slope Borough also apply in the reserve.

However, under current federal law, half of the federal royalty from any NPR-A production as well as lease rental and bonus revenue is shared with the state, although some of this must be appropriated by the state Legislature to local Inupiat communities in the reserve to develop local infrastructure and public services.

Small parts of the mineral rights in the reserve are also held by Arctic Slope Regional Corp. which had rights to select some NPR-A subsurface lands in lieu of other federal acreage on the slope.

CD-5, a new drill site being developed near the Alpine field by ConocoPhillips, is within the NPR-A and its subsurface is owned by ASRC. Therefore, royalties from CD-5 production, which is estimated to peak at 18,000 barrels per day, will go to ASRC.

However, under terms of the 1971 Alaska Native Claims Settlement Act, 70 percent of mineral royalties from lands transferred to Native corporations under ANCSA are shared with other regional and village corporations.

ASRC, in this case, will retain 30 percent of CD-5 royalties in addition to its share of the 70 percent distribution to all Native corporations.

 

Tim Bradner can be reached at tim.bradner@alaskajournal.com

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