Houston company takes stake in Brooks Range

Another small independent company is taking a stake in new North Slope development. Thyssen Petroleum Corp. of Houston has taken an equity position in Brooks Range Petroleum Corp., an Alaska-based company active in exploration and development on the Slope.

Thyssen Petroleum’s investment was confirmed by Brooks Range Chief Operating Officer Bart Armfield. Thyssen will buy the equity shares of Brooks Range that are now held by Alaska Venture Capital Group, a consortium of small Kansas-based independents, and Ramshorn Investments Inc., a subsidiary of Nabors Industries.

There may be additional investors in Brooks Range announced soon.

Brooks Range has been exploring on the Slope for more than a decade and is now developing one of its discoveries, the small Mustang oil field west of the Kuparuk River field.

The company plans to have first production in early 2016, Armfield said.

Mustang is expected to initially produce between 8,000 barrels per day and 10,000 barrels per day in 2016, its first full year of production, and about 12,000 b/d in 2017 as development drilling in the field is completed, Armfield said.

An oil gas processing facility being built at the field will have to capacity to process 15,000 b/d and will be available for other companies developing nearby prospects to use, he said.

Armfield said drilling on three production wells will begin this fall with drilling of six to eight additional wells in 2015 to provide the initial production. Another eight to 10 wells are planned in 2016, he said. Two test wells were drilled at Mustang in 2011 and 2012.

Total costs for the project, including the plant and drilling, are estimated at $580 million, Armfield said. The Alaska Industrial Development and Export Authority is investing $50 million in the process plant, which is estimated to cost between $200 million to $220 million.

AIDEA has also invested about $20 million in a $27 million gravel access road and pad to support the Mustang project. Other partners in the project including Brooks Range also contributed to the road and pad construction.

The authority’s investment in the processing plant, as in the road and pad, are structured so that AIDEA is a preferred member in the two limited liability companies created for the projects. The agreements provide for AIDEA’s share to be purchased by the other parties.

Over time Mustang will generate about $300 million in new state tax and royalty revenues and North Slope Borough tax revenues, according to estimates developed by AIDEA.

Mustang’s resources are estimated at 24 million barrels of recoverable reserves but there are additional prospects nearby that Brooks Range intends to pursue after the initial project is producing, Armfield said.

Its investment in Brooks Range will be Thyssen Petroleum Corp.’s first venture into Alaska. The company is now focused on production onshore in the U.S. Gulf coast states. Thyssen was not available for comment.

The company is the latest of a number of small companies becoming active on the slope. Miller Energy, a small Tennessee-based company active in Cook Inlet, through its subsidiary, Cook Inlet Energy, recently purchased Savant Alaska, a majority owner and operator of the small Badami field east of Prudhoe Bay.

Earlier this year Caelus Energy, a newly-formed independent, completed the acquisition of Pioneer Natural Resources’ Alaska assets, which include the producing offshore Oooguruk field near the Kuparuk River field.

Another new entrant on the North Slope will be Hilcorp Energy after that company’s deal is approved to acquire properties now owned by BP. Hilcorp will acquire two small producing offshore fields, Northstar and Endicott, as well as 50 percent of the Milne Point field, whch is onshore. Hilcorp would be the operator of all three fields.

Hilcorp would also become 50 percent owner in Liberty, a small offshore project that is not yet developed. BP would remain as operator of that project, however. A development plan is to be submitted for Liberty to the U.S. Bureau of Ocean Energy Management by the end of the year.

The Hilcorp acquisition of the BP properties is expected to be given final approval by the end of the year.