No cutbacks, producers say, despite low oil prices

PHOTO/Lisa Seifert/For the Journal
Despite lower oil prices, Alaska’s petroleum operators are cautiously optimistic and are sticking with plans for increased spending on new projects and drilling in 2002.

Steve Marshall, president of BP Exploration (Alaska) Inc., told the Resource Development Council for Alaska Inc.’s annual conference in Anchorage Nov. 29 that his company is planning $700 million in capital expenditures this year and will spend $3.5 billion over the next five years.

A major project for BP next year will be a $100 million program to develop North Slope viscous, or heavy, oil resources, Marshall said.

Alaska accounts for 10 percent of BP’s worldwide oil production, and the company’s production in Alaska will increase 13 percent next year with its new Northstar field now in production, he said.

Responding to a question about reported offers to buy BP’s assets in Alaska by other companies, Marshall said BP is sticking with its long-range plans to increase its core assets in Alaska.

The company is concentrating on work in and around producing fields and existing infrastructure, and will drill three exploration wells next year aimed at increasing reserves around the producing fields.

The North Slope and the North Sea have been the two pillars of BP’s worldwide oil production for years, Marshall said, and the company now sees its large, undeveloped gas resources in Alaska as key to increasing its gas business in North America, where BP is the largest gas producer.

The North Slope still has substantial potential for new oil, with an estimated 7 billion barrels of oil resource yet to be developed, Marshall said.

Rick Mott, exploration manager for Philips Alaska Inc., told the RDC conference his company sees continued bright prospects for new exploration.

Phillips will drill or participate in 10 exploration wells on the North Slope this winter, including five in the National Petroleum Reserve-Alaska. The company will also test three separate accumulations of oil and gas discovered in the NPR-A in previous drilling.

Mott also said the company’s new Alpine field is producing more than 90,000 barrels per day on average. The field had originally been expected to produce 60,000 barrels daily.

Jack Williams, Alaska production manager for ExxonMobil Production Co., said his company is proceeding with plans for a $1 billion gas recycling and condensate production project in the Point Thomson gas field, 60 miles east of Prudhoe Bay.

The company hopes to have the project in production in 2006, producing 70,000 barrels per day of condensate, a liquid hydrocarbon product condensed from natural gas liquids produced with dry gas at the field. Until a gas pipeline is available, the dry gas will be reinjected into the underground reservoir, Williams said.

In Cook Inlet, Marathon Oil Co. and Unocal are pushing ahead with an aggressive program to explore for gas on the southern Kenai Peninsula. The companies previously reported that exploration wells drilled in a partnership near Ninilchik were successful. Although reserve estimates were not released, plans for a gas pipeline from Kenai to the Ninilchik area are in the works, according to Chuck Pierce, who heads Unocal’s Alaska operations.

Pierce told the RDC that he expects the pipeline to be in operation by November 2003. It could eventually be extended further south to Anchor Point and eventually Homer, depending on the success of other exploration wells in the area, he said.

John Barnes, Marathon’s Alaska manager, told the conference that his company’s new Wolf Lake gas field began production Nov. 17, producing 3 million cubic feet per day. This is the first new gas supply brought into the Southcentral Alaska market since 1979, Barnes said.

Marathon sees several other prospects for gas near the new field, which can be tapped using the infrastructure built for Wolf Lake, he said. Gary Carlson, senior vice president for Forest Oil Corp., told the conference his company’s top priority is developing its new Redoubt Shoal oil and gas field, which is now estimated to contain more than 50 million barrels of recoverable oil.

Forest is spending $100 million on Alaska projects this year and will increase this to $150 million in 2001, Carlson told the RDC.

12/09/2001 - 8:00pm