Petroleum News 082706
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page Marshall: BP continuing inspections, 13 bypass lines possible on east side Vol. 11, No. 35 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of August 27, 2006 • $1.50 ● PIPELINES & DOWNSTREAM This month’s Mining News inside No reservoir damage AOGCC: no harm from one-time shutdown of Prudhoe eastern operating area By KRISTEN NELSON John Norman said Aug. 18. Petroleum News However, Norman cautioned, if shutdowns become “a repetitious he Alaska Oil and Gas pattern or cycle then certainly it’s Conservation Commission going to become problematic.” T does not expect damage to PHOTOS PATRICK JUDY Norman told a joint meeting the Prudhoe Bay reservoir of the Alaska Legislature’s from the Aug. 6 shutdown of the House and Senate Resources eastern operating area. committees that field operator “We’ve asked ourselves what JOHN NORMAN CATHY FOERSTER BP Exploration (Alaska) has told risks might there be to this very the commission they “plan to important reservoir … as a result of a rather abrupt continue waterflood and gas cap injections into the shutdown. And at this time we see no evidence a one- reservoir and we see that as being beneficial because time, temporary shutdown of oil production from the it will allow pressure to be maintained and indeed eastern operating area of the Prudhoe Bay reservoir build up during this period.” will damage that reservoir,” commission Chairman see AOGCC page 20 ● NATURAL GAS Back the Mac or pay price Harper says NWT’s failure to clear way for gas line could jeopardize hopes By GARY PARK the pipeline would be a step For Petroleum News closer toward agreement on a revenue-sharing pact. anadian Prime Minister But opposition to the project This month’s North of 60 Mining News has 17 stories, including the lat- Stephen Harper has put could undermine the chances est on the Bre-X scandal, a report on the progress made at the Pebble C the Northwest Territories’ of federal money being trans- mine sister projects in British Columbia, the fish refuge proposed for collective feet to the fire, ferred to territorial and aborigi- the Pebble mine area, the stepped up interest in B.C. uranium claims, and what BHP Billiton brings to Alaska. linking support for the nal governments, he said. Mackenzie Gas Project to the He said the proposed gas region’s hopes for a greater Bonanza may await explorers in STEPHEN HARPER HERB NORWEGIAN pipeline still faces many obsta- chunk of resource royalties. cles, including competition NPR-A South; miners want BLM He said the NWT’s cherished dream of getting from a pipeline out of Alaska’s North Slope to the to include coal, hard rock leasing direct access to royalty revenue rather than hand- Lower 48, fast-rising construction costs and oppo- outs from the federal government “won’t happen nents who Harper said would risk a “historical As federal regulators plan the opening unless you make sure that projects like the opportunity” to protect their own “narrow inter- of the 9.2 million acres in the southern Mackenzie Valley pipeline come to fruition.” est.” part of the National Petroleum Reserve- Speaking to business and political leaders in the He did not directly mention the Deh Cho First Alaska to oil and gas leasing, one Alaska NWT Legislature Aug. 19, Harper said approval of industry group is urging them to broaden see MAC page 18 their outlook. ● ALTERNATIVE ENERGY The Alaska Miners Association is advocating that the Bureau of Land Management, which oversees all activity in the 23-million-acre National Geothermal powers resort Steve Borell, execu- Petroleum Reserve-Alaska, cast a wider tive director, Alaska net in search of energy development Miners Association New UTC plant uses low-temp water, saves small fortune by replacing diesel opportunities. By SARAH HURST “For several decades, the mining industry has been aware For Petroleum News see COAL page 18 attling sub-zero temperatures is always a chal- SARAH HURST lenge for energy projects in Alaska, but now it’s B also possible to tap into the natural heat source BREAKING NEWS that lies beneath the ground and use it to pro- duce electricity. Bernie Karl, the owner of Chena Hot Canada battle over: Canadian Oil Sands Trust proclaims victo- 4 Springs Resort, charmed and cajoled his way into ry in Canada Southern take over, has no plans to develop Arctic gas winning Alaska’s first geothermal power plant, which was officially unveiled in the presence of U.S. Sen. 5 Legal cloud hangs over sale: Western Gulf of Mexico lease Ted Stevens, Gov. Frank Murkowski and an army sale sets records for number of bids and amount of money bid marching band Aug. 20. The truck-sized plant, nicknamed the Chena Chiller, had already been running for almost two 14 Report out on North Slope pipelines: SPCO says com- weeks before the celebratory event was held. “It’s Gov. Frank Murkowski, Bernie Karl and Sen. Ted mon carrier oil pipelines generally in good shape, minimal corrosion Stevens admire the Chena Chiller geothermal power see CHENA CHILLER page 19 plant at the official opening ceremony. 2 PETROLEUM NEWS • WEEK OF AUGUST 27, 2006 contents Petroleum News A weekly oil & gas newspaper based in Anchorage, Alaska ON THE COVER 5 Potential Alaska state and federal oil and gas lease sales No reservoir damage 10 BLM offers 8 million acres in NPR-A AOGCC: no harm from one-time Acreage includes northeast, northwest planning shutdown of Prudhoe eastern areas, acreage relinquished since 2002 sale, operating area new area north of Teshekpuk Lake Back the Mac or pay the price NATURAL GAS Harper says NWT’s failure to clear way for gas line could jeopardize hopes 3 Galveston oh Galveston.... Geothermal powers resort Holding company subsidiaries take role in first LNG storage facility; get approval for New UTC plant uses low-temp water, saves 1st terminal on U.S.-Canada West Coast small fortune by replacing diesel 4 Battle over: No plans to develop Arctic gas Bonanza may await in NPR-A South; miners want BLM to include coal, hard rock leasing 6 Woodside seeks permits for U.S. LNG port ALTERNATIVE ENERGY Australian company wants to regasify cargoes far off the coast of Los Angeles using special 12 Wind farm would interfere with signals ships; first Shell LNG reaches Mexico 20 Geothermal resources widespread in Alaska 7 Palin, Knowles to consider competing gas line proposals EXPLORATION & PRODUCTION 12 Canadian gas exports take three-way hit 12 Tillerson: World has decades of “sufficient oil” 16 Penn West touts multi-billion barrel deposit PIPELINES & DOWNSTREAM 4 Agrium to continue Kenai operation in ’07 FINANCE & ECONOMY 14 SPCO reports on North Slope pipelines 15 Taking flight in northern Canada Annual report shows Alaska North Slope Mullen spreads wings in remote resource locations, common carrier oil pipelines have some fueled by spate of takeovers; sees Mackenzie corrosion but are generally in good shape pipeline as major prey PRUDHOE BAY TRANSIT LINES GOVERNMENT 8 Regulators propose JPO for upstream 8 Alberta: Probing profits from pollution 9 Prudhoe shutdown could cost state $2B Provincial government and industry launch But with PPT in place state still comes out $308-$999M joint effort to evaluate economics of reducing ahead at Revenue’s $53.60 per barrel price case estimate carbon dioxide emissions into atmosphere 13 BP: bypass lines possible on east side LAND & LEASING 13 Gathering Center 2 loses compression 5 Legal cloud hangs over sale results 16 BP denies it manipulated Alaska data PETROLEUM NEWS • WEEK OF AUGUST 27, 2006 3 ● NATURAL GAS Galveston oh Galveston. Holding company subsidiaries take role in first LNG storage facility; get approval for 1st terminal on U.S.-Canada West Coast By GARY PARK ing LNG successful project — location that offers cause significant adverse environmental For Petroleum News LNG Impel, based in Barbados, is shorter sailing times and lower shipping effects based on a comprehensive study, responsible under the joint agreement for costs for suppliers; community support; the implementation of mitigation measures alveston LNG, a private Calgary- covering 100 percent of the capital cost of and take-away pipe to move the gas into and a follow-up program. The project now based holding company, is suddenly the hub. the North American network. has the backing of the Canadian and British G making waves in the global LNG In return it would gain access to Dubai’s One of those customers could be the Columbia environmental regulators and a scene. 50-year guaranteed tax holiday, part of the Alberta oil sands sector, where Boulton partnership agreement with the Haisla First Through its two wholly owned sub- emirate’s ambition to become the energy said demand for natural gas to power the Nation. sidiaries it has secured a role in construc- trading hub of the Middle East. production “will continue to grow, making Site preparation will start in late fall and tion of the world’s first LNG storage facil- the project attractive to offshore suppliers.” operations are scheduled to start in 2009, ity and has just cleared the final regulatory Kitimat receives permit Canadian Environment Minister Rona with initial send-out capacity of 610 mil- hurdle for its proposed LNG terminal on Separately, on Aug. 22, Kitimat LNG Ambrose said the terminal is not likely to lion cubic feet per day. ● the northern British Columbia coast. said it has received the Canadian govern- The announcements on back-to-back ment environmental permit needed to days give Galveston its highest profile develop its C$500 million terminal and since it was launched in 2003.