Petroleum News 123007
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December 2007 edition of North of 60 Mining News inside Petroleum News Vol. 12, No. 52 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of December 30, 2007 • $1.50 ● NATURAL GAS Nabors 106E drills first well Time to think huge JUDY PATRICK JUDY Economist tells industry execs LNG is their ‘friend’ provided they can adapt By GARY PARK A similar view was expressed by For Petroleum News TransCanada Chief Executive Officer Hal hose trying to get a handle on global energy Kvisle, who argues that because of LNG’s trends could use England’s industrial revolu- mobility, it will be delivered to North T tion of the late 18th century as a starting America only if prices compete with those point, then extrapolate that into a “super- in Europe and Japan. megatrend,” suggests Peter Tertzakian, chief ener- gy economist at ARC Financial. action. His message for Canadian oil and gas producers “This is not an overnight story,” he said. “But it at a Calgary outlook conference is to start thinking is a story that we’re actually seeing emerging and Pictured above is Nabors new Rig 106E, a new generation, pur- globally and adapt to change as the industry playing out already, sooner than I thought it pose-built, lightweight AC rig that can be broken down into 53 dif- embarks on a permanent reshaping. ferent loads for moving — 38,000 pounds the heaviest. The rig is would.” under contract in Alaska to Chevron and in the above photo is Known for the scope of his thinking, much of it drilling its first well (ever) at the Happy Valley prospect on the captured in his book “A Thousand Barrels a Kenai Peninsula this past October. The rig will begin drilling at Overseas LNG demand rising Chevron's White Hills prospect on the North Slope in January. Second,” Tertzakian told a packed meeting room that the industry is “in a period of change, which Using liquefied natural gas as an example, he can either be discomforting, or seen as an opportu- noted that the commodity, contrary to a widely Southward migration: Precision nity.” held belief, is “our friend.” Drilling places heavy bet on U.S. While conceding that the prospects for 2008 are Although LNG imports into the U.S. will com- not all that positive, and that the days of counting pete with Canadian gas, price will determine how Precision Drilling Trust, Canada’s largest oilfield services on other people to “take care of us” are over, he much reaches North America. company, has added its name to the southward migration, by tried persuading his audience to act on what many Over the past two years, it has become apparent setting a capital budget of C$370 million for 2008 (up 70 per- of them have claimed over the years, that Calgary that LNG demand is rising overseas, especially in cent from 2007) and deciding there is less risk in the United is an international energy center. Japan, the United Kingdom and Spain, where the States than Canada. Suggesting that the longer-term trend for both landed price for LNG is much higher than in North Having increased its U.S. rig fleet to 12 from one in 2007, oil and gas prices is upward, Tertzakian said the America, Tertzakian said. the trust expects the pace of growth to accelerate “with a con- challenge for Canadian companies is to figure out As a result, LNG is selling for almost US$14 how to get a piece of the emerging global energy see HUGE page 9 see BET page 9 ACMP moves to new DNR division ● LAND & LEASING Commissioner Tom Irwin said Dec. 21 that the Alaska Department of State requesting bids Natural Resources has recognized the need to create two offices because of the Competing exploration license proposals wanted; Copper River leases issued magnitude of workloads and complexi- ties of the Alaska Coastal Management By KRISTEN NELSON Program and the Large Project For Petroleum News Management team. The ACMP functions, formerly under he Alaska Division of Oil and Gas said Dec. the Office of Project Management and TOM IRWIN 17 it has received two exploration license pro- Permitting, will be housed in the new T posals which it intends to evaluate and is Division of Coastal and Ocean Management. Randy Bates, requesting competing proposals. Because the formerly deputy director of OPMP, has been named director state is soliciting for competing proposals it is not of the new division. releasing the names of the applicants or provisions Ed Fogels, who has held numerous positions within DNR, of the proposals. including the state’s large mining coordinator, has been One of the proposals is for a gas-only explo- named director of OPMP, which will retain the Large Project ration license for some 21,080 gross acres in the Management team and Alaska National Interest Lands Houston area in Southcentral Alaska. The Houston Conservation Act functions. area application is for state-owned land within —PETROLEUM NEWS township 18 north, range 3 west, sections 1-18 and 20-24; T18N-R4W, sections 1, 2, 11-13; T9N- R3W, sections 31-36; and T19N-R4W, sections, 35-36, all in the Seward Meridian. BREAKING NEWS The area is west-northwest of Anchorage. Houston is just within the southern boundary of the Full speed ahead to Texas: Kinder Morgan joins pipeline 3 exploration area; the southern border skirts the 19E; and T19N, R15-17E, Fairbanks Meridian. contest and new Enbridge-Exxon deal holds open season Susitna River, which is south of the area in the east Crooked Creek runs through the northwest cor- and just within the southern border on the west. ner of the application area, as does the Steese 5 Alaska approves Raven PA: BP-operated northeastern The other proposal is an oil and gas exploration Highway. Prudhoe satellite producing from Ivishak, Sag River at Heald Point license in the Crooked Creek basin northeast of Fairbanks, between the towns of Central and Applications received in April Circle Hot Springs, and the Yukon-Charley Rivers Both applications were received April 30. Turbulent times 6 Risk, change shakes utility investing: National Preserve. This area consists of some Applications are one way the licensing process can have changed how capital is invested in energy infrastructure 161,280 gross acres of state-owned land within township 7 north, ranges 16-19 east; T8N, R16- see BIDS page 11 2 PETROLEUM NEWS • WEEK OF DECEMBER 30, 2007 contents Petroleum News A weekly oil & gas newspaper based in Anchorage, Alaska ON THE COVER EXPLORATION & PRODUCTION Time to think huge 5 State of Alaska approves Raven PA Economist tells industry execs LNG is their BP-operated northeastern Prudhoe Bay satellite 'friend' provided they can adapt producing from Ivishak and Sag River under lease operating agreement at Heald Point FINANCE & ECONOMY 4 Exxon brief outlines Valdez argument GOVERNMENT 10 Committee finds probable cause that Harris broke ethics law State requesting bids Competing exploration license proposals NATURAL GAS wanted; Copper River leases issued 4 AGIA release will be in New Year Southward migration: Precision Drilling PIPELINES & DOWNSTREAM places heavy bet on U.S. 3 Full speed ahead to Texas ACMP moves to new DNR division Kinder Morgan joins pipeline contest and new Enbridge-ExxonMobil partnership holds open season on new project; not all proposals expected to survive UTILITIES 6 Risk, change shakes utility investing Turbulent times in the utility industry have changed how capital is invested in energy infrastructure, experts tells Alaskans Nabors 106E drills first well ALTERNATIVE ENERGY 7 Capturing Alaska's winter sun Cold Climate Housing Research Center: Look for the December Interior Alaska researchers test the energy issue of North of 60 potential of fleeting winter sunlight Mining inside PETROLEUM NEWS • WEEK OF DECEMBER 30, 2007 3 ● PIPELINES & DOWNSTREAM Full speed ahead to Texas Kinder Morgan joins pipeline contest and new Enbridge-ExxonMobil partnership holds open season on new project; not all proposals expected to survive driving oil prices up by US$4 per barrel. By GARY PARK Canadian oil priced at Edmonton For Petroleum News Daniel said Texas Access would expand sells for about C$15 per barrel pipeline infrastructure to “increase the reli- crowded field has become even less than similar oil from Mexico able supply of crude oil to U.S. refineries.” more congested as rival pipeline sold to Houston refineries. “Producers of crude oil from Western A companies jostle for leadership in a Enbridge believes it can deliver Canada’s oil sands, and from the Williston race to ship production from the Canadian crude to Texas for about Basin in North Dakota and Montana will Alberta oil sands to the U.S. Gulf Coast. C$6 per barrel. benefit from low-cost transportation from A partnership of Enbridge and the limited U.S. Midwest to the large Gulf ExxonMobil started soliciting binding Coast refining market. Gulf Coast refiner- commitments from shippers for a US$3 develop a portion of the Chinook system ies and refined products consumers will billion, 768-mile system from Patoka, Ill., that would originate at Cushing, Okla., and benefit from access to reliable, competi- to Texas refineries just a week after Kinder extend to the Gulf Coast refining centers, tively priced new sources of supply.” Morgan proposed a 2,000-mile system although it is not clear who would build through Wyoming and Oklahoma at a cost that connection. Open season closes Feb. 29 A Canadian spokesman for Kinder the company believes will be less than Canadian oil priced at Edmonton sells Morgan said a more accurate cost estimate US$5 billion.