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Vol. 7, No. 51 $1 • www.PetroleumNewsAlaska.com Alaska’s source for oil and gas news Week of December 22, 2002

■ ‘Free skimming’ in the Beaufort FINANCE & ECONOMY Five bucks a barrel For every barrel of oil leaving state, $5 needs to be reinvested, says Revenue; state must encourage investment to develop existing oil, find new fields

By Kristen Nelson PNA Editor-in-Chief

he Alaska Department of Judy Patrick Revenue estimates that it will

Courtesy Minerals Management Service take an investment of $5 for T every barrel of crude oil leaving the North Slope to maintain ANS production at a million barrels per day. In its fall revenue forecast, issued in late November, Revenue analyzed oil production as an eco- nomic oppor- See story on page 7 about an oil spill clean up plan that uses ice as a boom. tunity, trying to answer the Forest announces beginning of questions of where additional oil development might occur over the production at Redoubt Shoal next decade, and what state govern- Forest Oil Corp. said Dec. 16 that it has begun production at its ment could do to help that develop- Winter exploration drilling in the National Petroleum Reserve-Alaska. Redoubt Shoal field in Cook Inlet. The field, which began produc- ment. ing Dec. 9, is currently producing in excess of 4,200 barrels of oil Production is currently below the 1-million-barrel- barrels of additional production from producing fields per day from two of the four wells capable of production, the com- a-day mark, and Revenue said it believes that begin- and 1.35 billion barrels from discovered but non-pro- pany said. ning in fiscal year 2008 new fields should boost pro- ducing fields. The oil from discovered but non-pro- Forest said production is expected to be maintained near this rate duction back above 1 million bpd through 2012. ducing fields includes 180 million barrels from Alpine until new onshore production facilities at Kustatan are completed. Beyond 2013, unless companies have “significant satellites (“Nanuq, Fiord, etc.”), 150 million barrels Current production is flowing to Forest-owned facilities at the com- exploration success, which will require the commit- from Liberty, 560 million barrels from Point pany’s West McArthur River field. After completion work is final- ment of substantial money to the exploration and Thomson and others (Sourdough, Yukon Gold), 60 ized on the other two wells in the field Forest will resume drilling development of new fields,” production will again million barrels from Sandpiper and 400 million bar- activity. The company received a drilling permit for the Redoubt drop below 1 million bpd. rels from the National Petroleum Reserve-Alaska (Rendezvous/Spark). see FOREST OIL page 2 What is the potential? The heavy oil deposits at Ugnu, 7 billion barrels, Revenue estimates oil potential at 7.172 billion Tundra access looks good; Shively see INVESTMENT page 2

joins Holland America; Peak to ■ NORTHERN GAS build Thetis ice roads Despite the lack of cold temperatures into It’s time to get real about new mid-December, Gary Schultz is predicting tun- dra travel will start earlier this year than last. Warmer temps on the North Slope had oil gas supplies, says industry company and state of Alaska personnel wor- American Gas Association wants barriers to exploration, production lowered; ried about when the movement of vehicles that rates Alaska’s potential at 250 tcf, enough to meet U.S. needs for a decade are part of off-road exploration could begin, but it seems the lack of snow — i.e. insulation — has offset the warm temperatures. By Gary Park PNA Canadian Correspondent Schultz, natural resource manager for the Alaska Division of Mining, Land and Water, he case for speeding up Arctic natural gas told PNA Dec. 16 that the recent drop in temperatures combined development has received a fresh lift from the with “a fair amount of wind and then rain,” has resulted in the American Gas Association, which warns that see INSIDER page 13 T consumers face sharply higher prices in the next 10 to 15 years unless fresh supplies are brought to market. In a report released Dec. 11, the AGA said INSIDEAlaska gas and liquefied natural gas will “likely account for a significantly larger share of the sup- Ballard to head DEC 6 ply mix” over the next two decades. Describing the 35 trillion cubic feet of Prudhoe Canada ratifies Kyoto treaty 4 Bay as just the tip of the state’s resource potential, the AGA said Alaska’s gas resource base has been Feds approve Katalla’s plan of operations 3 estimated at 250 trillion cubic feet — enough to support all of the United States’ needs for more Alaska MMS chief addresses permitting, access 7 than a decade. The study forecast that Alaska will be among The American Gas Association’s Dec. 11 report, “From Little gasline impact expected at Sourdough Pete’s 10 the “non-traditional sources” providing the lion’s the Ground Up -- America’s Natural Gas Supply Challenge,” can be found at AGA's web site, see INDUSTRY page 15 www.aga.org 2 Petroleum News • Alaska THE REST OF THE STORY Week of December 22, 2002 continued from page 1 reserves: NPR-A (excluding Rendezvous) million barrels per day, this analysis leads to ers will want to maximize private economic INVESTMENT 900 million barrels; central North Slope the conclusion that for each barrel leaving activity, including jobs, the department said. satellites 1.5 billion barrels; eastern thrust the North Slope, $5 must come back to pay “The balance, sought by the host govern- belt and Foothills 900 million barrels; the for new exploration and development,” ment in every oil province of the world, is to and 1 billion barrels at Kuvlum and Arctic National Wildlife Refuge 4.4 billion Revenue said. take a healthy share of the profits derived Hammerhead in the outer continental shelf barrels; and Beaufort shelf federal offshore from oil while remaining competitive in the are not included because there are not cur- 2.6 billion barrels. $22 a barrel oil world marketplace for oil and gas invest- rently considered economic. The 10.3 billion barrels of “economically What does this mean in relation to the ment dollars.” But, Revenue notes, to recover the 7.172 recoverable reserves” is based on $22 per price of ANS crude? What changes could the state make in its billion barrels in producing fields, invest- barrel for Alaska North Slope crude, At prices of $22 a barrel, the department fiscal policies? ment is required. Only 3.752 million of Revenue’s new long-term West Coast price said, “free cash flows attributable to North The state could require investment as a those barrels can be recovered with what the estimate (see story in Dec. 8 issue of PNA). Slope production for both the Integrated- condition of leasing, but, Revenue said, department characterizes as modest addi- Producer at Prudhoe Bay and the Explorer- “such lease terms would probably reduce tional investment. The remaining additional Costs of production Producer in NPR-A would be about $7.30 both the price and marketability of future reserves, 3.42 million barrels, will require The finding cost for new oil is about $1 a per barrel. We need to hope they will invest leases.” major additional investment. barrel on the slope, Revenue said, a weight- more than two-thirds of that amount in new The state could provide incentives And all of the discovered non-producing ed average of a cost of more than $1 a barrel exploration and production if we are to through tax deductions or tax credits, lower- fields will require major additional invest- for new fields and about 60 cents a barrel for enjoy the benefits of million-barrels-per-day ing its take and essentially rewarding indus- ment. new satellite accumulations. production after 2010.” try for investing. And it could provide a tax Of the 8.5 billion barrels of additional To develop those discoveries, “to drill And at $22 a barrel, after money is set benefit for reinvestment in Alaska, some- production from currently discovered North the necessary wells and provide the infra- aside for reserve placement through explo- thing the state doesn’t currently do. The Slope fields, “approximately 3.8 billion of structure to produce the additional 4.7 bil- ration and development, that leaves produc- department said “Alaska is particularly those 8.5 billion barrels could be recovered lion barrels of discovered North Slope oil ers roughly $2.25 to pay interest and divi- alone among major oil producers in not with only those investments needed to pre- requiring substantial investment,” the dends. The $22 barrel price for ANS crude treating oil dollars that are reinvested here serve the integrity and safety of the facilities. department said it is estimating it will cost oil sold on the West Coast is the departmen- more favorably than oil dollars invested … Production of the other 4.7 billion barrels $3 per barrel. t’s new estimated long-term average. At $17 elsewhere.” would require significant additional invest- In addition, the companies also must a barrel, the department’s old long-term Another thing the state could do is to ment.” spend $300 million a year in “license to average price, investors essentially would make its fiscal system less regressive, thus New discoveries operate” capital, money the companies must get nothing after subtracting for reserve sharing the risk of low oil prices and earning invest in addition to routine operating and replacement. more when oil prices are high. Alaska’s 20- Revenue uses U.S. Geological Survey maintenance expenses to keep facilities mill property tax, production tax and royalty and Minerals Management Survey estimates operable and safe. Revenue said that based What can the state do? provisions in state leases are regressive, of economically recoverable reserves from on discussions with operators it estimates Future production — and future state Revenue said, because they are not based on North Slope and Beaufort Sea discoveries this at about 2 percent of “existing and revenues — “depends in large part on the profits. “Even when prices are so low that oil not yet made to define discovery opportuni- planned total capital expense for the facili- amount of money exploration and produc- production operations are unprofitable, the ties. ty.” tion companies spend to develop oil state continues to receive a share from some The number here is 10.3 billion barrels of “To maintain — and with luck increase resources that have already been discovered or all of these sources.” estimated economically recoverable — Alaska’s North Slope oil production at a on the North Slope and to discovery addi- If the state’s fiscal system were modified tional oil,” Revenue said. And those compa- to be less regressive, the department said, ny decisions “depend — in great part — on and if such modifications were properly world oil prices and government regulatory structured, the state could receive more total and fiscal policies.” revenue while at the same time it would Some government policy makers will become a less risky place to explore and want to maximize public revenue while oth- produce oil. ◆

continued from page 1 project demonstrates that large oil fields can be found in North America that are FOREST OIL not deepwater related. “We believe that Redoubt Shoal will Shoal No. 6 development well Dec. 13 have lower finding and development from the Alaska Oil and Gas costs and a shorter development schedule Conservation Commission. than deepwater or international projects “This is a significant milestone in the of similar size.” development of the Redoubt Shoal dis- Boswell also said that Forest will be covery,” Robert Boswell, Forest’s chair- doing further exploration on oil and gas man and CEO, said in a statement. “The prospects “in and around Cook Inlet discovery and development of Redoubt where we are now the largest oil produc- Shoal in 22 months was a great accom- er and currently own one of the largest plishment by our team in Alaska. The lease acreage positions.” Week of December 22, 2002 ON DEADLINE Petroleum News • Alaska 3 EXPLORATION & PRODUCTION Forest Service approves plan of operations for Katalla, drilling could begin in late March, says Chuck Frey The Chugach National Forest said Dec. 12 it has approved Cassandra Energy Corp.’s plan of operations for oil and gas drilling near Katalla, 56 miles southeast of Cordova and the site of Alaska’s first commercial oil production in 1902. Chuck Frey, planning staff officer for the Chugach National Forest, said work could begin as soon as the end of March if the agency’s decision is not appealed and, if appealed, the decision is upheld on all points. After a 45 day appeal period, which began Dec. 12, the Forest Service will have 45 days to respond to all appeals. Fifteen days from the end of the response period, work can begin at Katalla. ACMP process nears completion The project is nearing what appears to be successful completion of the Alaska Coastal Management Program review, a Division of Governmental Coordination offi- cial told PNA. The agency expects to issue a proposed consistency determination Dec. 18, as this issue of PNA goes to press. The final determination will be issued five days later. The five-day period gives par- ticipants the opportunity to elevate the decision — i.e. appeal it to the next level of authority. Participants include the applicant, the Alaska Department of Fish and Game, the Alaska Department of Natural Resources and the Alaska Department of Environmental Conservation. The Forest Service permits will not be issued until that review is final and the pro- ject was found to be consistent with the ACMP. Two parts to plan There are two major components of the plan of operations: (1) exploratory oil and gas drilling operations, and (2) access to the drill site and crew camp site which consists

see KATALLA page 13

Index

CLASSIFIEDS ...... 11 FINANCE & ECONOMY ...... 5 GOVERNMENT ...... 6 LAND & LEASING ...... 7 NORTHERN GAS ...... 10 ON DEADLINE ...... 3

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Petroleum News Alaska, ISSN 10936297, Week of December 22, 2002 Vol. 7, No. 51 Published weekly. Address: 5441 Old Seward, #3, Anchorage, AK 99518 (Please mail ALL correspondence to: P.O. Box 231651, Anchorage, AK 99523-1651) Subscription prices in U.S. — $52.00 for 1 year, $96.00 for 2 years, $140.00 for 3 years. Canada / Mexico — $165.95 for 1 year, $323.95 for 2 years, $465.95 for 3 years. Overseas (sent air mail) — $200.00 for 1 year, $380.00 for 2 years, $545.95 for 3 years. “Periodicals postage paid at Anchorage, AK 99502-9986.” POSTMASTER: Send address changes to Petroleum News Alaska, P.O. Box 231651, Anchorage, AK 99523-1651. 4 Petroleum News • Alaska ON DEADLINE Week of December 22, 2002

■ CANADA Canada rolls dice, ratifies Kyoto treaty The Liberty Party government of Prime Minister Jean Chretien sets cap on costs of greenhouse gas emissions, but industry wary until implementation details are negotiated; U.S.-based companies ready to go elsewhere said Kyoto in its present form could have a By Gary Park PNA Canadian Correspondent Want to know more? negative impact on the oilfield services company’s spending in Canada, which has If you’d like to read more about the Kyoto treaty debate in Canada and its expected anada has plunged into the unknown impact, go to Petroleum News • Alaska’s web site and search for these recently published totaled about C$700 million in the past 15 by ratifying the Kyoto Protocol and articles, which represent only about half of the Kyoto articles in the archives. months and involves a fleet of 650 drilling setting off a new wave of uncertainty Web site: www.PetroleumNewsAlaska.com/ rigs and 1,000 service rigs. over the future of investment in vital Petro-Canada is also facing a decision in C 2002 frontier projects. ■ Dec. 8 Non-conventional crude won’t be enough to meet rising world demand March on whether to spend C$200 million Against a background of warnings by ■ Dec. 8 Canada’s Arctic operators chop staff, spending on engineering and equipment purchases U.S.-based companies that they are pre- ■ Dec. 1 Canada’s revised Kyoto plan ‘lipstick on a pig’ leading up to a C$5.2 billion oil sands ■ Nov. 3 Major industries to carry up to 40% of Kyoto burden pared to pull back from Canada and invest ■ Nov. 3 Kyoto puts British Columbia’s energy goals at risk development. elsewhere, the Liberal party government of ■ Oct. 27 Canadian E&P companies keep tight hold on purse strings Chief Executive Officer Ron Prime Minister Jean Chretien pushed ■ Oct. 6 Kyoto could be billion-dollar boon for U.S. Brenneman has repeatedly cautioned that ■ through a motion to ratify Kyoto by 195 Oct. 6 Mackenzie Delta pipeline could be victim of Kyoto Petro-Canada, which is still 19 percent ■ Sept. 22 Canadian oil patch blindsided by Kyoto ratification votes to 77 on Dec. 10. ■ Sept. 29 Kyoto Protocol cited as Alberta oil sands project scaled back owned by the federal government, has little The focus now shifts to the direct fallout ■ May 26 NWT officials view climate change as threat to Arctic resource development hope that the government can provide the on the multi-billion-dollar plans to develop ■ March 10 Canada edges further away from early ratification of Kyoto details needed for a commercial decision. Alberta’s oil sands, Arctic natural gas and 2001 In that event, oil sands plans could end East Coast offshore oil and gas, which are ■ Dec. 16 Alberta warns Kyoto could drive capital, companies from Canada up on the shelf, where they would remain viewed as an essential element of North ■ Jan. 28 Canada opposes Bush plans for ANWR exploration for an indefinite period. American energy security. “The federal government, by adopting The parliamentary approval came with a the Kyoto Protocol, is clearly discouraging promise from the government to place a production. from over. this type of investment in Canada,” cap of C$15 per metric tonne on the price “I’ve always said the ratification was Brenneman said in a statement. “So we will industry must pay to reduce greenhouse gas Implementation next phase of going to pass and it’s really a non-issue,” proceed cautiously and take a final deci- emissions, although Natural Resources debate he said. “All it does is allow the prime min- sions … only when the implications for Minister Herb Dhaliwal said “we’re pretty Alberta Environment Minister Lorne ister to stand on the international stage and project economics are clear.” confident” the costs will more likely fall in Taylor said the announced cap was a good thump his chest.” Real Doucet, vice president of oil sands the range of C$5-C$10. first step towards an implementation strat- Pierre Alvarez, president of the at Canadian Natural Resources Ltd., said In the long build-up to the vote, gov- egy — the next phase of the Kyoto debate. Canadian Association of Petroleum the C$15 emissions cap lasts only until ernment officials had offered worst-case “If there’s a signed and guaranteed deal Producers, expressed frustration that 2012, which offers no certainty to the com- scenarios where the cost could be as high on (the C$15 cap), that’s a good place to Parliament had endorsed the treaty. pany, which is immersed in a possible C$8 as C$50 per tonne. start talking about an implementation plan “We still can’t calculate the competi- billion project with an operating life of 50 At C$10, the per-barrel costs for the because it offers some certainty as to what tiveness implications,” he said, noting that years. petroleum industry had been calculated at the numbers will be,” he said. many of the industry’s Kyoto-related issues Canadian Natural Resources has already 3 cents for conventional crude, 1.5 cents But, from the Alberta government’s remain unresolved. slashed its capital spending on the project for heavy crude and 10 cents for oil sands standpoint, Taylor said the battle was far Alberta Premier Ralph Klein, who by one-third to C$200 million and has said spoke to U.S. energy investors in the plush it may locate its upgrading facilities in the surroundings of the New York Yacht Club United States to escape the penalties of on Dec. 9, insisted his government will not Kyoto. “be rattled by Kyoto.” “We’re prepared to do whatever it takes Not all oil sands players retreating — including launching a constitutional But not all of the oil sands players are challenge (to defend Alberta’s ownership retreating ion the face of Kyoto. of its natural resources) — to ensure Syncrude Canada Ltd., the world’s Alberta’s concerns are addressed in the largest producer of synthetic crude, decid- implementation plan,” he said. ed last month to push ahead with a C$5.67 But Klein told investors that a legal fight billion expansion aimed at raising output to may not be necessary, with Chretien sched- 360,000 barrels per day by 2005. uled to step down in early 2004, likely to be To date, the consortium has made no replaced by former finance minister Paul specific changes that are directly linked to Martin, who has pledged to open up a fresh Kyoto, although its newest expansion dialogue in Canada about Kyoto. includes C$1.4 billion in environmental spending as part of its goal to reduce car- Wide range of reaction bon dioxide emissions by 35 percent per Across a broad spectrum of companies unit from 1990 to 2008 and sulfur dioxide with interests in Canada there has been a emissions by 5 percent. wide range of reaction. Nexen Inc. said Dec.12 it will decide in Among the U.S.-owned companies, 2003 whether to proceed with its C$2.5 bil- Murphy Oil Corp. President Harvey Doerr lion oil sands joint venture with OPTI said the global nature of most large oil Canada Inc. to tap a 6-billion-barrel bitu- companies allows them to “vote with their men reserve, starting to 70 barrels per day feet” if they are not happy about the Kyoto in 2007. terms. Nexen Chief Executive Officer Charlie ConocoPhillips Canada Ltd. President Fischer, one of the most outspoken critics Henry Sykes said that if the treaty punish- of Kyoto, told analysts he is still looking es his company’s investments then its bud- for certainty from the government on get — which includes a decision in 2003 Kyoto’s costs. on whether to proceed with a C$1 billion But he is more confident that “clarity oil sands venture — will shrink. will come” in time to let Nexen make a Duane Mather, president of the business decision within the next 12 Canadian unit of Nabors Industries Ltd., months. ◆ Week of December 22, 2002 Petroleum News • Alaska 5 FINANCE & ECONOMY

■ AUSTRIA ADVICE OPEC agrees to trim oil production Portfolio strategy update by at least 1.5 million barrels a day Mixed signals Plan increases quotas, with hope cartel members will adhere to them; members By David Gottstein estimated to be exceeding present quotas by as much as 3 million barrels a day

The new target will last indefinitely, Lukman By Bruce Stanley Associated Press Business Writer said, speaking after oil ministers reached their agreement in a meeting at the cartel’s headquar- Editor’s note: David Gottstein is with Dynamic Research Group n an unusual decision aimed at keeping crude oil ters in Vienna. in Anchorage. prices from falling, OPEC agreed to cut produc- Analysts said the agreement would have a tion by the time seasonal demand dips early next minimal impact on consumers of refined products The stock market has made an impressive advance since its year. such as gasoline and heating oil. October lows. Corporate earnings up nicely against a quarter and a I The Organization of Petroleum Exporting “This isn’t designed to create a wholesale year ago, a slight up-tick in consumer confidence, an improvement Countries said the Dec. 12 agreement would lead upward shift in crude prices,” said Mike in unemployment claims, advancing productivity and modest eco- to a net reduction of 1.5 million to 1.7 million Rothman, an energy analyst at Merrill Lynch in nomic growth, coupled with an aggressive move by the Federal barrels a day in OPEC’s actual output. New York. Reserve in lowering the Fed Funds rate by half a percent to 1&1/4 To achieve that goal, the group will take a Due to the current level of quota-busting, percent have convinced many that we are on track for an economic counterintuitive approach: raising its official pro- OPEC expects the quota increase to occur on recovery. duction target in paper only and not add any fresh barrels to the hopes that mem- market. The plan’s success hinges on the willing- Where do we go from here? “If you bring quotas and ber countries will ness of OPEC members to show greater disci- production close together, The Republicans are riding high, and add a measure of pro-busi- be more likely to pline in tightening their taps on production in the market begins to ness momentum. Both the prospect of lower tax rates and the fiscal adhere to the coming months. believe in quotas again.” stimulus brought on by the war against terrorism are already being quotas instead of However, Lukman acknowledged that some —Raad Alkadiri, The factored into the stock market. exceeding them member countries might not have the political Petroleum Finance Co. The question is where do we go from here? as they are now. will needed to pump less oil in the hope of keep- The market certainly has momentum in its favor, along with the The pact is ing prices firm. aforementioned fundamental factors. However it is no longer cheap. expected to have In fact, some analysts questioned whether We peg the price earnings ratio on the S&P 500 at about 18, after little, if any, impact on consumers. member countries wouldn’t just continue busting giving ample credit for earnings quality. Optimistically assuming the Analysts estimate that OPEC is producing as the new, higher quotas. Bill Edwards, an inde- worst is over. much as 3 million barrels a day above its existing pendent consultant based in Houston, likened the Government stimulus key target of 21.7 million barrels. This gap between increase in OPEC’s target to a tempting dessert OPEC’s target and its actual output widened dur- offered to a man on a diet. So PE rations might even be higher. ing the autumn, leading many observers to ques- Once again current market price levels are trading at historically tion the group’s credibility. Venezuela paralyzed high PE’s. Therefore future price gains will have to rely more on “If you bring quotas and production close In assessing the oil market, OPEC delegates earnings gains as opposed to PE expansion. together, the market begins to believe in quotas had to consider immediate disruptions to global We believe that the deep rate cut by the Fed reflects their concern again,” said Raad Alkadiri of The Petroleum supplies in Venezuela and the Gulf. A national about the strength of the economy, and its ability to sustain growth. Finance Co., a consultancy based in Washington. strike in member state Venezuela has paralyzed Consumer demand is wearing thin on mortgage refinancing, as are OPEC, which supplies about a third of the oil shipments from that country, the world’s fifth- auto sales propelled by cheap financing. world’s crude, is fearful of oversupplying the largest crude exporter. The strike entered its 12th We believe if it were not for government stimulus brought on by market ahead of a seasonal, post-winter decline in day Dec. 13. growing deficits, that the economy would indeed be much more like- demand in key markets in the Northern The unrest in Venezuela has compounded ly to be slipping backwards. Hemisphere. uncertainty about the impact a U.S.-led military When job and demand growth pick up on a measurable basis, we attack might have on crude production in Iraq, will believe a continuation of the bull market will be justified. Until Six percent increase home to the world’s second-largest oil reserves then we believe it is wise to be cautious. Under the plan, which was proposed by Saudi after Saudi Arabia. What if wars drags on? Arabia, OPEC’s most powerful member, the new “We wish to reassure consumers that we will production target will be increased by 1.3 million do everything we can to maintain steady, secure It appears that the good news is now priced into the market. The barrels a day, or 6 percent, to 23 million barrels supplies of crude at all times, to cover any even- economy will grow, we will win the war quickly, if and when it effective Jan. 1. At the same time, the group tuality that may arise. We have sufficient spare comes, and things will get back to normal. That means 2-3 percent urged its members to comply with their new quo- capacity within our organization to do this,” see GOTTSTEIN page 6 tas, OPEC President Rilwanu Lukman told a OPEC’s Lukman told delegates at the start of news conference. their meeting. ◆ 6 Petroleum News • Alaska GOVERNMENT Week of December 22, 2002

■ JUNEAU ANCHORAGE Murkowski names Ernesta Majority, minority complete Alaska Senate organizations Ballard to head DEC, Bill The Senate Republican majority named remaining committee chairs Dec. 4, after completion of recounts and resolution of court challenges and Senate Democrats met Corbus at Revenue Dec. 9 to name minority leadership and committee assignments. Governor says Ballard can foster cooperation between DEC Johnny Ellis, D-Anchorage, will continue as Senate minority leader. Kim Elton, D- and EPA, Corbus can help bring participation in Juneau, is minority whip; Lyman Hoffman, D-Bethel, and Donny Olson, D-Nome, infrastructure development from outside investors will serve on the Senate Finance Committee. Senate majority leadership, announced in November, includes Gene Therriault, R- North Pole, Senate president, Ben Stevens, R-Anchorage, Senate majority leader; John By Petroleum News • Alaska Ballard has served as budget Cowdery, R-Anchorage, chairman of the Rules committee; and Lyda Green, R- director at the University of ov. Frank Murkowski has named Washington and senior vice Wasilla, and Gary Wilken, R-Fairbanks, co-chairs of the Finance Committee. Ernesta Ballard as commissioner of Standing committee chairs named Dec. 4 include Tom Wagoner, R-Kenai, president for retail banking at the Department of Environmental Seattle Trust and Savings Bank. She Community and Regional Affairs; Fred Dyson, R-Eagle River, Health Education and Conservation and Bill Corbus as Social Services; Ralph Seekins, R-Fairbanks, Judiciary; Con Bunde, R-Anchorage, G was regional administrator of Region commissioner of the Department of 10 of the United States Labor and Commerce; Scott Ogan, R-Palmer, Resources; Cowdery, Transportation; Revenue. Environmental Protection Agency and Robin Taylor, R-Wrangell, State Affairs. In an announcement Dec. 9, the gover- from 1983-86 and moved to Alaska Other majority members of the Finance Committee are Alan Austerman, R-Kodiak; nor also named Joel Gilbertson as com- in 1989 to become chief executive Bunde; and Stevens. The other majority members of the Resources Committee are: missioner of the Department of Health officer of the Cape Fox Corp. Wagoner, Seekins, Dyson and Stevens. Taylor will chair the Legislative Council. and Social Services, Marc Antrim as com- Minority members of standing Senate committees include Elton and Gretchen missioner of the Department of Guess, D-Anchorage, on Resources. Corrections and Greg O’Claray as the between the agencies,” he said. commissioner of the Department of Rutherford turns down DNR post Labor. Corbus at Revenue Murkowski said in a statement that he Corbus is the retired president of Marty Rutherford, deputy commissioner of the Department of Natural expects to continue the process of select- Alaska Electric Light and Power, the elec- Resources, sent an email to DNR employees Dec. 13 saying that she had been ing qualified candidates for the remaining tric company that serves the Juneau area, offered the position of DNR commissioner by Gov. Frank Murkowski on the pre- cabinet posts over the coming weeks. where he has lived since 1970. Corbus vious Friday, December 7. Rutherford said she turned down the offer because she “Together with the earlier appointment holds a bachelor’s degree in industrial is leaving public service. (See related news item on this page.) of Gregg Renkes at the department of law, engineering from Stanford University and “For the past eleven years it has been my privilege to work at the Department of we now have nearly half of the cabinet in a master’s of business administration from Natural Resources with all of you. … I was greatly honored place,” Murkowski said. “I am looking the Amos Tuck Graduate School of when Gov. Murkowski offered me the DNR commissioner forward to completing this process as Business Administration at Dartmouth position. However, for various reasons I have decided it is soon as we can.” College. He served as a Lt. J.G. in the U.S. time for me to leave public service. I will resign around the Ballard at DEC Naval Reserve. From 1965-69, Corbus middle of January,” Rutherford said in the email. worked for Stone & Webster in New York “During the past 30 days the senior management team and Ballard has served as budget director at City providing public utility security I have been working with Gov. Murkowski’s transition team, the University of Washington and senior analysis, financial planning, and account- both the small department review team and the larger policy vice president for retail banking at Seattle ing. group. These teams, led by Harry Noah and including John Trust and Savings Bank. She was region- In 1970, he joined Alaska Electric Shively, have been collaborative, thorough and very non intru- al administrator of Region 10 of the Marty Rutherford Light and Power as assistant manager, sive. And, to your credit, they have determined that DNR is an United States Environmental Protection becoming general manager in 1978 and effective and well run organization,” she continued. Agency from 1983-86 and moved to president in 1988. Rutherford said the transition from the Knowles to the Murkowski administra- Alaska in 1989 to become chief executive “Bill Corbus has a solid, stable back- tion has “proceeded very smoothly.” officer of the Cape Fox Corp. She holds a ground in the management of financial She also said Murkowski’s new Cabinet appointments are “outstanding individ- bachelor’s degree from the University of resources, which, in these difficult times uals” and that she was “very impressed with the pragmatic approach embodied in Pennsylvania, attended Oxford University on Wall Street, will be good protection for the appointments and decisions to date.” on a Thouron Scholarship, and received a Alaska’s assets,” Murkowski said. “At the Editor’s note: See Oil Patch Insider for update on Marty Rutherford. master’s in business administration from department of revenue, we need a person —Kay Cashman Harvard University. who, in addition to managing the depart- She has been an environmental consul- ment well, will be able to husband our tant since leaving Cape Fox. financial resources in the turbulent invest- continued from page 5 ist challenge is very broad and deep, and will “For DEC, we were looking for an ment atmosphere back East. We have to GOTTSTEIN act as a constant drag on the economy in environmental professional, who is com- protect our bond rating. Plus, I think it’s much the same way that the cold war did. mitted to doing it right,” Murkowski said. about time that those outside Alaska, who We are unfortunately going to have to “Ernesta brings a strong background in have benefited over the years by manag- GDP growth, and 8-10 percent corporate give up the peace dividend. And China will implementing environmental policy at ing and investing our financial resources, earnings growth. be a constant force limiting future job EPA Region 10, where she gained the be called upon to bring some of it back to The problem is what if things don’t go growth as well. What all this means is that respect of her colleagues. She is thus Alaska. I think this can be done in the according to plan? it is likely that the economy will advance uniquely positioned to foster a new coop- form of participation in infrastructure Even though we believe that Saddam’s very modestly from here. eration between the state and EPA, and to development, and I think Bill Corbus is months are numbered, we believe the terror- Until a new paradigm develops. remove the unnecessary roadblocks just the man to make it happen.” ◆ Week of December 22, 2002 Petroleum News • Alaska 7 LAND & LEASING

■ ANCHORAGE CANADA Alaska MMS chief: Access, permitting Western Canadian land sales in tailspin of primary concern to industry Agency is looking at possible incentives for Beaufort Sea and Cook Inlet The strongest barometer of industry confidence, as well as a valu- leasing, but, John Goll tells Alliance, industry has told agency that able source of government revenue, has tumbled to one of its lowest levels in the past decade. without access and clarification of permitting, incentives meaningless Preliminary figures put total sales of government-owned explo- “If there is interest,” Goll said, “we would ration land in Alberta, British Columbia and Saskatchewan at C$893 By Kristen Nelson PNA Editor-in-Chief develop a sales proposal around that area and then million for 2002, compared with C$1.58 billion in 2001 and C$1.49 work towards a sale.” If a call for interest produces billion in 2000. he Department of the Interior’s Minerals no response, then the agency will ask the question As a measure of how tight-fisted E&P companies have become, Management Service hasn’t yet decided what again in a year. despite a year of robust oil and natural gas prices, land-buyers forked economic incentives it will offer as part of its Calls for both the Norton basin and Chukchi- over C$501.5 million in Alberta, the worst year since 1993. upcoming Beaufort Sea and Cook Inlet oil and Hope areas will be out early next year. A previous In the process they dragged average prices per hectare (2.471 T gas leases. call for interest in the Norton basin drew no acres) to C$180.65 from C$277.81 in 2001 and C$298 in 2000. “The department is still considering options and response. This will be the first Chukchi-Hope area Operators in British Columbia also displayed a similar, but less if we finally do more forward call in this five-year plan. pessimistic mood, paying C$288.5 million to secure exploration with some incentives we will “The Chukchi Sea shows tremendous potential opportunities, lagging far behind a record C$439.5 million in 2001, be announce those formally both for oil and gas,” Goll said. “Several wells but still the province’s second best year on record. in the preliminary notice of were drilled there around 1990, but of course it’s Like Alberta, the average per-hectare prices in British Columbia sale for the Beaufort Sea in far from infrastructure…” went into a tailspin, reaching C$339.75 compared with C$514.48 in February,” MMS Alaska No wells have been drilled in the federal area of 2001, but close to the C$358 average in 2000. Regional Director John Goll the Cook Inlet since the mid-1980s, Goll said. Saskatchewan was the only region to buck the trend, with sales told the Alaska Support “With new technology today, new theories,” the surging by 84 percent to C$103 million from C$56 million in 2001, Industry Alliance Dec. 12. federal waters of Cook Inlet may be a place “to propelled by investments of C$73 million in a lively new gas play in But, Goll said, industry look again with regard to potential for oil and gas.” southwest Saskatchewan. has made it pretty clear that if John Goll, MMS Outside the three leading oil- and gas-producing provinces, it has it doesn’t have access to land Why isn’t permitting timely? been an even more dismal year. and if the permitting issue On the permitting issue, Goll said, the question More dismal in other areas isn’t solved, incentives aren’t all that important. is frequently asked: Why can’t projects be permit- All three areas, he said, are among the ted in a timely way? Auctions have produced a mere C$14.3 million in work commit- Department of the Interior’s national goals for Goll said he thinks some of the permitting ments in the Northwest Territories and C$1.16 million in the Yukon. Alaska: more access to prospective lands, “getting uncertainty over the last few years comes from On the East Coast offshore, Nova Scotia, although it issued no better clarity and certainty in the permitting area” agencies wanting “to make decisions on issues that new exploration licenses, is sitting on C$1.56 billion in work com- and economic incentives for companies to explore maybe are more rightly those of another agency.” mitments that could stretch over the next 8 years. and develop areas offshore Alaska. MMS is working on that problem with both feder- Newfoundland, which has C$500 million in exploration commit- al and state agencies, he said. ments, deferred its scheduled 2002 offshore land sale. Different EIS approach The other issue he’s seen crop up over the past It said time is needed for the industry to shift its attention to deep- MMS is working on the access issue, Goll said, few years, Goll said, is that many reviewers want er waters and other basins and for major interest holders to complete taking a different approach than in the past with to scrap the application they receive. The approach a process of consolidation. one environmental impact statement for three of many has been, he said, “let’s forget what the Some observers say the decision to curb spending was not unex- Beaufort Sea sales included in the current five-year applicant gave us to review. And let’s redesign it pected following the torrid exploration pace of 2001. plan and one EIS for two Cook Inlet sales, instead ourselves the way we want.” Many E&P companies slashed their budgets for land and seismic of one EIS for each sale. The draft EIS for Cook Goll said MMS doesn’t agree with that. “If a work after spending C$3 billion acquiring rights in the previous two Inlet is out for comment, with public meetings company brings a proposal that meets the laws and years, said Dale Tremblay, chief financial officer of Precision scheduled for January (see sidebar). meets the regulations … then why can’t they get Drilling Corp., Canada’s largest petroleum services company. The final EIS for the Beaufort Sea and the pro- their permits?” he asked. Some smaller adjust- He said it makes no sense for companies to have idle investments posed notice of sale will be out in February, he ments may be needed, “but not a wholesale if they have sufficient land to explore over the next five years. said. The first of three Beaufort Sea sales is redesign, and this is something that we believe In addition, many operators have taken the chance to divert cash planned for September 2003, with additional sales really needs to be looked at.” flow into debt reduction and shore up their defenses for the next proposed for 2005 and 2007. downturn, which history suggests is inevitable. In the Chukchi Sea-Hope Basin and Norton Senior management involvement Sound areas, sales will be driven by industry inter- When President Bush took office he issued an —Gary Park, PNA Canadian correspondent est. see MMS page 8 8 Petroleum News • Alaska LAND & LEASING Week of December 22, 2002 STATEWIDE Potential state, federal oil, gas lease sales

Agency Sale and Area Proposed Date

MHT Cook Inlet Spring 2003 DNR Cook Inlet Areawide May 7, 2003 DNR Foothills Areawide May 7, 2003 Courtesy Minerals Management Service MMS Sale 186 Beaufort Sea September 2003 DNR North Slope Areawide October 2003 DNR Beaufort Sea Areawide October 2003 MMS Sale 191 Cook Inlet 2004 DNR Cook Inlet Areawide May 2004 DNR Foothills Areawide May 2004 BLM NE NPR-A June 17, 2004 BLM NW NPR-A June 17, 2004 DNR North Slope Areawide October 2004 DNR Beaufort Sea Areawide October 2004 MMS Sale 195 Beaufort Sea 2005 DNR Cook Inlet Areawide May 2005 DNR Foothills Areawide May 2005 DNR North Slope Areawide October 2005 DNR Beaufort Sea Areawide October 2005 MMS Sale 199 Cook Inlet 2006 MMS Sale 202 Beaufort Sea 2007 MMS Chukchi Sea/Hope Basin interest based MMS Norton Basin interest based

Agency key: BLM, U.S. Department of the Interior’s Bureau of Land Management, man- ages leasing in the National Petroleum Reserve-Alaska; DNR, Alaska Department of Natural Resources, Division of Oil and Gas, manages state oil and gas lease sales onshore and in state waters; MHT, Alaska Mental Health Trust Land Office, manages sales on trust lands; MMS, U.S. Department of the Interior’s Minerals Management Service, Alaska region outer

continental shelf office, manages sales in federal waters offshore Alaska. Courtesy Minerals Management Service

This week’s lease sale chart sponsored by: PGS Onshore, Inc.

Above photos: “Free skimming” test conducted by BP and Alaska Clean Seas in the Beaufort Sea, summer 2002. Oil in the Sea III continued from page 6 Actually, Goll said, the barge-based The study “Oil in the Sea III” is the third report from the National Academies on advanced skimming system worked very petroleum released to the marine environment. MMS well at funneling: unfortunately it fun- “New estimates indicate that the overall amount of petroleum released to the marine neled ice, not oil, which clogged the environment may be lower than earlier thought,” the Academies say in the study, a executive order on energy projects, skimmers, making the system ineffective manuscript version of which is available online through the National Academies Press “telling federal agencies that they need to on ice concentrations above 10-30 per- at: move ahead on energy projects with a cent. http://search.nap.edu/nap-cgi/naptitle.cgi?Search=Oil+in+the+Sea+III. good pace,” Goll said. Last summer, however, a successful The reduced amount of petroleum “reflects, in part, advances over the last decade in Principal agencies within the “free skimming” test got no press. marine transportation and oil and gas production techniques,” the report says. Spillage Department of the Interior — MMS, the Free skimming, Goll said, “is a tactic in North American waters from 1990 to 1999 was less than one-third that of the previ- Bureau of Land Management, the Fish used in some other countries which ous decade, “and, despite increased production, reductions in releases during oil and gas and Wildlife Service — are meeting on “relies on ice to be the containment exploration and production have been dramatic as well.” permitting issues, Goll said, with Cam boom.” The vessel operator locates a con- The releases from extraction and transportation represent less than 10 percent of Toohey, special assistant to the secretary centration of oil, maneuvers his vessel to releases from human activities, most of which comes “during consumption of petrole- for Alaska, kicking off an all-day meeting the site and deploys a skimmer to collect um, which include urban runoff, polluted rivers, and discharges from commercial and Dec. 6 at MMS in Anchorage. MMS is the oil. recreational marine vessels,” which combined account for 85 percent of releases in also working with other major federal “You don’t really need another North American waters, the study said. agencies including the Environmental boom,” Goll said. “You’re using the ice The study’s “best estimate” numbers for North America are 260,000 tonnes of Protection Agency and the Corps of as the boom.” The skimmer is then releases with 160,000 tonnes (62.5 percent) from natural seeps, 3,000 tonnes (1.2 per- Engineers. moved to the next location. Free skim- cent) from petroleum extraction, 9,100 tonnes (3.6 percent) from petroleum transporta- “And a key to this,” Goll said, “is not ming, he said, allows operators to “con- tion and 84,000 tonnes (32.8 percent) from petroleum consumption. just meeting on a staff-to-staff level. It is centrate on collecting oil, rather than try- really getting some of the senior manage- ing to push the ice out of the way and ice ment in the agencies involved…” That management.” involvement wasn’t always there, he said, The tactic increases the broken ice but now Cam Toohey and Drue Pearce concentrations in which skimmers can are working within Interior, “touching work, he said. The vessels are also more base with some of the senior management maneuverable and can reach quickly in within the federal agencies, to make sure changing conditions, allowing retrieval of they’re aware of what is going on and the more oil. importance of these projects.” Goll also noted that a recent National MMS is also meeting with state agen- Research Council report, “Oil in the Sea cies — the Department of Natural III,” found a dramatic improvement in Resources, the Department of spillage from the oil and gas industry and Environmental Conservation, the said that one issue in oil spill require- Department of Fish and Game and the ments is “how much credit can be given Division of Governmental Coordination for the improvements that have occurred” — to compare notes on offshore projects. in things like well control. (See sidebar.) Spill response issue Another issue is differences in cleanup technique requirements. The state One key joint federal-state issue is oil requires mechanical recovery, Goll said, spill response planning, Goll said. Two while MMS can allow other approaches years ago when BP and Alaska Clean such as in situ burning. Seas did broken ice oil spill trials, he said, there was a lot of publicity on failed tests. see MMS page 8 Week of December 22, 2002 LAND & LEASING Petroleum News • Alaska 9

MMS issues draft EIS for proposed Cook Inlet sales The Minerals Management Service issued a draft environmental impact statement for two proposed Cook Inlet federal outer continental shelf oil and gas lease sales Dec. 6. The draft EIS is available for public comment, the agency said Dec. 11, and com- ments will be accepted until Feb. 11. The EIS evaluates both Cook Inlet sales, sale 191 (2004) and sale 199 (2006). After completing the final EIS and proposed sale 191 in 2004, MMS said it will prepare a consistency determination and either an environmental assessment or, if necessary, a supplemental EIS for sale 199. MMS will hold public hearings in January in Kenai/Soldotna, Homer, Seldovia and Anchorage. Hearings will be: Anchorage, Jan. 16, 4-6:30 p.m., MMS Alaska Region Office, 949 East 36th Ave., Room 314; Seldovia, Jan. 21, 7-9 p.m., Seldovia Community Center multi-purpose room; Homer, Jan. 23, 7-9 p.m., Homer City Council Chambers, 491 E. Pioneer Way; Kenai/Soldotna, Jan. 25, 11 a.m.-1 p.m., Kenai Merit Inn, 260 S. Willow St. MMS will also hold a teleconferenced hearing Jan. 28 from 4-6:30 p.m. To testify at that hearing, call 1-800-764-2627. The draft EIS is available on the MMS web page: www.mms.gov/alaska, or from MMS, 949 E. 36th Ave., Anchorage AK 99508-4302. The area proposed for leasing is in Alaska’s Cook Inlet in federal waters between three and 30 nautical miles offshore and covers some 2.5 million acres from just south of Kalgin Island to just northwest of Shuyak Island in water depths ranging from 30 to 650 feet. Shelikof Strait is not included in the proposed sale area.

continued from page 7 MMS is also looking at price floors — it would suspend royalties if the value of MMS oil dropped below a certain price — and price ceilings, where royalty suspension Incentives still under discussion volumes would stop if the price exceeds a certain amount. The ceiling, he said, pro- On the incentive issue, Goll said four tects the federal government and taxpay- terms of oil and gas lease sales (royalty ers from giving away too much of the rate, primary term of the lease, minimum royalties. bid and rental rate) can be varied by sale, Goll said the MMS is looking at allow- and the agency is looking at how those ing operators more time to inventory terms can be set to provide an economic what is around a discovery and said it incentive to industry. MMS is also look- hopes to have a rule on that change pub- ing at using royalty suspension volumes lished in the Federal Register within the in Alaska, an amount of oil or gas which next month or two. ◆ can be produced free of royalty. 10 Petroleum News • Alaska NORTHERN GAS Week of December 22, 2002

■ FORT ST. JOHN, B.C. Little gasline impact expected at Sourdough Pete’s Eleventh in series, recreational vehicle park owner expects little economic boost from an Alaska gas pipeline project in Fort St. John

By Patricia Jones An Alaska gas pipeline project will PNA Contributing Writer likely not make a huge impact on ill and Sandra Cockwill know how the community, which is already Patricia Jones to make long-term campers com- used to accommodating the ebb and fortable throughout the year at flow of oil field workers, Cockwill B their recreational vehicle park said. located just south of this Alaska Highway community. park go up. Residents typically buy and Called Sourdough Pete’s RV Park, use electric plug-in heaters to supple- the facility offers a place to stay for ment their propane gas heaters in their campers, whether they be tourists travel- recreational vehicles. Heat tape to keep ing up and down the Alaska Highway, or the water and sewer lines open and flow- workers employed in the area’s oil and ing also contributes to electric bills that gas fields. are “thousands and thousands and thou- Road construction workers also fre- sands of dollars a month,” Sandra quent the RV park in Fort St. John, Cockwill said. British Columbia, which offers full-ser- Despite close proximity to northern vice spaces even in winter months. British Columbia gas fields and hydro- “We have water and sewer out to the electric dam projects, utility bills seem sites,” Bill Cockwill said. “We have to to keep increasing in Fort St. John, the have all the services or it would not couple said. “It should be the cheapest in make much sense for them to stay, to this area, but the further away you live, only sleep in a trailer. It’s their home.” the cheaper it gets,” Bill Cockwill said. Bill and Sandra Cockwill But as the cold sets in, costs to run the Yet they don’t expect an economic reprieve, should a natural gas pipeline project bring Alaska’s North Slope gas south. “We didn’t see it in the last pipeline (the Alliance project), but maybe this will be different,” Cockwill said. And the couple said they don’t antic- ipate an economic boost from an increase in customers, should that Alaska gas project be built. “Oil companies usually bring their own camp — like a 400 to 500-man camp,” Cockwill said. “It’s not going to affect us much.” Furthermore, the actual construction could bypass Fort St. John, depending on the route selected by developers. “They’ll go the shortest route, so it may be miles from the highway,” he said. “The pipeline could miss Fort St. John by 50 to 100 miles.” An Alaska gas pipeline project will likely not make a huge impact on the community, which is already used to accommodating the ebb and flow of oil field workers, Cockwill said. “This area gets used to little booms,” he said. “The oil patch is up and down all the time — nothing steady.” ◆ Week of December 22, 2002 Petroleum News • Alaska 11 CLASSIFIEDS Consultants Exploration and Logistics Curt Call (907) 563-0090 applicant. Hazmat cert; vac following for possible informa- in Geology required, Alaska Freeman, Cert. Prof. Geologist truck experience would be pre- tion: Better Business Bureau experience preferable, experi- Maps for oil & gas industry #6901 P.O. Box 80268 ferred. $17.00 + DOE call for 562-0704 Wage & Hour ence in PGE, Rare metal or gold and custom map work. Fairbanks, AK 99708 Phone interview. 563-7587 Administration AK Dept. of exploration helpful. Salary DOE. Geotechnicians: Mapmakers Alaska (907) 745- 907-457-5159 Fax 907-455- Petroleum News Alaska is seek- Labor 269-4900 Experience 8069 email [email protected] in gridding, sampling, power 3398. Udelhoven Current Immediate ing an experienced circulation Avalon Development is seek- web site auger drilling drill sampling and Hoefler Consulting Group Openings: 4 NICET level 2 and sales representative. ing personnel interested in antic- www.avalonalaska.com GPS navigation preferable. 3 Certified Technicians. Work Position is FT, based in ipated 2002 field positions. Services include environmental Salary DOE If you are interested Site: North Slope send resumes Anchorage. Personality is a plus! These are no-nonsense geology permitting and studies, air quali- Employment in learning more about ty, and RCRA for Alaska oil and to [email protected] Submit your resume by email to oriented field positions in remote Positions we are always Employment opportunities in gas, mining and utility indus- Dan Wilcox at [email protected]. camps. Positions are as follows: WANTED EMPLOYMENT: accepting applications for Alaska with Avalon tries. Call (907) 563-2137 or Employment offers that suggest Senior Geologists: +5 years Experienced operator/mechanic include: Administrative, cleri- Development, submit a resume email guaranteed out of state or over- experience, Alaska experience seeking employment on the cal, As built, Material Handler, along with references. Resumes [email protected] seas positions, glamorous travel, preferable, expertise in PGE, North Slope, will work 4/2 or 3/3 Carpenter, Electrician, Electrical may be emailed to: Bill Vallee - Petroleum gifts or high wages for limited Rare Metal or gold exploration weeks-12 hour shifts. Has arctic Inspector, Engineer, Equipment [email protected], Faxed to Land Services experience may be deceptive or required. Salary DOE. Junior , 37 Years clothing, good professional Operator, FCO Technician, 907-455-8069 or mailed to unethical in nature. contact the Geologists: Bachelors degree Field & Staff Experience, resume, CDL w/ endorsements, HVAC, Instrument Technician, Contract or Day Rate, Phone: NSTC training. contact Laborer, Millwright, NICET, (907) 333-1277, FAX: (907) [email protected] or (907) Operator, Pipe fitter, Plumber, Fire & Gas Technician - Prudhoe Bay, Alaska Recruiting Authorization No. 1335 333-7889, E-Mail: 766-2095. Project Control, Project Summary: Installs, maintains, calibrates and adjusts fire and gas detection systems, [email protected] WORK WANTED Manager, Quality Assurance, instrumentation and instrument lops. Essential Functions: Calibrates and adjusts, ALASKA eCOMMERCE Journeyman, Lineman! Safety, Surveyor, Welder. repairs and installs fire alarms and gas detection systems. Interprets test data. ONLINE - Highly user friendly, Please contact Frank Please e-mail your resume to: Performs functional testing including the interface to process control and shutdown affordable, interactive websites (760) 791-6269 [email protected] or systems. Uses and maintains tools and equipment employed to perform calibration testing (precision for automated business man- fax to: (907) 522-2541 Attention: regulators and test gauges, volt-ohm meter, potentiometers, thermocouple calibrator, signal genera- agement. Web based access to Lisa tor, leak detection unit oscilloscope and manufacturers specialized test equipment; i.e. Pyrotronics files and software all running on Confined Space $15.00 SU-9 calibrators. Routinely performs safety and productivity observations; shop, field, and vehicle any designated servers, yours or Anchorage-based remediation inspections and is required to attend various components of technical, developmental and safety train- ours. Call us for a demo, you'll company seeks candidates with ing. Must demonstrate support for the company’s environmental management system objectives. Immediate Positions For: Qualifications: Five (5) years experience as a process instrument technician or electrician in the oil or be glad you did. Dave Nanney certs in Hazmat / Hazwop / Sr. Land Surveyor (10-15 yr chemical industry and two (2) years of related technical/vocational training preferred. Must be able to 1 907 766 2763 Confined Space. Temporary to exp) Managing survey crews, work as part of a team; communicate effectively with fellow workers and alternate; and demonstrate [email protected] Perm positions avail. Call AutoCAD 2000 LDD. adherence to established safety policies and procedures. Must have knowledge of ISA Standards as AVALON DEVELOPMENT Jennifer Paul @ Personnel Plus: Civil Engineer (10+yr exp) well as the functional operations and adjustments of the various components of instruments and instru- CORP. Mineral Exploration 563-7587 No fees water/sewer/site grading ment loops such as controllers, transmitters, and level indicators; calibration; and trouble shooting Consulting Services Property exp/AutoCAD Class 'A' CDL Driver Oil instrument loops and loop tuning. Must have experience reading and interpreting drawings, specifi- Evaluations, Exploration Design Airport Planner (5 yr exp) remediation Company seeks cations, vendor data, and technical data sheets. Must demonstrate knowledge of OSHA safe work & Management, Field practices associated with instrument power voltages; programmable controllers and distributed con- trol systems; and fire and gas alarm and shutdown systems as related to explosion proof atmospheres. Electronics skills a plus. Driver’s license required (note that this requirement may be waived at the Process Operator - Field-Based -Alaska . Alaska Process Operator Roles and company’s discretion for employees hired on a temporary basis). Must possess Alaska State licens- Responsibilities: The Operations Technicians are expected to assist during pre-com- es 1B in Fire Alarms and IIIA in Special Hazards (and corresponding NICET certifications). Note: missioning and commissioning activities, performing pressure/leak tests, equipment Skills tests may be required of new hires to demonstrate core proficiencies, or of existing employees flushing/cleaning, functional checkout of equipment/instrumentation, and valve tag- to advance to a new job level. Physical Requirements: The physical demands described here are rep- ging and operating procedure development. The Operations Technicians will be resentative of those that must be met by an employee to successfully perform the essential functions required to perform both Control Room and field duties and be willing to undergo flexibility training to of this job. Reasonable accommodations may be made to enable individuals with disabilities to per- perform light maintenance tasks. Control Room duties will include: Plant operation via a DCS form the essential functions. MOBILITY: Employee frequently required to stand; walk;reach with (Fischer/Rosemount Delta V) system to maintain safe operation at all times. Compiling daily produc- hands and arms; climb or balance; and stoop, kneel, crouch or crawl. The employee is occasionally tion and environmental reports. Start up and shutdown of the facility. Operation and control trou- required to sit. Must be able to work from ladders and scaffolds to access instrumentation. FINE bleshooting. Assisting the technical support team with the demonstration program and technology MOTOR SKILLS: Frequently required to use hands and fingers with sufficient dexterity to perform development. Field duties will include: Operational troubleshooting, sample taking, instrumentation close, exacting and repetitive tasks. HEARING: Must be able to hear audible safety alarms and warn- and equipment monitoring, routing blow down and maintenance tasks. The field technician will be ings. VISUAL ACUITY: Specific vision abilities required by this job include close vision. Vision must required to man the DCS panel for short periods. It is expected that this will be a very demanding and be adequate to perform above listed tasks in a safe manner. LIFTING: The employee must regularly challenging role working with cutting edge technology, including equipment, instrumentation and con- lift, pull and /or move up to 40 pounds, and occasionally lift and /or move up to 70 pounds. COM- trol, and analytical equipment, developing and optimizing the operating envelope and gathering the MUNICATION SKILLS: Must display ability to read and understand job descriptions, safety/technical data necessary for commercial plant scale up. The successful candidates will work to a 12 hour shift manuals and safety/warning signs. Must display sufficient oral communication skills to be able to give pattern but also be flexible enough to accommodate call out to provide absence and sick cover. The and receive oral safety warnings, instructions, and task assignments. ENVIRONMENT: While per- selected candidates will be required to work within at team environment that is comprised of both shift forming the duties of this job, the employee is frequently exposed to severe arctic weather conditions. and day personnel and be accountable for the safe, reliable operation of the facility. Experience: The employee is frequently exposed to high, precarious places, confined spaces, and the risk of elec- ·Minimum of Five (5) years experience in facility or production operations. ·Maintenance technicians trical shock. May be required to work with toxic or caustic chemicals. DISCLAIMER: The above will to train in Operations encouraged to apply. ·DCS Operations experience preferred. ·Research, description covers the principal duties and responsibilities of the job, specific to, and intended for, technology development experience would be an advantage. ·Steam Methane Reforming, VECO Greater Prudhoe Bay projects only and may or may not reflect general duties and responsi- Hydrocracking or other chemical/refinery operations experience would be an advantage. ·Strong oral, bilities on other VECO projects. This description should not be construed as a complete listing of all written and basic mathematical skills. ·Demonstrated ability to work well in a team and respond effec- duties that may be required. This is a Regular Full time position located in Prudhoe Bay,Alaska, with tively to changing situations. ·Proven ability to learn quickly and utilize newly acquired skills. This is a a rotation of 2 weeks on 2 weeks off. Please submit your resume to: VECO Corporation Alaska Regular Full-time position, located in Kenai, Alaska. Please submit your resume to: Recruiting Region Attn: Ken Sigurdson 6411 A Street, Anchorage, Alaska 99518 USA Phone: (907) 277-5309 Department 949 E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to: Fax: (907) 550-8890 Email Resume to: [email protected] or fax (907) 762-1040 VECO [email protected] or fax (907) 762-1040 VECO Alaska Job Web site: www.veco.com Email Corporation Job Web site: www.veco.com. Please quote the Job Title and Recruiting Authorization attachments should be in Microsoft Word or Rich Text format. VECO Alaska is an Equal Opportunity No. (if applicable) in all correspondence. VECO Corporation is an Equal Opportunity Employer that Employer that Supports a Diverse Workforce. Positions Require U.S. Work Authorization Please Supports a Diverse Workforce. Positions Require U.S. Work Authorization. quote the Job Title and Recruiting Authorization No. (if applicable) in all correspondence.

Legal Notice Legal Notice U.S.D.A. Forest Service Alaska Region Chugach National Forest Cordova Ranger District The purpose is to notify all interested persons that the following Decision Notice and Finding of No Significant Impact is available to the public pursuant to 36 CFR 215.9: Decision Notice and Finding of No Significant Impact Revised Environmental Assessment Oil and Gas Exploration in the Katalla Area, The purpose of the Decision Notice is to document the factors considered and the rationale used in making a decision concerning the potential effects of approving Cassandra Energy Corporation's Plan of Operations for oil and gas drilling near Katalla, Alaska. The decision consists of whether to approve the Plan of Operations. There are two major components of the Plan of Operations: (1) Exploratory oil and gas drilling operations; and (2) Access to the drill site which con- sists of establishment of a temporary staging area, construction of approximately 550 feet of tempo- rary road, and use and maintenance of an existing temporary access road on National Forest System lands. The responsible official is: Dave R. Gibbons, Forest Supervisor Chugach National Forest 3301 C St. Anchorage, Alaska, 99503-3998 The decision and accompanying Environmental Assessment can be obtained from the Cordova District Ranger, P.O. Box 280, Cordova, Alaska, 99574-0280; and the Forest Supervisor's Office, 3301 C St., Anchorage, Alaska, 99503. They are also available on the Internet at: www.fs.fed.us/r10/plans_projects/katalla/index.html/. For more information on this Environmental Assessment please call Ken Hodges, Cordova Ranger District at (907) 424-4738; or To place a classified listing please contact: Chuck Frey, Forest Supervisor's Office, Anchorage, at (907) 743-9557. The decision is subject to appeal pursuant to 36 CFR 215. Appeals must be filed with the appeal deciding officer: Dennis Amy Piland Bschor, Regional Forester U.S.D.A. Forest Service Alaska Region-Region 10 P.O. Box 21628 Classifieds Manager Juneau, AK 99802-1628 The appeal must be postmarked and submitted to the Appeal Deciding Officer within 45 days of the date of this publication in accordance with 36 CFR 215.13. The appeal period ends January 27, 2003. Pub.: December 13, 2002 Phone: (907)(907) 644-4444644-4444 12 Petroleum News • Alaska PNA CLASSIFIEDS Week of December 22, 2002

Avalon Development, attn: EQUIPMENT FOR LEASE heaters, & boilers. NuERA Corp. [email protected]. R.S.V.P (907) 563-2226 - Taping/texturing AV-Jobs2002, PO Box 80268, CAT 245 Excavator, CAT D5B Serving you since 1984. 1-800- Friday, January 24, 2003: - Drywall repair Fairbanks, Alaska 99708 Dozer, GROVE 25 ton Hydraulic 347-9575. Leases/Prospects Meet Alaska 2003 at Sheraton - Wood staining/finishing RT Crane, CASE 621B Loader, Available Anchorage Hotel. Plan for a day- - Remodeling Equipment Investment long conference! For informa- - Power washing & cleaning KELLY EQUIPMENT CO. AVCG looking for qualified Opportunities tion/registration, please call - QUALITY WORK! 907-566-2290 partners for 104,000 acres on (907) 563-2226 Ph: 830-3680 Alaska Equipment Appraisers Alaska Independent needs North Slope. Call Bo 316-263- SAFETY PARKA. Safety rated Machinery and equipment operator to explore and 2243. Miscellaneous to minus 70F. 920-864-7147 appraisals. Mike Tope 250-9083 develop prime North www.zero-below.com [email protected] WASTE OIL INTO FREE Slope/Cook Inlet prospects. Meetings/Events Busy Beaver Handyman FINE ART HEAVY CONSTRUCTION HEAT Waste oil furnaces, Call Rick 907-456-2300 or email Services Fine Art for office or home. One Painting & drywall is our #1 ser- each (out of only 100 ever print- Doyon Drilling, Inc. is currently accepting resumes for Electricians, Pitwatcher vice! ed) of the first 10 lithographs. (Solids Operator), and Mechanics. Doyon Drilling, Inc. accepts resumes from Over 17 years experience By: Jacque & Mary Regat. For Alaska Support Industry individuals with direct on or off shore drill rig experience at the floorhand level FREE ESTIMATES! more info contact: Alliance events: and above. You may fax, mail or e-mail your complete resume to our Human Resources Department. - Interior/exterior painting [email protected] Our mailing address is: Doyon Drilling, Inc., 101 W. Benson Blvd., Suite 503, Anchorage, AK 99503 Phone: 907-563-5530, Fax: 907-561-8986, Email: [email protected] Attachments should be in one of the following standard formats: Microsoft Word (Windows) or RTF. Resumes should contain Human Resources Technician - Anchorage, Alaska Recruiting Authorization a listing of employment experience on oil and gas drilling rigs and should have a minimum of three ver- No. 4600. The Human Resources Department currently has an opening for an indi- ified references. Other application paperwork will be provided at the time of hire. vidual who is a service oriented, professional and enjoys working in a team environ- Electricians: Summary: Installs, maintains and repairs drill rig electrical systems, apparatus and elec- ment. Requires a 2-year degree; or 2 years plus experience and/or training or equiva- trical and electronic components of drill rig machinery and equipment. Essential Duties: Maintains and lent combination of education and experience. Prior customer service or human repairs the electrical and electronic equipment associated with drill rig top drives, draw works, iron resources experience a plus. Duties include helping administer VECO Alaska’s employee benefit pro- roughnecks, SCR's AC motor controllers, DC motors, AC generators, air conditioners PLC's and oil- gram, in accordance with company policy and procedures, and records system input and filing. field mud and gas monitoring systems. Installs power supply wiring and conduit for newly installed Having some knowledge of legal requirements and government reporting a plus. Successful candi- machines and equipment such as mud pumps, motors and conveyors. date will also research and resolve benefit issues and questions. Excellent interpersonal skills, oral and Pitwatcher (Solids Operator): Summary: Performs drilling fluid mixing operations, drilling fluid written communication skills, able to organize, prioritize work and meet deadlines. Proficient in the use property sampling, monitoring of well bore returns, maintenance of mud pumps and drilling fluid cir- of MS Access, Word and Excel preferred. Maintaining confidentiality is a must. Some travel required. culation system. Essential Duties: Maintain drilling fluid solids control and circulation equipment, Carry Anchorage based. Regular Full-Time. out routine drilling fluid property sampling, Mixing of drilling fluid chemicals and maintenance of drilling Accounts Receivable Technician - Anchorage, Alaska Recruiting Authorization No. 2829. fluid properties, Cleaning and maintenance of rig drilling fluid pits, Follow DDI and customer operat- Accounts Receivable Technician One opening for an individual with previous accounts receivable ing and reporting procedures, Maintain clear communications with relief, mud engineer, Derrickman experience and cost coding experience in a fast-pace and high volume environment. Excellent com- and Driller. munication skills ( both oral and written). Analytical and accurate. Excellent problem solving skills. Well Mechanics: Summary: Responsible for the operability, maintenance and repair of all drill-rig related organized and detail oriented. Ability to handle multiple tasks, prioritizes workload and meet deadlines. machinery and support equipment such as engines, motors, pumps, winches, pneumatic tools and Computer experience and 10-key by touch a must. Anchorage based. Regular Full-time. This is an conveyor systems as directed by the rig toolpusher. Essential Duties: Works on the following: Drill rig Internal Posting and is opened until filled. Please submit your resume to: Recruiting Department 949 top drive systems, Drill rig draw work systems, Drill rig mud pumps, SCR systems, Caterpillar and E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to: [email protected] or fax Detroit Diesel engines, Allison transmissions, air conditioners, glycol, hydraulic and pneumatic sys- (907) 762-1040 VECO Alaska Job Web site: www.veco.com VECO Alaska is an Equal Opportunity tems, Drill rig heating and heat distribution systems including boilers and fans. Employer that Supports a Diverse Workforce. Positions Require U.S. Work Authorization.

Principal Mechanical Engineer - Anchorage, Alaska Minimum 12 years engineering experience. B.S.M.E With a P.E(Alaska would be a plus). Experience in oil/gas or petrochemical design preferably in Production Facilities. Project Engineering as well as design engineering background. Strong skills in analyzing all technical aspects of assigned projects and recommend design changes as appropriate. Ability to define scope of work and develop and review schedules for assigned projects. Review drawings and check designs for conformance with client and code requirements. Provide technical assistance to less senior engineering and design personnel and evaluate results. Review ven- dor bids to assure compliance with specs. Participate in the development of engineering methods, techniques and criteria. Computer literate and familiar with standard engineering software and Microsoft Office Products. Solid background and understanding of ASME B31.3 AND B31.4 piping codes. Ability to lead a design team (one or more Mechanical Engineers and Designers). Previous supervisory or lead experience would be a plus. Good written and oral communication skills. Solid planning and organizational skills. Arctic engineering experience preferred. Position is Regular Full Time, based in Anchorage, Alaska. Process Control Engineer - Anchorage, Alaska (Principal level) with 15 years + in implementation of instrumentation, process control systems engi- neering. Strong background in PROGRAMMING DCS Controls. Knowledge of hardware as well as software control systems. Previous experience per- forming quality checks and fault testing of software for reliability. Experience designing graphics displays and configuring facility automation control consoles. Ability to write control codes . Familiar with the following Bailey Infi90,Moore,Wonderware,Honeywell,Bradley,Fisher Rosemont. Training in PLC Programming, Advanced Process Control Techniques, Advanced Statistical Process Control. Evaluates, selects and applies standard design techniques, procedures and criteria to make design adaptations and modifications. Review design drawings and vendor submittal for assigned segments of a project for technical conformations to requirements to codes. Prepares design calculations, specs and sketches for instrumentation and control systems into overall pro- ject design. Assist with preparation to scopes of work, equipment estimates, installed cost estimates and budgets for project assignments. Strong comput- er literacy with good written, verbal and analytical skills. Familiar with standard engineering software. Has worked in refineries, oil and gas facilities is a must. Engineering degree required. Seeking an Alaskan P.E. Strong working knowledge of programming of DCS systems. Background in software and hardware. Comfortable working with programming and assisting less experienced engineers and designers with this aspect. Position is Regular Full Time, based in Anchorage, Alaska Please submit your resume to: Recruiting Department 949 E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to: [email protected] or fax (907) 762-1040 VECO Alaska Job Web site: www.veco.com VECO Alaska is an Equal Opportunity Employer that Supports a Diverse Workforce. Positions Require U.S. Work Authorization Week of December 22, 2002 THE REST OF THE STORY Petroleum News • Alaska 13 continued from page 1 fishing and Native Co. has all its permits Peak Oilfield Service Co. has been culture. to drill three explo- awarded the contract to build the project’s INSIDER Shively has ration wells at its ice roads, Sheffield said. accepted the position prospect between “As of today, we have not signed a rig coastal areas “starting to firm up.” of vice president of Thetis Island and the contract, but plan to address this issue in “There aren’t many pockets of soft external affairs for Kuparuk River unit. the near term,” he said. ground under the surface,” he said. Holland America in The company will The proposed exploration wells are off- “Looking at what was happening earlier Alaska. begin drilling the first shore in approximately five to 10 feet of with the warm temps, we thought it might But he’s not total- well (Ivik) in late water. Drilling plans call for grounded sea not open up until February, but there has ly leaving Jade John Shively January, Ken Ken Sheffield ice pad locations that will be accessed via been less snow this year to insulate the North LLC, the con- Sheffield, president ice roads from Oliktok Point dock. No tun- ground. … And then it got cold. It was 31 sulting firm he founded in 2000 after of the Calgary-based Pioneer subsidiary dra travel is planned. below in Deadhorse this morning.” resigning as commission. A partner in the and Alaska project manager, told PNA All sea ice operations are expected to be Schultz said he’s “optimistic,” and pre- firm, Patty Bielawski, is assuming Dec. 16. completed by the end of March. dicts an earlier opening than last year,” Shively’s management duties, but she said which had the latest tundra access dates on he will retain his partnership in the compa- record. ny and the title of senior partner. continued from page 3 southeast Alaska’s Tongass. In 2002 the state broke the North Instead of being a fulltime consultant, KATALLA Welch told PNA in earlier interviews Slope into two areas, Schultz said. he “will now serve in the role of senior that 44 wells were drilled at Katalla “The coastal area was opened to off- advisor on strategic issues for the business between 1901 and 1930, of which of barging equipment and supplies up the road travel on Jan. 25, 2002. The rather than handle day to day client repre- approximately 18 wells produced oil Katalla River from the Gulf of Alaska. It foothills had very deep snow and very sentation. We envision this as analogous to from fractured sandstone and siltstone of also involves construction of 550 feet of little wind. This created a deep, fluffy a partner who serves in an “of counsel” the Katalla formation at depths ranging new temporary access road, establish- snow layer that insulated the ground. role in the legal profession,” Bielawski from 360 to 1,750 feet. He said produc- ment of a temporary staging area, and use There were areas in the foothills where said. tion per well varied from 15 to 240 bar- and maintenance of an existing tempo- the ground never did freeze completely,” Anchorage-based Jade North provides rels per month. Recorded production at rary access road on National Forest Schlutz said. consulting services for the natural resource, Katalla over a 30-year period totaled System lands. “In spite of this, we thought that the Alaska Native and government sectors. 153,922 barrels of oil. Production ceased deep snow would protect the ground Anchorage-based Cassandra plans to in 1933 when the Katalla refinery was drill two or three exploratory wells direc- (especially since the seismic operator in MARTY RUTHERFORD JOINS destroyed by fire. tionally from private land acquired this area was using only tracked equip- JADE NORTH…. In mid-January, Alaska through a lease-purchase agreement from New wells will be deeper ment). Therefore, again on Jan. 25, we Department of Natural Resources Deputy Del and Ginger Welch, who own the site allowed off-road travel in the foothills Commissioner Marty Rutherford will leave The wells drilled from 1901 to 1930 of the old 465-acre Katalla oil field, into on a project-specific basis under two state government and become a partner at had depths of up to 2,300 feet. Cassandra mineral estates owned by Chugach conditions: a) that a DNR inspector had Jade North LLC, the company said Dec. President Bill Stevens, who is the safety Alaska Corp., a regional Native corpora- to be present to verify that no tundra 16. (See related article on page 6.) and health program coordinator for Inlet tion. damage was occurring and b) that the Rutherford will “represent clients with Drilling Alaska Inc. in Kenai, told offi- Under a 1982 agreement with the fed- operator would have to fund a follow-up natural resource extraction and transporta- cials he expects to find oil at deeper lev- eral government, Chugach Alaska has to inspection the following summer to con- tion interests as well as assist clients with els than previously drilled. He estimates locate commercial quantities of hydrocar- firm that no damage had occurred. This land management projects and issues with the field could hold 200 million to 600 bons on the acreage by Dec. 31, 2004, or work went well, and we did not find any government, Native and other private land million barrels of recoverable oil. the subsurface rights revert to the govern- significant tundra damage from this owners,” Jade North said in a statement. Stevens said he plans to use Inlet Rig ment. operation,” he said. Earlier this year Bill Schoephoester CC1 for an exploration drilling program Cassandra has a lease-option for oil joined Jade North. He does electric utility that would start with two or three wells and gas rights on 10,134 acres from SHIVELY HEADS TO HOLLAND and oil spill prevention and response plan- and, if they had commercial oil shows, Chugach Alaska. The surface rights are AMERICA…. Former Alaska Department ning, as well as project management ser- could result in “as many as 12 wells on controlled by the 5.9 million-acre of Natural Resources Commissioner John vices. privately owned acreage, for a total cost Chugach National Forest, the country’s Shively started a new career Dec. 16 pro- DRILLING TO START AT of approximately $20 million.” second-largest national forest, after moting a different type of natural resource KUPARUK-THETIS PROJECT IN —Kay Cashman, PNA publisher — Alaska’s wilderness, wildlife, glaciers, JANUARY…. Pioneer Natural Resources PNA CLASSIFIEDS

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Let people know your company is part of Alaska's oil and gas industry. Advertise in Petroleum News • Alaska! Call (907) 644-4444 14 Petroleum News • Alaska ADVERTISER INDEX Week of December 22, 2002 Companies involved in Alaska’s oil and gas industry Business

ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS Spotlight A Kenai Aviation Kenworth Alaska ...... 15 KPMG LLP Advancial Federal Credit Union

Kuukpik Arctic Catering Forrest Crane Air Logistics of Alaska Kuukpik - Fairweather - Veritas ...... 7 Alaska Airlines Cargo Kuukpik - LCMF Alaska Dreams Lounsbury & Associates Alaska Interstate Construction Lynden Air Cargo Alaska Marine Lines Lynden Air Freight Alaska Railroad Corp. Lynden Inc. Alaska Steel Lynden International Alaska Telecom Lynden Logistics Alaska Tent & Tarp Lynden Transport Alaska Textiles ...... 3 Lynx Enterprises Alaska Valve & Fitting Machinery Technical Support Alaska WalkFit Orthotics Mapmakers of Alaska Alaska West Express MI Swaco John Brunton, vice president Alliance, The Michael Baker Jr. Alpine-Meadow Midtown Auto Parts & Machine American Marine ...... 3 Oil and Gas Millennium Hotel Anchorage Hilton Hotel Montgomery Watson Harza ...... 8 Supply API Systems Group MT Housing Located in Kenai and Arctic Controls Anchorage, Oil and Gas Supply dis- Arctic Pacific Enterprises N-P tributes and fabricates industrial Arctic Slope Telephone Assoc...... 6 hose and fittings, Aeroquip Arctic Wire Rope & Supply ...... 6 hydraulic hose and fittings, rubber Nabors Alaska Drilling ...... 10 Army/Navy Store and synthetic gasket material, NANA/Colt Engineering ArrowHealth stainless steel hose assemblies Natco Canada and expansion joints. Hydraulic sys- ASCG Inspection (AII) N.C. Machinery tem design, sales, service and Avalon Development Neeser Construction repair, as well as Swagelok fittings, NEI Fluid Technology valves and stainless tubing, are B-F available in Kenai. The staff has New World Technology more than 100 years of industry Nordic/Calista Services Badger Productions experience. North Coast Electric Co...... 3 John Brunton, vice president, Baroid Drilling Fluids Northern Air Cargo has been in the business for 25 Brooks Range Supply Northern Testing Laboratories years. He purchased Oil and Gas Cafe Amsterdam Northern Transportation Co. Supply in 1995 with wife Jackie, Cameron president and “boss.” They love Oil and Gas Supply Co. Carlile Transportation Services entertaining and wave running at Offshore Divers ...... 4 Chiulista Camp Services their Big Lake cabin, and golfing at PDC/Harris Group Chugach Technical Services nearby Settler’s Bay. When the Pacific Rim Leadership Development schedule allows it, they’re off to Clarion Suites Panalpina their casa in Cabo San Lucas. Cleanaire Alaska Peak Oilfield Service Co. CN Aquatrain ...... 9 Penco Coldwell Banker Petroleum Equipment & Services Colville Petrotechnical Resources of Alaska Conam Construction

PGS Onshore ...... 8 Forrest Crane ConocoPhillips Alaska PSI Environmental & Instrumentation Continental Auto Group Cook Inlet Tug & Barge Crowley Alaska Cruz Construction Q-Z Dowland - Bach Corp. QUADCO Doyon Drilling Rolls Royce Energy Systems Dura-Wrap Containments R & R Scaffold Erectors Dynamic Capital Management Schlumberger Oilfield Services Engineered Fire Systems ...... 15 SECORP Industries ENSR Alaska Security Aviation ...... 4 Epoch Well Services Seekins Ford Era Aviation Shred Alaska John Holland, marketing manager, Evergreen Helicopters of Alaska SimplexGrinnell Helicopter Division Evergreen Resources Alaska Snowbird Management Executive Suite Hotel Sourdough Express F.A.T.S. Era Aviation Inc. Span-Alaska Consolidators Fairweather Companies, The Era Aviation, an Alaska corpora- STEELFAB First National Bank Alaska tion since 1948, maintains head- Taiga Adventures FMC Energy Systems quarters in Anchorage. The Tec Labs Flowline Alaska Helicopter Division operates 100 Testing Institute of Alaska aircraft for the oil and gas industry Forest Oil ...... 2 Thrifty Car Rental in Alaska, the West Coast and Gulf Frontier Flying Service TOTE of Mexico. John Holland has been the division’s marketing manager G-M Totem Equipment & Supply since 1997. The company’s primary Travco Industrial Housing focus is meeting customer needs Udelhoven Oilfield Systems Services GBR Equipment with the highest safety and perfor- Umiat Commercial ...... 10 mance levels. Golden North Van Lines Unitech of Alaska ...... 4 Holland, a former Army UH-60 Golder Associates ...... 2 United Van Lines helicopter crew chief, graduated Great Northwest ...... 2 with honors from Embry-Riddle Univar USA Hawthorne Suites Aeronautical University and is URS H.C. Price licensed in fixed and rotor wing air- U.S. Bearings and Drives Industrial Project Services craft. Fishing and hunting — not Wood Group (Alaska) work — brought him to Alaska. Inspirations ...... 5 XTO Energy John is the father of two year old IRF Group ZY-TECH Global Industries Emilie. He caught a 62-pound king Java King during his first 10 minutes of fish- Jackovich Industrial & Construction Supply ing. “Unfortunately, it’s been down- All of the companies listed above advertise on a regular basis hill ever since,” he says. Judy Patrick Photography ...... 9 with Petroleum News • Alaska. Week of December 22, 2002 THE REST OF THE STORY Petroleum News • Alaska 15 continued from page 1 cent in deliverability over three years, “In many ways, development of new INDUSTRY lending weight to arguments that the AGA president and CEO David N. gas resources in Canada reflects the chal- Arctic is a crucial new source just to sus- Parker said the irony is that laws lenges of discovery in the U.S.,” the study tain current output. and regulations encourage the use said. “Basins in Western Canada, particu- share of expected growth after 2010. The study projected deliverability will of gas, but outdated concerns about larly in Alberta and British Columbia, “At the wellhead, Alaska is the third slide to 15.9 billion cubic feet per day by the environmental impact of finding have been extensively drilled, although not largest gas producing state in the U.S.,” the end of 2004 from 16.6 billion cubic and producing gas make it for as long a time as some producing the AGA said. “Since 1995, wellhead gas feet per day at the end of 2001, when pro- increasingly difficult for companies regions in the U.S. production has averaged 9.4 billion cubic duction was already 900 million cubic to match consumer demand. “More drilling will need to be targeted feet per day, which is exceeded only by feet per day short of a December 2000 in Eastern Canada (offshore) and in the Louisiana and Texas. market assessment by the NEB. migrate to the deepwater Gulf of Mexico, less explored northern tier of the Yukon, In continuing to scale back its fore- south Texas, north Texas/Louisiana and Northwest Territories and the Arctic On the price front, the AGA said casts for the basin, the NEB reinforced a the Rocky Mountain basins. Islands if Canadian production is to grow.” analysts believe gas from non- growing sentiment that Canada is in an Projecting sources of U.S. traditional traditional deepwater, Alaska and era when ever-increasing drilling is yield- Non-traditional gas more price supply, the AGA estimated the Lower 48 LNG sources, that may not have ing ever-decreasing supplies. competitive will rise from 20.8-21.3 trillion cubic feet been viable at wellhead prices of Noting that the Western Canada On the price front, the AGA said ana- in 2005 to a range of 19.7-24.7 trillion US$2 per million British thermal Sedimentary Basin must achieve 3 bcf lysts believe gas from non-traditional cubic feet in 2020, while Canadian exports units, are more competitive in the per day of new production each year just deepwater, Alaska and LNG sources, that to the United States will climb from 3.9 range of US$3-$4 to maintain current levels, the NEB said: may not have been viable at wellhead trillion cubic feet in 2005 to between 4.5 “For the past several years, it has taken an prices of US$2 per million British thermal and 7 trillion cubic feet over the 15 years. increasing drilling effort to accomplish Consumption is expected to soar 50 “However, 86 percent of this produc- units, are more competitive in the range of this.” US$3-$4. percent from 22 trillion cubic feet in 2001 tion is reinjected in order to improve oil to 33 trillion cubic feet in 2020, underscor- recovery on the North Slope and because Move to riskier areas unlikely It said prices from the mid-1980s to 2000 were stable and actually fell when ing the critical importance of migration to there is no pipeline” to the Lower 48. But, despite a combination of lower ini- new sources. But adding Alaska to the Lower 48 adjusted for inflation, but have since expe- tial production rates and faster decline rienced fluctuations because of a tighten- “Americans want a stable, reliable supply chain depends on “overcoming rates since 1996, the industry is not likely source of environmentally friendly energy economic factors and impediments to sit- ing balance been supply and demand, cre- to deviate from its strategy of recent years ating a “tightrope” effect that is sensitive that is produced in North America,” said ing facilities (as well as) the gap that by making any sudden shifts to riskier AGA president and CEO David N. Parker develops between domestic production to even small changes in weather, eco- areas of the basin, said the study. nomic activity or world energy. in a news release. capability and growing gas demand,” said It said that although low-cost, shallow “They find it in natural gas. But, given the report, entitled From the Ground Up: The AGA also concluded that “current wells in southeast Alberta and southwest resource estimates for many frontier areas the long lead time associated with produc- America’s Natural Gas Supply Saskatchewan generally come on stream at ing and transporting natural gas, critical Challenge. appear to be very conservative,” arguing a mere 200,000 cubic feet per day com- that geologists tend to underestimate the decisions must be made now. Government action urged pared with 21 million cubic feet per day in size of new fields. “As a popular television psychologist the deep Foothills, the average drilling might say, it is time to ‘get real’ about Among its recommendations, the “The simple act of exploring for natur- costs range from C$100,000 for a shallow al gas in promising areas can, and often increasing supplies of natural gas in the AGA urged the federal government to well to C$10 million per well in the deep- face of growing customer demand.” take the lead in “overcoming the logjam does, result in new discoveries over and er, more complex Foothills plays, which above previous estimates,” it said. Parker said the irony is that laws and created by a pervasive ‘not in my back- are outside the financial means of all but regulations encourage the use of gas, but yard’ attitude toward energy infrastruc- In that context, the AGA said Canadian the largest E&P companies. production can grow, but likely outside the outdated concerns about the environmen- ture development in this country. Although the NEB forecast drilling in tal impact of finding and producing gas “State officials must also recognize Western Canadian Sedimentary Basin the Western Canada Sedimentary Basin except for development of coalbed make it increasingly difficult for compa- that economic development and environ- ◆ will continue to rise over the next two methane reserves in Western Canada. nies to match consumer demand. mental quality for their citizens hinge on years in response to growing North increased natural gas supplies.” American demand, that will not be enough The AGA also urged Washington to to compensate for lower initial productivi- work “closely and cooperatively” with ty per well connection, which is already 25 the Canadian and Mexican governments percent below 1995 levels. to solve North America’s challenge of The only encouraging sign is that initial “supplying competitively priced gas, in production rates for 2001 well connections an environmentally sound manner, to a appear to have stabilized at 2000 levels, growing market.” while decline rates have shown some hints New technologies need to be of flattening out, the study said. shared The NEB plans to release a report on Canada’s energy supply and demand out- In calling for technologies and prac- look to 2025 in the spring of 2003. tices to be shared among the three part- ners in the North American Free Trade Resources described as vast Agreement, it noted that development But the American Gas Association Canada’s East Coast offshore has been report also gave hope in describing the successful, while similar geological for- North American gas resource base as mations in the U.S. Atlantic are off-limits “vast, diverse and dynamic,” noting that it to producers, along with most of the West has kept pace so far with cycles in gas pro- Coast and Eastern Gulf of Mexico. duction and consumption. Similarly, the development of coalbed It said current estimates of remaining methane in the U.S. Rocky Mountain U.S. and Canadian gas resource potential region offers the potential for technology are substantially higher than they were 20 transfer to the vast, but untapped CBM years ago, despite the consumption of 200 resource of Canada. trillion cubic feet in the United States over “At the very least, projects to move that period. gas from Alaska to the Lower 48 will Improvements in exploration and pro- require cooperative foresight by both (the duction technology and the momentum of U.S. and Canada) in order to efficiently market forces have contributed to a dra- and economically develop stranded gas matic rise in the ultimately recoverable supplies,” the AGA said. resource base in the United States, the Canadian report also out AGA said, referring to estimates devel- oped by the Potential Gas Committee of The AGA report was released one day the Colorado School of Mines. before Canada’s National Energy Board In 1980, the committee calculated the issued what could be a distant early warn- combined proved reserves, potential ing for the Western Canada Sedimentary resources and cumulate production to date Basin, the largest single gas supply basin at 1,708 trillion cubic feet. At the end of in North America and the source of at 2000, the committee raised that figure by least 15 percent of U.S. gas needs. 30 percent to 2,208 trillion cubic feet. The federal regulator said the Western Those revised figures reflected techno- Canada Sedimentary Basin — which logical advances that made opened the sprawls from the Northwest Territories door to new sources of gas, such as gas and Yukon through northeastern British from coal seams or production from Columbia, Alberta, Saskatchewan and deposits located under thousands of feet of into Manitoba — faces a drop of 4.3 per- water, which have seen U.S. production 16 Petroleum News • Alaska ADVERTISEMENT Week of December 22, 2002