page Alaska partners intend to exercise 15 option for share of gas pipeline Vol. 9, No. 6 • www.PetroleumNews.com North America’s source for oil and gas news Week of February 8, 2004 • $1 HOUSTON, TEXAS Watch for it next week Evidence mounts JUDY PATRICK JUDY Indicators favor drillers, service firms: U.S rig count expected to jump 12% PETROLEUM NEWS rillers and others in the oilfield services business are looking even more confident than a few D weeks ago about their future, as are industry PATRICK JUDY analysts who cover the sector. “Given our constructive view of the macro energy outlook, we believe there is a growing likelihood of a sustainable increase in drilling activity over the next several years,” concluded investment bank Simmons & Co. Gene Isenberg, chairman and chief executive offi- cer of Nabors Industries, also was upbeat coming off a successful 2003 drilling season. “Looking forward, we expect every one of our businesses to achieve high- er results in the first quarter of 2004,” he said. Doug Rock, chairman and chief executive officer A monthly mining publication for Alaska and northern Canada debuts in the Feb. 15 issue of Petroleum News. Above is a photo of a temporary of oilfield service company Smith International, said bridge being installed this month as part of the ice access road to Teck- Cominco's Pogo gold mine in Interior Alaska. The 50 mile long, single see EVIDENCE page 18 Nabors Rig 33-E, BP’s Northstar field, Beaufort Sea, Alaska lane ice road, built by Cruz Construction of Palmer, Alaska, will be used to transport camp modules and other equipment and supplies to the site for the summer construction season. Alaska Interstate Construction will NOVA SCOTIA construct the permanent year-round gravel access road to the mine. Exxon unwilling to line up Sable gas field hard hit Although the major North Slope producers got together to submit a joint application under Alaska’s Stranded Gas Development Act, they are not by reserve downgrades of one mind whether to spend “It’s just Exxon being any more time discussing a Exxon.” Projections wipe 10 years off field life, hope rests in discoveries, Deep Panuke JV possible northern route for a —John Manly, Alaska Gov. Frank natural gas line from the slope. By GARY PARK instead of the hoped-for 2024 when it came on The application for a state Murkowski’s press secretary Petroleum News Calgary Correspondent stream four years ago. fiscal contract covers the pro- James Kinnear, president of Pengrowth Energy posed pipeline route that would follow the Alaska Highway into ova Scotia’s lone producing gas field has Trust, which owns 8.4 percent of Sable, told a confer- Canada and also the so-called over-the-top route that would run been rocked by a third downsizing of reserves ence call Feb. 3 that at current rates of production the from the North Slope offshore to Canada’s Mackenzie River N that has slashed the operating life of the C$3 Sable reserve life index is 7.2 years, while the “eco- see EXXON page 19 billion project in half to just 10 years and nomic” operating life is 10 years. added to the dismal recent record of Canada’s East He was confident that the field could maintain pro- Income trusts fuel Canadian Coast. duction at about 400 million to 500 million cubic feet With estimated sales gas reserves now at 1.35 per day for the “foreseeable future,” but declined to financings, up 14% from 2002 trillion cubic feet, compared with an original 3.5 estimate when output would peak. tcf, the field could run out of gas about 2014, A powerful combination of rising market demand for income see SABLE page 18 trusts, high oil and natural gas prices, low interest rates and a fresh wave of junior companies boosted the total value of Canadian EL SEGUNDO, CALIF. petroleum industry financings by 14 percent last year to C$11.4 billion, according to Sayer Securities. The Calgary-based firm, which raises money for small and Unocal cuts Gulf medium-sized firms, reported a staggering 190 percent hike in trust unit issues to C$4.1 billion from C$1.4 billion in both 2002 shelf exploration PATRICK JUDY see TRUSTS page 18 Alaska has lowest replacement cost, BREAKING NEWS company replaces 149% of production By ALLEN BAKER 2 Report counts on oil sands bonanza: Alberta chamber Petroleum News Contributing Writer says five-fold increase to 5 million barrels per day possible by 2030 nocal Corp. has cut its exploration program for the Gulf of Mexico shelf by about 50 percent for the current year 7Anadarko lowers ’04 production target: Independent U after disappointing results from that area in 2003. drops growth target because of weather-related delays at Marco Polo Overall, Unocal replaced 149 percent of its 2003 produc- tion with new reserves, though asset sales led to a decline in the overall reserve base. 15 Mackenzie project faces full review: Government The move in the Gulf came after drilling cost overruns and orders exhaustive environmental assessment, Imperial welcomes decision see UNOCAL page 18 Unocal’s monopod platform, Cook Inlet, Alaska 2 ON DEADLINE PETROLEUM NEWS • WEEK OF FEBRUARY 8, 2004 G ALBERTA Report counts on oil sands bonanza Alberta Chamber of Resources says five-fold increase to 5 million barrels per day is possible from oil sands by 2030; but group acknowledges wide range of technological challenges By GARY PARK In an 82-page study released Jan. Petroleum News Calgary Correspondent Want to know 30, the chamber predicted that the echnology has been the key to more? oil sands will meet 16 percent of achieving production of almost 1 If you’d like to read more about the North America’s oil demand by T million barrels per day from oil sands, go to Petroleum News’ 2030 provided innovation remains Alberta’s oil sands and will under- web site and search for these arti- pin expansion to 2 million bpd in 2012 cles, which were a few of the arti- in the forefront. cles published on this subject in the and possibly 5 million bpd in 2030, said last couple of months. report estimates ultimate recovery rates the Alberta Chamber of Resources. of 40 percent to 70 percent. In an 82-page study released Jan. 30, Web site: www.PetroleumNews.com But if as steam-assisted gravity the chamber predicted that the oil sands drainage production is to expand greatly will meet 16 percent of North America’s 2004 G Jan. 18 Gas-bitumen showdown “much of the new production will need to oil demand by 2030 provided innovation enters a critical phase be upgraded to higher value product,” the remains in the forefront. G Jan. 11 No end to oil sands vs. chamber said. After nearly 40 years of commercial bitumen fight The industry is put on notice that chal- production, encompassing two phases of G Jan. 11 Canada ships 60% of lenges in managing air emissions will growth, the oil sands sector is “now crude to U.S. G Jan. 4 Oil sands poised for gusher become greater with time and will poised for a third wave of development” G Jan. 4 Canadian pipelines chase require attention to community relations. that could generate C$40 billion of eco- U.S. markets Although 70 percent to 80 percent of nomic growth in Canada, create tens of life cycle greenhouse gas emissions come thousands of new jobs and produce up to 2003 G from burning the final fuel products, the C$90 billion in new investment over 30 Dec. 28 Two oil sands ventures make progress 15 percent or so released at the produc- years, the report says. G Dec. 21 Oil sands best hope for tion stage are largely the result of high Within less than 10 years, oil sands are cap-ex hike energy use for bitumen recovery and expected to account for 2 percent of G Dec. 14 Carriers go from reducing that use is a major target for Canada’s Gross Domestic Product. pipedreams to pipelines to ship oil sands overall cost reduction. Challenges ahead The full report is available online at www.acr-alberta.com. But those lofty goals will not be • Sustainable development must be reached without meeting a series of chal- apparent in all aspects of operations. Advances on several lenges. • Economic wealth must be shared oil sands projects Chamber Executive Director Brad broadly across Canada and more narrow- The findings were released during a Anderson said the Athabasca, Cold Lake ly among the communities — aboriginal week when advances were made on sev- and Peace River regions form a basin in particular — likely to be most affected eral oil sands projects. “with a lot of oil in it, but it’s also the by continued development. most expensive hydrocarbon in the world • Having received regulatory to produce.” Oil sands could bridge approval, Canadian Natural Resources The chamber’s roadmap is designed to energy gap to future may start work this fall on Alberta’s set a course for growth by identifying fourth large-scale oil sands project. The chamber said that as conventional issues and technology options to over- Backed by a work force that will peak at crude and natural gas decline, the oil come hurdles. about 3,500, the C$8.5 billion Horizon sands could bridge the gap between non- “As producers work toward this new project could come on stream in 2008 and renewable fossil fuels and cleaner energy vision, they will rely heavily on technol- grow to 232,000 bpd by 2012, producing options of the future.