July ANS volumes down 15%; driven by Alpine work, TAPS maintenance

page

4

l F I N A N C E & E C O N O M Y

l G O V E R N M E N T

Vol. 26, No. 36 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of September 5, 2021 • $2.50

l E X P L O R A T I O N & P R O D U C T I O N

see SCOPING PERIOD page 7

After Louisiana court injunction BOEM resumes inlet sale work

As a consequence of an injunction in the federal District Court

for the Western District of Louisiana, the Bureau of Ocean

Energy Management is continuing its preparations for an oil and

gas lease sale in federal waters of the lower Cook Inlet, originally

scheduled to be held in 2021. On Jan. 13 of this year the agency

published a draft environmental impact statement for the lease

sale, with a public comment period for the EIS scheduled to run

from Jan. 16 to March 1. However, on Feb. 4, in response to an

executive order by President Biden pausing federal oil and gas

leasing, the agency cancelled the public comment period, thus

postponing the lease sale indefinitely.

see LINE 3 page 11

Hilcorp plans greenfield well at Ivan River on west side of inlet

Hilcorp Alaska is planning to drill a new well at the Ivan River

gas field in the fourth quarter, the first new well at that field in

more than 10 years.

The Alaska Division of Oil and Gas said in an Aug. 25

approval of an amendment to the company’s 2021 plan of devel-

opment for the Ivan River unit that the company originally pro-

posed to do no grassroots drilling at the field during the 2021

POD.

Hilcorp told the division it had identified sufficient gas

reserves in the Sterling and Beluga formations to support drilling

of a grassroots well and plans to drill the IRU 241-01 well in the

fourth quarter of this year to target the identified reserves.

Ivan River is an onshore west side Cook Inlet gas field. The

see IVAN RIVER page 11

see INLET SALE page 12

BLM schedules EIS public meetings; seeks ANWR lease sales comments

The Bureau of Land Management has scheduled meetings

to gather public comments for the scoping of the supplemental

environmental impact statement for the Arctic National

Wildlife Refuge coastal plain oil and gas lease sale program.

The meetings, which will be conducted remotely over Zoom,

will take place on Sept. 14, 15 and 16. On each of these days

there will be two sessions, one from 1 p.m. to 3:30 p.m. and

the second from 6 p.m. to 8:30 p.m. Information about the

meetings is available on the BLM.gov website.

The meetings form part of a 60-day public scoping period

for the SEIS, which is being developed following a June 1 sec-

retarial order, placing a hold on the oil and gas leasing pro-

gram in the coastal plain. The purpose of gathering public

Ida’s effect muted GOM hurricane price impact dulled by delta, end of summer driving season

By STEVE SUTHERLIN Petroleum News

A laska North Slope crude inched lower by 11

cents Sept. 1, to close at $71.35 per barrel,

while West Texas Intermediate gained 9 cents to close

at $$68.59 and Brent dropped by $1.40 to close at

$71.59.

For ANS and Brent, it was the seventh consecu-

tive close above $70 following a plunge into the mid-

$60 range in mid-August and choppy trading all

month long. WTI traded in the high $60s over the

week ending Sept. 1, following its own plunge into

the lower $60s.

The price stability was remarkable given the coun-

tervailing factors pulling on the market, including a

devastating hurricane in the Gulf of Mexico, a pro-

duction adjustment meeting of the Organization of

the Petroleum Exporting Counties and its allies,

ongoing demand fears due to new variants of

COVID-19, the first full FDA approval for a COVID-

19 vaccine, strong inventory draws on U.S oil and

gasoline stockpiles and ongoing negotiations

between the United States and Iran which might

affect sanctions on Iranian oil exports.

Committed to Willow ConocoPhillips obeys court decision; remains dedicated to core Alaska biz

By KAY CASHMAN Petroleum News

The federal District Court in Alaska

recently upheld appeals challenging

the validity of the environmental impact

statement and the associated polar bear

biological opinion for ConocoPhillips

Alaska’s Willow oil field development in

the northeastern National Petroleum

Reserve-Alaska. The result is that

ConocoPhillips will not be able to start any on-the-

ground work to develop the field until the Bureau

of Land Management has reworked and approved

the EIS, and the Fish and Wildlife Service has

reworked the associated biological opinion.

ConocoPhillips had hoped to start gravel work

and road construction for the project in

February of this year.

But the company has not given up on

Willow, which at last estimate will yield

some 586 million barrels of oil over its

30-year field life.

The field will produce oil from the

Nanushuk formation in the Bear Tooth

unit, west of the Greater Mooses Tooth

unit, where oil is already being produced

by the company. Oil production at

Willow is projected at 160,000 barrels per day,

with the field having production capacity of

200,000 bpd.

Field development will involve the construction

Promises … or puffery? Hopes of positive debate on energy during Canada’s election campaign dashed

By GARY PARK For Petroleum News

Canada is in the midst of a federal

election campaign, which gives

many candidates another chance to trash

the petroleum industry.

That means the governing Liberals

led by Prime Minister Justin Trudeau and

the New Democrats, Greens and Bloc

Quebecois, can embark on a free-for-all

of pinning all or most of the blame for climate

change on oil and natural gas producers.

Trudeau is seeking his third term in power by

calling a snap election at the halfway point of his

current mandate, claiming he needs early

approval to steer Canada through

COVID-19 and prepare the country for

an economic recovery.

But analysts are increasingly of the

view that he will do no better than repeat

his minority success in 2019, which

means he will continue to need the back-

ing of the minority parties to pass legisla-

tion in the House of Commons.

The Conservative party under Erin

O’Toole has made surprising gains in the latest

polls, indicating Trudeau’s grand plan could be

frustrated.

see OIL PRICES page 7

see WILLOW DECISION page 11

see ENERGY DEBATE page 9

Line 3 posts court victories: Minn. delivers setbacks to opponents

Enbridge has added two more legal vic-

tories to its battle for final approval of the

Line 3 crude oil pipeline.

The Calgary-based company is now

within sight of starting shipments within

four months of 760,000 barrels per day of

oil sands bitumen from Alberta to its refin-

ing terminal in Wisconsin.

The Minnesota Supreme Court refused

to hear an appeal from opponents of the

pipeline, closely followed on Aug. 30 by

the state’s Court of Appeals which affirmed a decision by the

Minnesota Pollution Control Agency, MPCA, to issue a water

SONYA SAVAGE

OPEC+ will proceed with its scheduled 400,000 bpd oil production increase

in October.

EREC ISAACSON

JUSTIN TRUDEAU

2 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

Trusted upstream coverage >> www.petroleumnews.com

Petroleum News Alaska’s source for oil and gas news

Ida’s effect muted GOM price impact dulled by delta, end of summer driving season

Committed to Willow Conoco obeys court decision; remains dedicated to core Alaska biz

Promises … or puffery? Hopes of positive debate on energy during Canada’s election dashed

ON THE COVER

BLM schedules EIS public meetings; seeks ANWR lease sales comments

After Louisiana court injunction BOEM resumes inlet sale workLine 3 posts court victories: Minn. delivers setbacks to opponentsHilcorp plans greenfield well at Ivan River on west side of inlet

4 July ANS volumes down 15% at 409,720 bpd

EXPLORATION & PRODUCTION

6 Hilcorp applies to Corps to expand L Pad

6 US rotary rig count gains 5, now at 508

GOVERNMENT

7 RCA wants more info on pipeline transfer

Gardes purchase of North Fork field includes Anchor Point Energy, holder of certificate of convenience and necessity for pipeline

PIPELINES & DOWNSTREAM

5 CD-4 pad expansion project advances

State of Alaska opens 30-day comment period on ConocoPhillips project;19 new wells to access Narwhal, Qannik oil in the Nanushuk

2 State gauging interest in its royalty oil

Division of Oil & Gas has non-binding informal solicitation out for ANS royalty-in-kind oil; responses due by end of September

contents

l G O V E R N M E N T

State gauging interest in its royalty oil Division of Oil & Gas has non-binding informal solicitation out for ANS royalty-in-kind oil; responses due by end of September

By KRISTEN NELSON Petroleum News

The Alaska Division of Oil and Gas has published a

non-binding solicitation of interest to gauge whether

commercial refiners or other parties would like to acquire

some of the state’s North Slope royalty-in-kind, RIK, oil.

Division Director Tom Stokes said in the Aug. 26 solic-

itation that the state’s current RIK contracts end in the third

and fourth quarters of 2022.

The state has received inquiries from potential buyers

for multiyear RIK contracts, and state statutes require com-

petitive bid sales for the state’s royalty oil except in cases

when the Department of Natural Resources commissioner

“determines that the best interest of the state does not

require competitive bidding or that no competition exists.”

“If there is substantial interest expressed by more than

one potential buyer for RIK oil, DNR may issue an

Invitation to Bid and conduct a sealed-bid auction for the

RIK oil consequently,” the solicitation says.

Written responses are due Sept. 30.

(See state’s Aug. 26 solicitation of interest in PDF ver-

sion of this issue of Petroleum News online at

www.PetroleumNews.com.)

Multiyear RIK sales agreements require a review by the

Alaska Royalty Oil and Gas Development Advisory Board

and approval by the state Legislature.

The contract will supply RIK oil for at lease three years,

the solicitation said.

One-year contracts In May DNR published a final best interest finding and

determination for the sale of ANS RIK oil to Marathon

Petroleum Supply and Trading Co. for a negotiated one-

year contract for a portion of the state’s ANS RIK oil.

While multiyear contracts require board review and leg-

islative approval, contracts designed to relieve market con-

ditions are not required to go through that process if they are

for one year or less.

The one-year Marathon contract covered between

10,000 and 15,000 barrels per day between Aug. 1, 2021,

and July 31, 2022.

In approving the one-year contract DNR Commissioner

Corri Feige said the standard approval process takes time,

“and here, could means months without royalty oil being

delivered to the Nikiski refinery.”

The May finding said the state has a long history of sell-

ing North Slope RIK to the Marathon refinery, having sup-

plied ANS crude to that facility between July 1980 and

January 1982, between January 1983 and December 1998

and since February 2014.

The state also asked for expressions of interest from

companies interested in bidding on the state’s ANS RIK

crude oil last September.

At that time the state had a five-year contract with

Tesoro Refining and Marketing Co. which began in 2016

(Tesoro changed its name to Andeavor in 2017 and merged

with Marathon Petroleum in 2018) and a four-year contract

with Petro Star Inc. which began in 2017, although the

state’s Petro Star contract began with a one-year contract

effective Jan. 1, 2017.

From November 1979 through December 2020 the state

disposed of 965 million barrels of oil through RIK sales,

approximately 45% of its North Slope royalty oil.

There are five refineries in the state, with three produc-

ing refined petroleum products (Marathon’s Kenai refinery,

Petro Star’s North Pole refinery and Petro Star’s Valdez

refinery) and small topping plants on the North Slope oper-

ated by Hilcorp and ConocoPhillips. l

SIDEBAR, PAGE 4: Cook Inlet gas down 4.7%

Rig Owner/Rig Type Rig No. Rig Location/Activity Operator or Status Alaska Rig Status

North Slope - Onshore

All American Oilfield LLC IDECO H-37 AAO 111 Deadhorse, Stacked in Cruz Yard Available Doyon Drilling Dreco 1250 UE 14 (SCR/TD) Standby Hilcorp Alaska LLC Dreco 1000 UE 16 (SCR/TD) Standby Dreco D2000 Uebd 19 (SCR/TD) Standby AC Mobile 25 Alpine, MT7-06 ConocoPhillips OIME 2000 141 (SCR/TD) Standby 142 (SCR/TD) Standby TSM 700 Arctic Fox #1 Standby ERD 26 Alpine, CD2-310 ConocoPhillips Hilcorp Alaska LLC Rotary Drilling Innovation Milne Point, S Pad Hilcorp Alaska LLC Nabors Alaska Drilling AC Coil Hybrid CDR-2 (CTD) Milne Point, Cold Stacked Available AC Coil CDR-3 (CTD) Kuparuk, Cold Stacked at 12 Acre Pad ConocoPhillips Ideco 900 3 (SCR/TD) Deadhorse, Stacked Available Dreco 1000 UE 7-ES (SCR-TD) Kuparuk, Startup ConocoPhillips Mid-Continental U36A 3-S Stacked Available Oilwell 700 E 4-ES (SCR) Stacked Available Dreco 1000 UE 9-ES (SCR/TD) Stacked Available Oilwell 2000 Hercules 14-E (SCR) Deadhorse Available Oilwell 2000 Hercules 16-E (SCR/TD) Stacked Brooks Range Petroleum Emsco Electro-hoist Oilwell 2000 Canrig 1050E 27-E (SCR-TD) Stacked Available Oilwell 2000 33-E Deadhorse Available Academy AC Electric CANRIG 99AC (AC-TD) Stacked Available OIME 2000 245-E (SCR-ACTD) 12 Acre Pad, stacked Available Academy AC electric CANRIG 105AC (AC-TD) Stacked Available Academy AC electric Heli-Rig 106AC (AC-TD) Stacked Available Nordic Calista Services Superior 700 UE 1 (SCR/CTD) Deadhorse Available Superior 700 UE 2 (SCR/CTD/TD) Deadhorse, stacked Available Ideco 900 3 (SCR/TD) Deadhorse, stacked Available Rig Master 1500AC 4 (AC/TD) Oliktok Point ENI Parker Drilling Arctic Operating LLC NOV ADS-10SD 272 Deadhorse, Stacked Available NOV ADS-10SD 273 Deadhorse, Stacked Available

North Slope - Offshore

Doyon Drilling Sky top Brewster NE-12 15 (SCR/TD) Spy Island, S102-SE6 ENI Nabors Alaska Drilling OIME 1000 19AC (AC-TD) Oooguruk, Stacked ENI

Cook Inlet Basin – Onshore BlueCrest Alaska Operating LLC Land Rig BlueCrest Rig #1 Stacked BlueCrest Alaska Operating LLC Glacier Oil & Gas Rig 37 West McArthur River Unit Workover Glacier Oil & Gas Hilcorp Alaska LLC TSM-850 147 Stacked Hilcorp Alaska LLC TSM-850 169 Seaview Hilcorp Alaska LLC

Cook Inlet Basin – Offshore Hilcorp Alaska LLC National 110 C (TD) Platform C, Stacked Hilcorp Alaska LLC Rig 51 Steelhead Platform, Stacked Hilcorp Alaska LLC Rig 56 Monopod A-13, stacked Hilcorp Alaska LLC Nordic Calista Services Land Rig 36 (TD) Kenai, stacked Available Spartan Drilling Baker Marine ILC-Skidoff, jack-up Spartan 151, Tyonek Platform Hilcorp Alaska LLC Furie Operating Alaska Randolf Yost jack-up Nikiski, OSK dock Available Glacier Oil & Gas National 1320 35 Osprey Platform, activated Glacier Oil & Gas

Alaska-Mackenzie Rig ReportThe Alaska-Mackenzie Rig Report as of September 1, 2021.

Active drilling companies only listed.

TD = rigs equipped with top drive units WO = workover operations CT = coiled tubing operation SCR = electric rig

This rig report was prepared by Marti Reeve

Baker Hughes North America rotary rig counts* Aug. 27 Aug. 20 Year Ago United States 508 503 254 Canada 147 156 54 Gulf of Mexico 14 14 13

Highest/Lowest US/Highest 4530 December 1981 US/Lowest 244 August 2020 *Issued by Baker Hughes since 1944

The Alaska-Mackenzie Rig Report is sponsored by:

JUDY

PAT

RICK

Mackenzie Rig Status

Canadian Beaufort Sea SDC Drilling Inc. SSDC CANMAR Island Rig #2 SDC Set down at Roland Bay Available

PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021 3

By KRISTEN NELSON Petroleum News

A laska North Slope production saw a

major month-over-month drop in

July largely driven by a major field turn-

around at Alpine and a maintenance shut-

down on the trans-Alaska oil pipeline.

ANS production averaged 409,720

barrels per day in July, down 71,802 bpd,

14.9%, from a June average of 481,522

bpd and down 15% from a July 2020

average of 482,029 bpd. Crude volumes

were 370,903 bpd, 90.5% of the total,

down 60,337 bpd, 14%, from a June vol-

ume of 431,240 bpd and down 14.3%

from a July 2020 volume of 432,764 bpd

and 38,817 bpd of natural gas liquids,

9.5% of total volume, down 11,464 bpd,

22.8%, from a June average of 50,282

bpd and down 21.2% from a July 2020

average of 49,265 bpd.

Production was down from all North

Slope fields except Eni’s Nikaitchuq,

with the largest month-over-month

decreases on the western side of the

Slope.

Turnaround, maintenance shutdown There was a 26-day turnaround at

ConocoPhillips Alaska’s Colville River

unit which began July 9 and ended Aug.

3, affecting the Alpine and Greater

Mooses’ Tooth fields.

In an Aug. 26 email, ConocoPhillips

Alaska spokeswoman Rebecca Boys said:

“The Alpine Turnaround was very suc-

cessful from a scope completion, duration

and safety perspective.”

Work accomplished during the turn-

around included:

•Completion of the Alpine gas expan-

sion (with turbine, compressor, gas cool-

ing and gas dehydration upgrades).

•Completion of Alpine slug-catcher

critical tie-ins.

•Completion of Alpine power expan-

sion critical tie-ins (with switchgear and

fuel gas system upgrades) and

•Completion of final GMT2 tie-ins.

Impacting production Slope-wide was

the 30-hour turnaround July 17-18 of the

trans-Alaska oil pipeline by Alyeska

Pipeline Service Co.

It was the first major maintenance

shutdown of the line since August 2019,

Alyeska said, and the only long-duration

shutdown scheduled for the year (see

story in July 25 issue of Petroleum

News). Two short-duration shutdowns, 12

hours or less, were scheduled for August.

Work during Alyeska’s maintenance

shutdown included:

•Replacement of piping previous used

to inject drag reducing agent at Pump

Station 1 and replacing it with 48-inch

straight piping.

•Installation of new actuators on Pump

Station 1’s two large oil tanks.

•Installation of 87 feet of 48-inch pip-

ing between two valves at Pump Station

7.

•Systemwide upgrading of the safety

integrity pressure protection system and

•Various value work, testing and

cabling repairs.

Colville, Greater Mooses Tooth The largest ANS percentage reduc-

tions were at ConocoPhillips Alaska’s

western North Slope operations, the

Colville River unit and at Greater Mooses

Tooth, with production down following

the July 9 shutdown.

Colville River production averaged

10,651 bpd in July, down 75.7%, 33,174

bpd, from a June average of 43,825 bpd

and down 78.5% from a July 2020 aver-

age of 49,429 bpd.

Production data come from the Alaska

Oil and Gas Conservation Commission

which reports production by field and

well on a month delay basis.

In addition to oil from the main Alpine

pool, Colville production includes satel-

lite production from Nanuq and Qannik.

Crude from Greater Mooses Tooth in

the National Petroleum Reserve-Alaska is

processed at Alpine facilities, and aver-

aged 675 bpd in July, down 1,826 bpd,

73%, from a June average of 2,501 bpd

and down 68% from a July 2020 average

of 2,110 bpd.

Prudhoe Bay, Kuparuk The Hilcorp North Slope-operated

Prudhoe Bay field, the Slope’s largest,

averaged 226,412 bpd in July, down

11.9%, 30,703 bpd, from a June average

of 257,115 bpd and down 9.5% from a

July 2020 average of 250,038 bpd.

Crude production accounted for 84.2%

of Prudhoe output, an average of 190,735

bpd, down 20,374 bpd, 9.7%, from a June

average of 211,109 bpd and down 7%

from a July 2020 average of 205,181 bpd.

Prudhoe NGL production averaged

35,677 bpd, 15.8% of the field’s output,

down 10,330 bpd, 22.5%, from a June

average of 46,007 bpd and down 20.5%

from a July 2020 average of 44,857 bpd.

In addition to the primary reservoir,

production volumes from Prudhoe

include Aurora, Borealis, Lisburne,

Midnight Sun, Niakuk, Polaris, Point

McIntyre, Put River, Raven and Schrader

Bluff.

The ConocoPhillips Alaska-operated

Kuparuk River field, the second largest

Slope field, averaged 89,170 bpd in July,

down 1,737 bpd, 1.9%, from a June aver-

age of 90,907 bpd and down 6.2% from a

l E X P L O R A T I O N & P R O D U C T I O N

July ANS volumes down 15% at 409,720 bpd Decline driven by 26-day turnaround at Alpine beginning July 9 and July 17-18 maintenance shutdown of trans-Alaska oil pipeline

4 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

ADDRESS P.O. Box 231647 Anchorage, AK 99523-1647 NEWS 907.522.9469 publisher@petroleumnews.com CIRCULATION 907.522.9469 circulation@petroleumnews.com ADVERTISING Susan Crane • 907.770.5592 scrane@petroleumnews.com

OWNER: Petroleum Newspapers of Alaska LLC (PNA) Petroleum News (ISSN 1544-3612) • Vol. 26, No. 36 • Week of September 5, 2021

Published weekly. Address: 5441 Old Seward, #3, Anchorage, AK 99518 (Please mail ALL correspondence to:

P.O. Box 231647 Anchorage, AK 99523-1647) Subscription prices in U.S. — $118.00 1 year, $216.00 2 years

Canada — $206.00 1 year, $375.00 2 years Overseas (sent air mail) — $240.00 1 year, $436.00 2 years “Periodicals postage paid at Anchorage, AK 99502-9986.”

POSTMASTER: Send address changes to Petroleum News, P.O. Box 231647 Anchorage, AK 99523-1647.

www.PetroleumNews.com

Petroleum News and its supplement, Petroleum Directory, are owned by Petroleum Newspapers of Alaska LLC. The newspaper is published weekly. Several of the individuals

listed above work for independent companies that contract services to Petroleum Newspapers of Alaska

LLC or are freelance writers.

Kay Cashman PUBLISHER & FOUNDER

Mary Mack CEO & GENERAL MANAGER

Kristen Nelson EDITOR-IN-CHIEF

Susan Crane ADVERTISING DIRECTOR

Heather Yates BOOKKEEPER

Marti Reeve SPECIAL PUBLICATIONS DIRECTOR

Steven Merritt PRODUCTION DIRECTOR

Alan Bailey CONTRIBUTING WRITER

Eric Lidji CONTRIBUTING WRITER

Gary Park CONTRIBUTING WRITER (CANADA)

Steve Sutherlin CONTRIBUTING WRITER

Judy Patrick Photography CONTRACT PHOTOGRAPHER

Forrest Crane CONTRACT PHOTOGRAPHER

Renee Garbutt CIRCULATION MANAGER

281-978-2771

www.alaskasteel.com

6180 Electron DriveAnchorage, AK 99518

Cook Inlet gas down 4.7% Natural gas production from Cook Inlet averaged 198,599 thousand cubic feet

in July, down 9,846 mcf per day, 4.7%, from a June average of 208,445 mcf per

day and down 0.2% from a July 2020 average of 198,905 mcf per day.

This data is from the Alaska Oil and Gas Conservation Commission, which

reports production on a month-delay basis. For natural gas AOGCC reports meas-

urements in thousands of cubic feet, mcf.

The inlet’s nine largest fields account for the majority of natural gas produc-

tion, 86.5% in July compared to 79% in July 2020.

Hilcorp Alaska’s Kenai field averaged 33,131 mcf per day in July, down 3,899

mcf per day, 10.5%, from a June average of 37,030 mcf per day and up 2.2% from

a July 2020 average of 32,414 mcf per day.

Hilcorp’s Ninilchik field averaged 30,483 mcf per day in July, up 350 mcf per

day, 1.2%, from a June average of 30,133 mcf per day and down 4.2% from a July

2020 average of 31,833 mcf per day.

Hilcorp’s McArthur River averaged 21,481 mcf per day in July, down 1,723

mcf per day, 7.4%, from a June average of 23,204 mcf per day and down 11.8%

from a July 2020 average of 24,353 mcf per day.

The Hilcorp-operated Beluga River field averaged 19,724 mcf per day in July,

down 861 mcf per day, 4.2%, from a June average of 20,584 mcf per day and up

21.3% from a July 2020 average of 16,262 mcf per day.

Hilcorp’s Swanson River averaged 19,231 mcf per day in July, up 129 mcf per

day, 0.7%, from a June average of 19,102 mcf per day and down 22.5% from a

July 2020 average of 24,797 mcf per day.

Hilcorp’s North Cook Inlet averaged 19,071 mcf per day, up 4,242 mcf per day,

28.6%, from a June average of 14,828 mcf per day and up 25.1% from a July 2020

average of 15,249 mcf per day.

Furie’s Kitchen Lights averaged 11,488 mcf per day in July, down 3,144 mcf

per day, 21.5%, from a June average of 14,631 mcf per day and down 9.4% from

a July 2020 average of 12,678 mcf per day.

Hilcorp’s Beaver Creek averaged 8,711 mcf per day in July, down 1,547 mcf

see ANS VOLUMES page 8

see INLET GAS page 8

By KAY CASHMAN Petroleum News

O n Aug. 30, Alaska’s Division of Oil

and Gas opened the 30-day public

comment period on ConocoPhillips

Alaska’s July 23 request for approval of

an amendment to the Colville River unit

plan of operations to move forward with

the expansion of Colville Delta No. 4

pad.

The company proposes to place

55,000 cubic yards of clean gravel fill and

3,400 cy of erosion protection onto 5.1

acres of jurisdictional wetlands and 0.4

acres of non-jurisdictional uplands to

expand the north, south and east sides of

the existing CD-4 pad.

Supporting infrastructure includes 19

new wells, a pipe rack extension, valve

shelters, conductors, mouseholes, ther-

mosyphons, vertical support members, a

new remote electrical instrumentation

module, fuel gas conditioning skid, light-

ing, on-pad trenching for cable installa-

tion, and temporary offices, envirovacs

and break shacks. No new permanent

buildings are anticipated.

Approximately half the wells will be

producers and half injectors.

Upon completion, the larger pad will

have the potential for a total of 63 wells.

The purpose of the expansion project

is to access the Narwhal and Qannik

resources, both in the Nanushuk forma-

tion.

The project is expected to start on Jan.

1 and continue until all wells are drilled

in about 2035, but construction of sup-

porting ice features will actually start

around Nov. 1 and finish at the end of

January.

The infrastructure will be utilized until

the end of field life, ConocoPhillips said.

Gravel, roads, VSMs Gravel placement will occur over one

winter season, with gravel transported

from a commercial gravel source to CD-4

using typical Maxi-Haul end-dumps.

No fill will be placed during the

migratory bird nesting window of June 1

through July 31.

The permitted Western North Slope

Resupply Ice Road will be used to sup-

port the project. Other ice, if required,

will be permitted with the North Slope

Borough separately.

Access to the project area and support

for gravel placement will also be via

existing Alpine gravel roads. No new per-

manent roads are anticipated at this time.

The existing airstrip at CD-1 will be

used to support this project. No new

airstrips are anticipated at this time.

Gravel sources being considered for

use include the ASRC Mine Site and

Kuparuk Mine Site C.

VSMs will be installed as needed to

support various project components.

Sizes and method will vary.

Trenching will be done as needed at

various places on the existing pad and

expansion area to install power and com-

munications.

Project location, land use, water The project area is within the North

Slope Borough Resource Development

District, the surface land is owed by the

Kuukpik Corp. and the mineral rights are

owned by the state of Alaska, specifically

ADL384211, which is leased to

ConocoPhillips.

The project area has been examined in

part by previous cultural resource efforts

during surveys for proposed exploration

drilling and development projects.

ConocoPhillips said it has reviewed

the database of Traditional Land Use

Inventory, or TLUI, Alaska Heritage

Resource Survey site, Native allotments,

and cabins used for subsistence purposes

and there are no known sites within 500

feet of the CD-4 pad expansion area.

The company said it believes there

would be no impact to cultural resources

for the project and it will apply for a

Certificate of TLUI Clearance.

All activities will be conducted in

accordance with federal, state and local

regulations, permit stipulations and gen-

eral concurrence stipulations as appropri-

ate, ConocoPhillips said.

All water sources are or will be per-

mitted with the Alaska Department of

Natural Resources’ Division of Water.

Sources that may support this project

include, but are not limited to, the

Colville River and its channels, ASRC

Mine Site gravel pits, Lakes M9603,

M9607, B8530, M9608, M9606, L9327,

B8531/L9326, M9934, L9325, L9324

and L9323.

Dismantling, removal, restoration At end of field life, ConocoPhillips

must fully dismantle, remove and restore

all temporary and permanent improve-

ments approved by the plan of operations

unless the state of Alaska determines, at

the time of rehabilitation, that different

rehabilitation measures are necessary to

deliver up the land in good order and con-

dition.

A little history ConocoPhillips’ 2018 exploration pro-

gram included a pair of exploration wells

just south of the Colville River unit, near

the village of Nuiqsut.

The play has a long and circular histo-

ry with several names.

ConocoPhillips first asked the state to

expand the Colville River unit to include

acreage to the south in 2002. The

prospect was known at the time as

Titania. The state agreed to the Titania

expansion but in 2004 contracted the

acreage out of the unit after

ConocoPhillips failed to meet its drilling

commitments.

A joint venture operated by Brooks

Range Petroleum Corp. acquired the

acreage through a lease sale and began

referring to the leases as the Tofkat

prospect. The small independent encoun-

tered hydrocarbons on the leases in early

2008 with the Tofkat No. 1 well and two

related sidetracks and in 2011 formed the

Tofkat unit.

The state terminated the unit in late

March 2016, after the company missed

work commitments. The termination pro-

ceedings came as ConocoPhillips was

acquiring the acreage. ConocoPhillips

asked the state to incorporate it into the

Colville River unit.

The state was hesitant to approve the

expansion, but eventually agreed to the

request, pursuant to bonds, guarantees

and conditions.

Under this newest effort,

ConocoPhillips began referring to the

project as Putu. To meet the initial set of

conditions required by the state,

ConocoPhillips drilled the Putu No. 2 and

Putu No. 2A wells and made a $3 million

bonus bid replacement. The company

also drilled four appraisal wells — CD4-

595PH1, CD4-595, CD4-594PH1 and

PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021 5

l E X P L O R A T I O N & P R O D U C T I O N

CD-4 pad expansion project advances State of Alaska opens 30-day comment period on ConocoPhillips project;19 new wells to access Narwhal, Qannik oil in the Nanushuk

see PAD EXPANSION page 6

The purpose of the expansion project, which is expected to start

on Jan. 1 and continue until all wells are drilled in about 2035, is to access the Narwhal and Qannik resources, both in the Nanushuk

formation.

6 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

EXPLORATION & PRODUCTIONUS rotary rig count gains 5, now at 508

The Baker Hughes U.S. rotary drilling rig count was 508 the week ending Aug. 27,

up five from 503 the previous week and up by 254 from 254 a year ago.

When the count dropped to 244 in mid-August 2020 it was the lowest the domestic

rotary rig count has been since the Houston based oilfield services company began

issuing weekly U.S. numbers in 1944.

Prior to 2020, the low was 404 rigs in May 2016. The count peaked at 4,530 in

1981.

The count was in the low 790s at the beginning of 2020, where it remained through

mid-March, when it began to fall, dropping below what had been the historic low in

early May with a count of 374 and continuing to drop through the third week of

August 2020 when it gained back 10 rigs.

The Aug. 27 count includes 410 rigs targeting oil, up by five from the previous

week and up 230 from 180 a year ago, with 97 rigs targeting gas, unchanged from the

previous week and up by 25 from 72 a year ago, and one miscellaneous rig,

unchanged from the previous week and down by one from a year ago.

Twenty-five of the rigs reported Aug. 27 were drilling directional wells, 459 were

drilling horizontal wells and 21 were drilling vertical wells.

The Wyoming rig count (18) was up by two from the previous week.

New Mexico (81), Oklahoma (31) and Texas (232) each gained a single rig week-

over-week.

Counts in all other states were unchanged, week-over-week: Alaska (4), California

(6), Colorado (11), Louisiana (49), North Dakota (22), Ohio (12), Pennsylvania (19),

Utah (11) and West Virginia (9).

Baker Hughes shows Alaska with four rigs active Aug. 27, unchanged from the

previous week and up one from a year ago, when the state’s count stood at three.

The rig count in the Permian, the most active basin in the country, was up by two

from the previous week at 249 and up by 124 from a count of 125 a year ago.

—KRISTEN NELSON

MACHINE SHOP SERVICES | PREMIUM THREADINGTOOL TESTING | DOWNHOLE TOOL DESIGN

MANAGED SERVICES | SHOP & DATA SUPPORTISO 9001:2015 CERTIFIED

ANCHORAGE MACHINE SHOP907-336-3343

1270 E. 64th AvenueAnchorage, AK 99518admin@nsakllc.com

DEADHORSE MACHINE SHOP907-331-7627

At the corner of Spur & SpinePrudhoe Bay, AK 99734

deadhorse@nsakllc.com

www.northernsolutionsak.com

CD4-594 — beyond its work commit-

ments “to better understand the reservoir

and to test the technical feasibility of

extended reach drilling at shallow depth,”

according to the company.

The next round of commitments

required ConocoPhillips to pay $4 mil-

lion to the state and submit a plan detail-

ing efforts to bring the leases into sus-

tained production.

Based on preliminary testing of its ini-

tial Putu exploration wells, the company

announced the Narwhal discovery, esti-

mated to contain between 100 million and

350 million barrels of oil equivalent.

Willow and Narwhal are different sed-

iment deposits within the Nanushuk for-

mation, with Willow being older.

ConocoPhillips drilled a follow-up

well at Narwhal in the 2019 exploration

season. That summer, the company said

that the results were “encouraging”

enough to justify “an additional unbud-

geted horizontal well from an existing

Alpine drill site into the Narwhal trend”

later in the year. That relatively sponta-

neous decision, at least by North Slope

standards, reflects one of the big strategic

opportunities of the prospect. It is close

enough to the Colville River unit to uti-

lize existing well pads, bringing down

costs and reducing some of the most com-

mon logistical complications of off-road

winter exploration.

Asked about the additional well, a

ConocoPhillips executive said it would

be a “long-term test” to better “under-

stand the long-term deliverability.” He

added, “We also can drill an offset injec-

tion well to this producer from the same

drill site. So, we’re going to take the

opportunity to do that as well. And that

will give us further information on the

Narwhal trend. But it’s really driven by

encouragement and what we saw in the

initial well in the Narwhal, the Putu

appraisal well we call that.”

A long-term flow test conducted on the

Narwhal exploration well also “exceeded

expectations,” according to

ConocoPhillips, at a peak rate producing

4,500 barrels of oil per day. This led the

company to increase its estimated ulti-

mate recovery figure for the prospect by

150 million to 400 million barrels of oil

equivalent.

The company initially envisioned a

two-pronged strategy at the Narwhal

prospect. It would drill about half the

wells horizontally from the existing CD-4

pad in the Colville River unit and the

remaining wells from a new CD-8 pad in

the southern end of the unit.

Under that proposal, the company ini-

tially expected production as early as

2022 from the wells at the CD-4 pad and

production from the planned CD-8 pad as

early as 2025.

But by late 2020, ConocoPhillips was

rethinking its approach. The CD4-594

and CD4-595 appraisal wells had

“stretched the limits” of serviceable

extended reach drilling at shallow depths.

And so the company shifted the project

toward CD-8, which would support

between 20 and 40 wells, depending on

modeling.

All the ConocoPhillips projects at the

Colville River unit and in the NPR-A

(such as Willow) place additional respon-

sibilities on the Alpine infrastructure. In

his Meet Alaska presentation earlier this

year, ConocoPhillips Alaska President

Erec Isaacson described three projects

underway this year to expand the gas-

handling capacity and power generation

and to add a slug catcher at the Alpine

processing facility. The $190 million

projects will allow Alpine to handle addi-

tional production coming online. l

EXPLORATION & PRODUCTIONHilcorp applies to Corps to expand L Pad

Hilcorp North Slope, the Prudhoe Bay unit operator, has applied to the U.S.

Army Corps of Engineers to expand L Pad in the Western Satellite area at

Prudhoe.

Development drilling from L Pad is ongoing.

In a July proposed amendment for the Western Satellites 2021 plan of devel-

opment, Hilcorp told the Alaska Division of Oil and Gas it anticipated completing

as many as six new drill wells within the Orion participating area, as many as

three producers and one injector from L Pad and up to one producer and one injec-

tor from Z Pad.

That drilling was planned for existing pad areas.

In July, Hilcorp applied to the division “to drill up to five boreholes in tundra

adjacent to L Pad” at Prudhoe. In approving the request, an amendment of the unit

plan of operations, the division said: “Future plans for L Pad include a pad expan-

sion and new wells. The purpose of this project is to determine the exact location

of these future wells.” The division said the company anticipated starting the

borehole project Aug. 15.

The public notice of application for permit from the Corps, dated Aug. 30, said:

“The applicant’s stated purpose is to expand the L Pad to accommodate new wells

for increased production and oil retrieval.”

The proposed work would place 25,000 cubic yards of clean gravel onto 3.7

acres of wetlands, expanding the pad into an area 300 feet by 530 feet. Comments

on the proposal are due by Sept. 29.

An illustration of the work that is part of the Corps public notice shows the

expansion off the western end of the pad, with two new well rows, each beginning

on the existing pad and expanding onto the new pad surface.

—KRISTEN NELSON

continued from page 5

PAD EXPANSION Expected timeline 1. Construction of supporting ice features 11/1/2021—1/31/2022. 2. Mobilization of equipment 1/1/2022—1/31/2022. 3. Hauling gravel and construction of gravel expansion 1/15/2022—4/15/2022. 4. Demobilization of gravel installation equipment 4/15/2022—4/30/2022. 5. Final conditioning of gravel 8/1/2022—12/31/2023. 6. Install supporting infrastructure 10/1/2022—12/31/2024. 7. Commence drilling operations 10/1/2022—12/31/2035.

Despite firming near the end of the

month, oil prices fell in August. ANS closed

at $71.46 Aug. 31, down $4.52 from the

July 30 close of $75.87, a loss of 5.9%. WTI

closed at $68.59 Aug. 31, down $5.36 from

the July 30 close of $73.95, a loss of 7.2%.

Brent closed at $71.59 Aug. 31, down $4.74

from the July 30 close of $76.33, a loss of

6.2%.

Hurricane effects muted Prices rose modestly on Aug. 30, the first

trading day after the Category 4 Hurricane

Ida made landfall in Louisiana just before

noon Aug. 29. ANS gained 42 cents Aug. 30

to close at $72.05, WTI lifted 47 cents to

close at $69.21, and Brent popped 71 cents

to close at $73.41.

The hurricane boost was short lived. The

gains of ANS and WTI were relinquished

the next day, and Brent slid as well.

As of 12:30 p.m. EDT Aug. 31, an esti-

mated 94% of oil production and 94% of

natural gas production in federally adminis-

tered areas of the U.S. Gulf of Mexico

remained shut-in, according to the Bureau

of Safety and Environmental Enforcement.

The U.S. Department of Energy said in a

Sept. 1 situation report that seven refineries

in Louisiana remain shut, accounting for

about 1.7 million barrels per day of refinery

capacity, approximately 9% of total U.S.

operable refining capacity.

The refinery and offshore platform shut-

ins are not anticipated to cause immediate

supply issues, DOE said.

“For the week ending on August 20,

Gulf Coast stocks of gasoline and distillate

were 3% and 5% above the seasonal five-

year average,” DOE said, adding that Gulf

Coast stocks of crude oil were essentially in

line with the five-year average, not includ-

ing the Strategic Petroleum Reserve.

The impact of the storm on refined prod-

uct supply initially appeared to be greater

than the impact to crude supply, IHS Markit

said in a Sept. 1 release, but it expects the

impact on pump prices to be muted —

between 2 cents and 5 cents per gallon in

the upper range.

“The spread between demand and sup-

ply was not as skewed towards demand as it

would have been had there not been a resur-

gence of the Delta variant of the coron-

avirus,” said Debnil Chowdhury, IHS

Markit executive director. “This is also the

time of year where seasonal gasoline

demand peaks and starts to fall heading into

winter; as a result, outright prices are not

expected to increase much higher than what

we saw immediately after landfall.”

Most of the shuttered refineries are

expected to be back online within three

weeks, IHS Markit said. A small number of

refineries that sustained significant wind

and flood damage will be down for as much

as two months.

OPEC+ will add production OPEC+ will proceed with its scheduled

400,000 bpd oil production increase in

October.

The production boost was ratified at the

20th OPEC and non-OPEC Ministerial

Meeting, held by videoconference Sept. 1.

OPEC said that while the effects of the

COVID-19 pandemic continue to cast some

uncertainty, market fundamentals have

strengthened, and that Organization for

Economic Co-operation and Development

stocks continue to fall as the recovery accel-

erates.

It said overall conformity to production

continued from page 1

OIL PRICES

PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021 7

Thousands of

Experif Miles of

ience

D

Comm

PowerplanPipeline Constr

Safety E

SaClient to

Dedicated to

mitted

nt Construction | General Cont

p

ruction & Maintenance | EPC C

Excellence

tisfaction

tractingContracting

Anchorage | DeadhoPowerplan

.prorse | 907.278.4400 | wwwnt Construction | General Cont

.comicegregorytracting

l P I P E L I N E S & D O W N S T R E A M

RCA wants more info on pipeline transfer Gardes purchase of North Fork field includes Anchor Point Energy, holder of certificate of convenience and necessity for pipeline

By KRISTEN NELSON Petroleum News

Gardes Holdings purchased the small southern Kenai

Peninsula North Fork gas field from Glacier Oil and

Gas late last year.

The field had been operated by Glacier subsidiary

Cook Inlet Energy.

The Alaska Division of Oil and Gas approved transfer

of operatorship of the North Fork unit to Gardes Holding,

and subsequently to Gardes subsidiary Vision Operating,

in May.

But approval from the Regulatory Commission of

Alaska is still in the works.

The natural gas produced at the field is moved through

the 7.4-mile North Fork Pipeline to a connection with

Enstar’s southern Kenai Peninsula line at Anchor Point.

Anchor Point Energy holds the certificate of public

convenience and necessity for the North Fork Pipeline.

Cook Inlet Energy holds controlling interest in Anchor

Point Energy, the owner of the North Fork Pipeline, and

Cook Inlet Energy and Gardes Holdings have filed jointly

for approval from RCA to transfer CIE’s controlling inter-

est in Anchor Point Energy to Gardes Holdings.

More information On Aug. 31 RCA ordered filings from the companies

on the transfer.

RCA said its regulations require copies of all pipeline

right-of-way agreements or, if ROW agreements are not

finalized, copies of the most recent ROW applications.

The commission said that Gardes and CIE did not file

a copy of the ROW agreement with their joint application

but told the commission that the ROW agreements appli-

cable to the North Fork Pipeline are the same as those

presently on file and said the ROW agreements would not

change as a result of the authorizations the companies

seek.

The commission said that in reviewing previous appli-

cations it found the last application related to the pipeline

was filed in 2014 for ROW agreement ADL 230928.

Parties to that agreement included the state of Alaska and

Anchor Point Energy, RCA said.

But, the commission said, the parties in the present

joint filing said the ROW was held in the name of Cook

Inlet Energy, and RCA said it does not have a copy of a

ROW agreement in the name of CIE in its files.

“The Joint Applicants further state that they would

work to have the right-of-way agreement transferred to

Anchor Point Energy, while maintaining that the applica-

ble right-of-way agreement would not change. We find

these statements inconsistent,” RCA said.

The commission is requiring the joint applicants to

clarify their statements about the ROW agreement and is

requiring that the applicants file a copy of the current

ROW applicable to the North Fork Pipeline and any ROW

transfer applications currently being considered by the

Department of Natural Resources.

RCA also requires the applicants to “report on the sta-

tus of any transfer application being considered by DNR

including whether DNR is requiring any form of financial

assurance as a condition of transfer.”

The filings are due by Sept. 8. l

comments is to determine the scope of issues to be

addressed and to identify any significant issues, includ-

ing any legal deficiencies, in the original EIS approval.

Approved in August 2020 The original EIS for the lease sale program was

approved in August 2020, with then Secretary of the

Interior David Bernhardt signing a record of decision on

Aug. 17 of that year, approving the ANWR coastal plain

lease sale program. Then, on Jan. 6, 2021, BLM conducted

the first ANWR lease sale, with the Alaska Industrial

Development and Export Authority, Knik Arm Services

and Regenerate Alaska, obtaining tracts. The lease sale

program resulted from legislation passed by Congress and

signed by President Donald Trump in December 2017 —

the legislation required the Department of the Interior to

conduct oil and gas lease sales for the coastal plain.

On June 1 of this year the Biden administration sus-

pended the ANWR oil and gas leases, in anticipation of

conducting a new environmental review of the leasing

program — hence the development of the SEIS, which

results from what BLM now claims are deficiencies in the

original EIS.

A hold on permitting Political news outlet Politico has reported that the

Department of the Interior has told the State of Alaska that

DOI will not process permit applications for seismic sur-

veying or related fieldwork in ANWR until the SEIS has

been completed.

AIDEA has been planning to conduct seismic surveying

in the coastal plain for its ANWR leases — on Aug. 4 the

agency issued a notice of intent to award a contract for pre-

development permitting and planning work to

SAExploration Inc., with Kaktovik Iñupiat Corp., ERC

Alaska and SALA LLC to be engaged as subcontractors.

Also according to Politico, BLM turned down an

AIDEA application for a permit to conduct cultural

resources surveys in ANWR in August. Apparently the

processing of an application by Kaktovik Iñupiat Corp. for

an ANWR seismic surveying permit has also been delayed.

At the time of going to press, neither BLM nor AIDEA

had responded to requests by Petroleum News for com-

ments on what Politico has reported.

Repeal of ANWR statutes? Another issue has arisen in conjunction with the budget

reconciliation bill being developed by the U.S. House of

Representatives — the House Natural Resources

Committee has included in the bill a section for repealing

the legislation from 2017 that opened the ANWR Coastal

Plain for oil and gas leasing. Under the proposed bill lan-

guage there would be a buyback of all ANWR leases that

have been issued. The Gwich’in Native people of northern

Alaska and Canada have expressed support for this legisla-

tion, given their strong objections to ANWR oil develop-

ment. The Gwich’in are particularly concerned about the

possible impact of oil industry activities on the Porcupine

caribou herd that calves on the coastal plain and is a pri-

mary subsistence food source for the Gwich’in.

—ALAN BAILEY

continued from page 1

SCOPING PERIOD

see OIL PRICES page 9

8 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

July 2020 average of 95,018 bpd.

In addition to the main Kuparuk pool,

Kuparuk produces from satellites at

Meltwater, Tabasco and Tarn, and from

West Sak.

Smaller Slope fields Eni’s Nikaitchuq was the only North

Slope field with a month-over-month pro-

duction increase. It averaged 18,629 bpd in

July, up 1,116 bpd, 6.4%, from a June aver-

age of 17,513 bpd although down 3.5%

from a July 2020 average of 19,297 bpd.

Two fields had very small month-over-

month declines.

Badami, operated by Savant, a Glacier

Oil and Gas company, averaged 1,076 bpd

in July, down just 7 bpd, 0.7%, from a June

average of 1,084 bpd. The field was shut-in

last July.

The ExxonMobil Production-operated

Point Thomson field also had a small

month-over-month decline, averaging 9,435

bpd in July, down just 32 bpd, 0.3%, from a

June average of 9,467 bpd and up 4.1%

from a July 2020 average of 9,066 bpd.

Hilcorp’s Milne Point field averaged

34,861 bpd in July, down 2,617 bpd, 7%,

from a June average of 37,478 bpd but up

6.3% from a July 2020 average of 32,784

bpd.

Hilcorp’s Northstar averaged 6,673 bpd

in July, down 18.7%, 1,535 bpd, from a

June average of 8,207 bpd and down 28.7%

from a July 2020 average of 9,356 bpd.

Crude oil from Northstar averaged 4,031

bpd, 60.4% of the field’s production, down

748 bpd, 15.7%, from a June average of

4,779 bpd and down 30.2% from a July

2020 average of 5,775 bpd. Northstar

NGLs, 39.6% of the field’s volume, aver-

aged 2,642 bpd in July, down 786 bpd,

22.9%, from a June average of 3,428 bpd

and down 26.2% from a July 2020 average

of 3,581 bpd.

Eni’s Oooguruk averaged 6,613 bpd in

July, down 3.4%, 233 bpd, from a July aver-

age of 6,846 bpd and down 12.4% from a

July 2020 average of 7,549 bpd.

The Hilcorp-operated Endicott field

averaged 5,525 bpd in July, down 16%,

1,053 bpd, from a June average of 6,578

bpd and down 25.1% from a July 2020

average of 7,380 bpd. Endicott crude, 91%

of the field’s volume, averaged 5,026 bpd in

July, down 12.3%, 705 bpd, from a June

average of 5,731 bpd and down 23.3% from

a July 2020 average of 6,554 bpd. Endicott

NGLs, 9% of volume, averaged 499 bpd in

July, down 41.1%, 348 bpd, from a June

average of 847 bpd and down 39.7% from a

July 2020 average of 827 bpd.

Cook Inlet up 4% July oil volumes from Cook Inlet aver-

aged 9,240 bpd, up 4%, 359 bpd, from a

June average of 8,881 bpd although down

18.5% from a July 2020 average of 11,341

bpd. With the exception of a small volume

of NGLs from the Swanson River unit, 157

bpd in July, 1.7% of the inlet total, Cook

Inlet liquids are crude oil.

Hilcorp’s McArthur River field, Cook

Inlet’s largest, averaged 3,360 bpd in July,

down 91 bpd, 2.7%, from a June average of

3,452 bpd and down 9.3% from a July 2020

average of 3,707 bpd.

Hilcorp’s Granite Point averaged 2,637

bpd in July, up 36 bpd, 1.4%, from a June

average of 2,601 bpd and down 16.4% from

a July 2020 average of 3,155 bpd.

Hilcorp’s Trading Bay averaged 1,050

bpd in July, up 184 bpd, 21.2%, from a June

average of 866 bpd and down 18.4% from a

July 2020 average of 1,286 bpd.

BlueCrest’s Hansen field averaged 893

bpd in July, down 22 bpd, 2.4%, from a

June average of 915 bpd and down 9.1%

from a July 2020 average of 982 bpd.

Hilcorp’s Swanson River averaged 907

bpd in July (750 bpd of crude and 157 bpd

of NGLs), up 43 bpd, 5%, from a June aver-

age of 864 bpd and up 11% from a July

2020 average of 817 bpd.

Hilcorp’s Beaver Creek averaged 393

bpd in July, up 212 bpd, 116.8%, from a

June average of 181 bpd and up 196.5%

from a July 2020 average of 132 bpd.

ANS crude oil production peaked in

1988 at 2.1 million bpd; Cook Inlet crude

oil production peaked in 1970 at more than

227,000 bpd. l

per day, 15.1%, from a June average of

10,258 mcf per day and down 4.5%

from a July 2020 average of 9,118 mcf

per day.

Hilcorp’s Ivan River averaged 8,517

mcf per day in July, down 2,841 mcf

per day, 25%, from a June average of

11,358 mcf per day, and up 247.8%

from a July 2020 average of 2,449 mcf

per day.

AIX’s Kenai Loop averaged 4,646

mcf per day in July, up 541 mcf per

day, 13.2%, from a June average of

4,105 mcf per day and down 5.1%

from a July 2020 average of 4,895 mcf

per day.

Hilcorp’s Cannery Loop averaged

4,138 mcf per day in July, down 1,117

mcf per day, 21.3%, from a June aver-

age of 5,255 mcf per day and down

22.3% from a July 2020 average of

5,328 mcf per day.

Hilcorp’s Deep Creek averaged

3,734 mcf per day in July, down 227

mcf per day, 5.7%, from a June average

of 3,961 mcf per day and down 4.4%

from a July 2020 average of 3,906 mcf

per day.

Hilcorp’s Granite Point averaged

3,707 mcf per day in July, up 101 mcf

per day, 2.8%, from a June average of

3,605 mcf per day and down 0.9%

from a July 2020 average of 3,741 mcf

per day.

Vision Operating’s North Fork aver-

aged 3,119 mcf per day, up 92 mcf per

day, 3%, from a June average of 3,028

mcf per day and down 8.3% from a

July 2020 average of 3,403 mcf per

day.

BlueCrest’s Hansen averaged 2,723

mcf per day in July, down 248 mcf per

day, 8.4%, from a June average of

2,972 mcf per day and down 19.1%

from a July 2020 average of 3,366 mcf

per day.

Hilcorp’s Trading Bay averaged

1,976 mcf per day in July, up 224 mcf

per day, 12.8%, from a June average of

1,752 mcf per day and down 34% from

a July 2020 average of 2,995 mcf per

day.

Hilcorp’s Seaview, which came

online in June, averaged 1,085 mcf per

day in July, up 373 mcf per day, 52.5%,

from a June average of 712 mcf per

day.

Hilcorp’s Lewis River averaged 912

mcf per day in July, down 199 mcf per

day, 17.9%, from a June average of

1,111 mcf per day and down 14.5%

from a July 2020 average of 1,067 mcf

per day.

Amaroq’s Nicolai Creek averaged

383 mcf per day in July, down 28 mcf

per day, 6.8%, from a June average of

411 mcf per day and up 4.9% from a

July 2020 average of 365 mcf per day.

Hilcorp’s Nikolaevsk averaged 340

mcf per day in July, down 64 mcf per

day, 15.9%, from a June average of 404

mcf per day and down 12.2% from a

July 2020 average of 387 mcf per day.

Cook Inlet natural gas production

peaked in the mid-1990s at more than

850,000 mcf per day.

—KRISTEN NELSON

continued from page 4

ANS VOLUMEScontinued from page 4

INLET GAS

DT

IELDTEAETH

Safety Health

ERVITHMA

onment QualiEnvir

RSTTHA

ity

Safety Health

onment QualiEnvir

ity

3 035-26) 5709(

mco.r.eitnrofka r|

m

We have been providing compressor lubrications systemssince 1954 in lower 48 and since

1986 on the slope.

Equipment Installation & Calibration

Plant Surveys

Startup/Commissioning Assistance

Equipment Training

Rental Equipment

360-668-0280 I www.frostnw.com

FIELD SERVICES

ENGINEERING SERVICES

Equipment Application Engineering

"As Built" Drawings

Equipment Skid Design/Build

Product Integration

Project Management

The inlet’s nine largest fields account for the majority of

natural gas production, 86.5% in July compared to 79% in July

2020.

PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021 9

Oil Patch Bits

ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS

Companies involved in Alaska’s oil and gas industry

A ABR, Inc. Acuren Ahtna, Inc. Airport Equipment Rentals Alaska Dreams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Alaska Frontier Constructors (AFC) . . . . . . . . . . . . . . . . . . . .8 Alaska Fuel Services Alaska Marine Lines Alaska Materials Alaska Railroad Alaska Steel Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Alaska Textiles Alaska West Express Arctic Controls ARCTOS Alaska, Division of NORTECH Armstrong ASTAC (Arctic Slope Telephone Assn. Coop, Inc) AT&T Avalon Development

B-F Bombay Deluxe Brooks Range Supply Calista Corp. ChampionX Coffman Engineers Colville Inc. Computing Alternatives CONAM Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

Construction Machinery Industrial (CMI) Cook Inlet Tug & Barge Cruz Construction Denali Universal Services (DUS) Doyon Anvil Doyon Associated Doyon Drilling Doyon, Limited EEIS Consulting Engineers, Inc. EXP Energy Services F. R. Bell & Associates, Inc. Flowline Alaska Frost Engineering Service Co. – NW . . . . . . . . . . . . . . . . . . .8

G-M GCI GeoLog GMW Fire Protection Greer Tank & Welding Guess & Rudd, PC HDR Engineering, Inc. Inlet Energy Inspirations Judy Patrick Photography Little Red Services, Inc. (LRS) Lynden Air Cargo Lynden Air Freight Lynden Inc. Lynden International Lynden Logistics Lynden Transport

Maritime Helicopters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Matson

N-P Nabors Alaska Drilling NANA Worley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Nature Conservancy, The NEI Fluid Technology Nordic Calista North Slope Borough North Slope Telecom Northern Air Cargo Northern Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Oil Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 PND Engineers, Inc. PRA (Petrotechnical Resources of Alaska) Price Gregory International . . . . . . . . . . . . . . . . . . . . . . . . . .7

Q-Z

Resource Development Council SALA Remote Medics SeaTac Marine Services Sourdough Express Strategic Action Associates Tanks-A-Lot US Ecology Alaska Weston Solutions Wolfpack Land Co. Yukon Fire Protection

All of the companies listed above advertise on a regular basis with Petroleum News

Scott Patterson earns high-level NACE certification Coffman Engineers Inc. said Aug. 31 that it is pleased to announce that

Anchorage mechanical engineer, Scott Patterson, has earned the National Association of Corrosion Engineers Senior Internal Corrosion Technologist cer-tification.

A certified senior internal corrosion technologist has a thorough under-standing of electrochemical and corrosion principles and is capable of compre-hensive assessments required to develop and manage corrosion control pro-grams and high-level internal corrosion problems in pipeline systems. Certification candidates must successfully complete the exam, NACE courses, and meet work experience and education requirements.

Patterson is a critical team member on Coffman’s industrial mechanical team. He has supported integrity management and corrosion control engineer-ing work, including developing advanced integrity management analysis tools and solutions for many major clients. Patterson has also worked on performing critical stress analysis and destructive testing of specialized downhole drilling tools.

Patterson is a 2014 graduate of the University of Vermont with dual bache-lor’s degrees in mechanical engineering and mathematics. In addition, he is a U.S. Olympic skier and a three-time U.S. National Champion. He joined Coffman as an intern in 2012. Since then, Patterson has become a prominent figure in the skiing community with the support and sponsorship of Coffman, where he continues to advance his career. SCOTT PATTERSON

While that speculation builds the socialist New

Democrats have been waging their endless campaign to

destroy the fossil fuel industry, although party leader

Jagmeet Singh has never said when or how he proposes

to achieve that end.

The party’s focus for now is on ending subsidies for

the industry which Singh said amounted to C$18 billion

in 2020, citing a report by the activist U.S.-based

Environmental Defense Fund.

Numbers A close look at his numbers show they include multi-

billion dollar green tech programs — the underpinning

of the New Democrats drive to save the planet from envi-

ronmental destruction — that subsidize car battery plants

and low-emission steel production, as well as C$1.7 bil-

lion for capping off and cleaning up inactive oil and gas

wells.

Challenged by reporters to explain how he would

replace what he viewed as petroleum subsidies, Singh

said a New Democratic government would invest direct-

ly in promoting renewable energy programs and remedi-

ating abandoned wells.

The Canadian Association of Petroleum Producers, in

refuting the claims of anti-industry organizations, said

that for every C$1 the oil and gas industry pays in taxes

it uses just 30 cents of the tax exemptions, deductions

and credits at its disposal — the lowest of the top five

industries.

Economist Jack Mintz, at the University of Calgary’s

School of Public Policy, when asked by the Calgary

Herald if Canada’s petroleum industry is subsidized,

said: “In total, no. The latest calculations we’ve done

show the industry, next to finance, is the most highly-

taxed sector in the economy.”

Government statistics estimate the industry creates

about 522,000 direct jobs, generates about C$10 billion

a year in government revenues through taxes and royal-

ties and pumps about C$100 billion into the gross

domestic product.

Conservatives Of the other contentious petroleum issues, O’Toole’s

Conservatives are calling for a revamp of Bill C-69,

which is viewed as a comprehensive regulatory barrier to

all petroleum projects that encroach into federal jurisdic-

tion, and a repeal of Bill C-48 which bans oil tankers off

the northern coast of British Columbia.

The Conservatives also want an LNG export strategy,

a hydrogen energy plan, a pledge to make oil export

pipelines a priority and C$5 billion in tax credits for proj-

ects to advance carbon capture, utilization and storage or

CCUS and develop small modular nuclear reactors.

“We have an energy policy that would ensure Canada

can complete projects and get our products to export

markets, as opposed to (the governing Liberals) doing

everything they can to prevent them,” said Blake

Richards, a Conservative candidate in an Alberta con-

stituency.

While defending itself against accusations of benefit-

ing from federal subsidies, CAPP may have undermined

its position by asking for a 100% tax break on capital

spending and for clean-tech investments.

CAPP, whose member companies account for 90% of

Canada’s oil and gas output, said it is “crucially impor-

tant for the incoming federal government to make policy

decisions that position Canada to succeed in an ultra-

competitive investment market.”

CAPP Chief Executive Officer Tim McMillan said the

proposed tax break would be “vital to developing and

commercializing technologies that reduce (greenhouse

gas) emissions, water use, and more.”

Alberta Energy Minister Sonya Savage and industry

leaders had expressed hope that the campaign might

focus on the success of companies in lowering their

greenhouse gas emissions by 30% since 2008, and their

commitments to achieve net-zero emissions by 2050.

But Savage’s call for “an honest conversation about the

importance of the energy sector” shows every sign of being

swamped with false claims about federal subsidies. l

adjustments by participating countries in the OPEC+

Declaration of Cooperation was 110% in July, “rein-

forcing the trend of high conformity.”

According to a Bloomberg report, the meeting was

wrapped up in less than one hour, in stark contrast to

July’s meeting.

The meeting to establish August production levels

originally scheduled for July 1 was delayed, extended

and then postponed before an agreement was reached

July 14.

The next such meeting will be held Oct. 4. l

continued from page 1

ENERGY DEBATE

continued from page 7

OIL PRICES

Contact Steve Sutherlin at ssutherlin@petroleumnews.com

10 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

The Department of Natural Resources (DNR) is inquiring whether there is

interest among commercial refiners or other parties to acquire some or all of

the State’s North Slope royalty in-kind (RIK) oil that may become available for

sale when the current RIK supply contract obligations terminate in the third

and fourth quarters of 2022 or any additional North Slope royalty volumes

that the State chooses to take as RIK oil. If there is substantiated interest ex-

pressed by more than one potential buyer for RIK oil, DNR may issue an Invi-

tation to Bid and conduct a sealed-bid auction for the RIK oil consequently.

DNR has received inquiries from potential buyers for multi-year RIK con-

tracts. Under AS 38.05.183, the sale of the state’s royalty oil must be by com-

petitive bid except when the Commissioner determines that the best interest

of the state does not require competitive bidding or that no competition exists.

We would like to know if your company might be interested in purchasing

RIK oil and participating in an auction via a competitive sealed bid mechanism

for a contract. We would also like to know the approximate volumetric range

(in barrels per day per year) you would require, and the preferred length of the

contract term (preferably, not less than three years). This is an informal, non-binding inquiry and your response will not create any kind of commitment by you or your company/organization. Your response, and those of other po-

tentially interested parties, will be used only to gauge whether sufficient com-

petition exists for RIK oil, and to determine whether the state will engage in a

competitive disposition in the sale of RIK oil.

Below we have described some of the bidding and contractual terms that

might apply to such a sale. Of course, they are subject to change depending

on circumstances at the time DNR issues an Invitation to Bid, and we invite

you to comment on proposed bidding and contractual term.

Proposed Bidding Terms (subject to change):

• Priority Bidders. The Department proposes to create a class of priority

RIK bidders who will have preference over the general class of RIK bidders.

This priority class of RIK bidders will consist of in-state commercial petroleum

processors, as defined under 11 AAC 03.190, that will (1) provide financial

guarantees in the form of a stand-by letter of credit, a surety bond, or a par-

ent guarantee from a parent with an investment grade credit rating from one

or more recognized credit rating companies (presuming that the Buyer is not

the parent), combined with an Opinion Letter provided by a Financial Analyst

that is independent from the Buyer, the parent, and the credit rating com-

pany, and (2) propose effective, viable Special Commitments that, if imple-

mented, would have an impact on lowering in-state energy costs for

consumers and addressing the need for a greater supply of crude oil for use in

the state. The requirement for proposing Special Commitments is discussed

further below.

• Sealed Bid Auction of RIK Oil Lots. RIK oil may be auctioned under fixed

or variable lots of no less than 3,000 bpd/year, with an estimated total avail-

able amount for sale of 40,000 bpd/year, and potentially varying year by year.

Each of these lots would be offered independently for each year, with deliver-

ies likely beginning in the second half of 2022 through the life of the desired

contract. As such, a bidder may be able to tailor their RIK oil bids in a manner

that comports with its forward-looking expectations concerning demand for

RIK oil. The winner of each lot will be the highest responsible bidder, and such

a winner may be determined by a procedure that considers, among other po-

tential factors, the lowest “RIK Differential” offered (possibly subject to a re-

servation price). The RIK Differential is a reducing element in the netback

pricing method described below. You are invited to comment on this broad

auction framework and bidding approach presented and define your vol-

umetric range requirements for RIK oil.

• Reservation Fee. During the term of the contract, and within certain tim-

ing and volumetric limits, a buyer may change their monthly nomination to a

quantity less than the maximum volume defined in a lot. This provides opera-

tional flexibility for a buyer to match its monthly RIK oil supply to its refinery’s

requirements. Such flexibility, however, comes at a cost to the State by pre-

venting the sale of the remainder of the lot as RIK. To compensate for this

cost, the State proposes to institute a per-barrel reservation fee assessed on

those barrels below the RIK lot maximum not nominated by the buyer. You

are invited to comment on your preferred mechanism for implementing such

a reservation fee.

• Bid Process. Upon evaluating responses to this Non-Binding Solicitation of

Interest, the Department may distribute a public notice and a formal Invitation

to Bid to all potential buyers and the public outlining the auction process in

more detail, if a competitive disposition is selected. Bidders will have at least 30

days after the Invitation to Bid is published to submit bids and documentation.

Proposed Contractual Terms for RIK Disposition (subject to change):

• Sale Oil Quantity. The contract will specify the volume, or “Sale Oil Quan-

tity,” awarded as a result of the nomination or auction. For example, if RIK oil

is auctioned in different lots, and a buyer successfully bids on several of them,

a single RIK Contract would include the total Sale Oil Quantity from all the lots.

The State expects each nomination or bid to be for at least 3,000 bpd/year.

Proposals are sought for nomination ranges from potential buyers.

• State’s RIK Nomination. Because the State must nominate with at least

90 days in advance to take its royalty oil in-kind, all contracts will provide that

DNR will make commercially reasonable efforts to nominate, in accordance

with applicable Unit Agreements, percentages of the State’s estimated royalty

oil from one or more Units that will equal the Sale Oil Quantity nominated by

the buyer. The nomination procedures are basically unchanged from every

RIK contract offered by the Department since the first production of oil at the

Prudhoe Bay Unit. Any former or current buyer of RIK oil should be familiar

with these procedures.

• Volumetric Limits and Proration. The actual Sale Oil Quantity delivered to

all RIK oil buyers may be lower than their total initial nominations. DNR re-

serves the right to limit total Sale Oil Quantity delivered to all RIK oil buyers to

a maximum of 95% of the State’s estimated royalty oil. Whenever total initial

nominations by all buyers exceed 95% of the State’s estimated royalty oil, pro-

ration takes effect and affects RIK buyers’ initial nominations. DNR is consid-

ering several proration mechanisms. You are invited to provide thoughts

concerning an appropriate proration mechanism.

• Price. The price for the Sale Oil is calculated as a simple netback price. The

formula starts with a destination value for the State’s royalty oil on the US

West Coast minus the RIK Differential. The RIK Differential is a numeric vari-

able that may be used as the bid variable in the case of a competitive disposi-

tion. The ownership-weighted average interstate tariff for TAPS and tariffs for

pipelines upstream of TAPS Pump Station No. 1 are also subtracted depending

on the source of the RIK that will be supplied to the buyer. The price formula

also includes a Quality Bank Adjustment and an allowance for line loss. The

price provision in the contract will stipulate that the value of RIK is bounded

below by zero. DNR is open to suggestions for a constant or variable RIK Dif-

ferential value and process. Your thoughts concerning the appropriate pricing

indexes to value ANS on the US West Coast are also welcome.

• Contract term. The contract will supply RIK oil for at least three years,

based on disposition preferences and terms.

• Security Arrangements. The security arrangements protect the State

from the risk of default by requiring a stand-by letter of credit, a surety bond,

or a parent guarantee, if the buyer is not the parent, combined with an Opin-

ion Letter provided by a Financial Analyst that is independent from the Buyer,

the parent, and the credit-rating company.

• Special Commitments. Bidders may be required to propose Special Com-

mitments that will be incorporated into the RIK contract. The Special Commit-

ments should propose means to mitigate the high cost of consumer

petroleum products in Alaska and address the need for a greater supply of

crude oil for use in the state. Examples of a Special Commitments might be a

commitment to make a substantial capital investment to support in-state pro-

cessing, a commitment to lowering the cost of petroleum products to the

consumer and others, etc. You are invited to comment on how Special Com-

mitments might affect your interest in RIK oil and offer alternatives.

I will appreciate a written response to this informal solicitation by Sep-

tember 30, 2021. In the meantime, I invite you to contact Jhonny Meza at

jhonny.meza@alaska.gov to discuss this letter. As stated above, this is an in-

formal, non-binding inquiry and your response will not create any commit-

ment by you or your company.

Tom Stokes, Director, Division of Oil and Gas

First publication: August 26, 2021

PUB 9/5/2021; 9/12/2021

AO 22CM-10-013

Non-binding Solicitation of Interest North Slope Royalty In-Kind Oil Supply

of up to five drill sites, a central process-

ing facility, an operations center pad, up

to 37 miles of gravel roads and an airstrip,

as well as the installation of necessary

pipelines.

“We, and many important stakehold-

ers, remain committed to Willow as the

next significant North Slope project,”

ConocoPhillips told Petroleum News on

Aug. 30.

“The merits of the project represent a

strong example of environmentally

responsible development that offers

extensive public benefits, including sig-

nificant employment of Alaskan skilled

labor from union and non-union trade

associations and financial payments to

federal, state, borough, and community

governments.”

Alaska’s congressional delegation

agreed with ConocoPhillips, Arctic Slope

Regional Corp., and other stakeholders in

the project, weighing in on Gleason’s

decision.

“Yet again another devastating deci-

sion by this federal judge that promotes

the interests of Lower 48 radical environ-

mental groups waging their unrelenting

war on Alaska’s economy, working fami-

lies, and Native communities,” Sen. Dan

Sullivan said. “This decision won’t do

one thing to help the environment. To the

contrary, it further delays one of Alaska’s

most strategic energy development proj-

ects, which will benefit our adversaries

that produce oil, like Russia, Venezuela

and Iran, whose environmental standards

are some of the worst in the world.”

Sen. Lisa Murkowski said Gleason’s

decision was “just plain wrong. … In

partnership with communities on the

North Slope, ConocoPhillips Alaska has

been responsibly producing oil from the

NPR-A region for decades under the high-

est environmental standards and this pro-

posed project will be no different.”

Continues to review decision “In order to determine the best course

of action for advancing the Willow proj-

ect,” ConocoPhillips continues to review

U.S. District Judge Sharon Gleason’s

Aug. 18 decision to vacate BLM’s

approval of Willow.

ConocoPhillips also said it still

“strongly” believes that BLM and cooper-

ating agencies “performed a robust, thor-

ough, and extensive review of the Willow

project,” and will again engage with the

relevant agencies to address the matters

described in the Court’s decision.

“On a parallel path we will continue to

perform engineering design work in

anticipation of a future final investment

decision (FID),” the company said.

However, given the recent Court deci-

sion, ConocoPhillips said it did not expect

to make the FID decision in 2021 as orig-

inally planned and continues to be clear

that it “won’t make the FID until the legal

risks are resolved.”

No impact on core biz Regarding ConocoPhillips’ other explo-

ration, appraisal, development and produc-

tion interests on the North Slope, the com-

pany told Petroleum News: “The Willow

decision on August 18 has no direct impact

on the remainder of the company’s core

business in Alaska.”

Those words are not surprising, in light

of what ConocoPhillips Alaska’s top execu-

tive Erec Isaacson has been saying in recent

weeks: “After working through last year’s

market volatility and the pandemic, the

theme for us this year has been Getting

Back to Work, and we are full speed ahead.”

“Alaskans are back to work on the North

Slope,” he continued, “and ConocoPhillips

is investing in Alaska’s future. The state’s

economy is no doubt still on shaky ground,

but we are fully engaged in multiple large-

scale projects.”

Among those activities:

•The restart of drilling in the Kuparuk

River unit with a workover rig in the third

quarter, followed by a coiled tubing rig in

the fourth quarter and rotary rig drilling in

the second quarter of 2022.

•The first Fiord West well was spud in

second quarter. It will test more than 45 mil-

lion barrels of oil equivalent from the exist-

ing CD-2 pad and be tied back to infrastruc-

ture with first oil scheduled later this year.

•The GMT-2 project is in its third and

final construction season.

•A new oil discovery in the Nanushuk

formation at the Coyote prospect just west

of Kuparuk.

•Alpine expansion, Nuna development

and ongoing work at the Eastern NEWS at

the Kuparuk River unit are a few of those

projects. l

PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021 11

RESOURCEBUILDING A

TRIESE INDUS’SALASKA

S

quality certification for the project.

Enbridge said construction is “nearly completed” in

Minnesota, with the Canadian, North Dakota and Wisconsin

sections already finished, setting the stage for the new line

to start operations in the fourth quarter.

Line 3 will replace a pipeline built in the 1960s that oper-

ates at half its original capacity because of corrosion and

cracking risks. The company said the new line, which will

carry an incremental 390,000 bpd, is about safety and main-

tenance, with the upgraded pipe made of thicker steel and

technically advanced coatings that “will better protect

Minnesota’s environment for generations to come.”

Objections remain However, Margaret Levin, director of the Sierra Club’s

Minnesota chapter, said it was disappointing that the appeals

court would not hold the MPCA “accountable for their fail-

ure to protect our clean water … now it’s more urgent than

ever that President (Joe) Biden step in, live up to his com-

mitments to climate action and environmental justice, and

stop Line 3.”

She said Enbridge has “already had dozens of drilling

fluid spills during the course of construction.”

The appeals court said the MPCA’s approval was “sup-

ported by substantial evidence in the record,” including its

certification last November that cleared the way for the U.S.

Army Corps of Engineers to issue the remaining federal per-

mit for the pipeline.

From concept to reality Kevin Birn, analyst with IHS Marketing, said Line 3 is

now “moving from a theoretical concept to something that

is physical.”

“There have been lots of pipeline projects in the past, but

very few have made it to the finish line,” he said. Referring

to the abandonment of three large-scale plans to export

crude bitumen out of Canada — Northern Gateway, Energy

East and Keystone XL, which had potential combined ship-

ments of almost 2.5 million bpd.

Birn noted it has taken an average of more than seven

years for two surviving projects — Line 3 and the Trans

Mountain expansion — to advance from initial regulatory

filings to anticipated completion.

Alberta Energy Minister Sonya Savage, who spent seven

years with Enbridge before entering politics, told the

Calgary Herald that getting Line 3 so close to completion “is

certainly a big relief” for oil sands producers to “have this

additional capacity.”

Enbridge said Line 3 has involved spending of US$287

million in Native American communities and small busi-

nesses and will provide millions of dollars in additional local

spending and tax revenues.

—GARY PARK

continued from page 1

LINE 3

unit was formed in 1967 by Standard Oil Company of

California, the original operator, and initially included

24,439 acres. Hilcorp took over as operator Jan. 1, 2012, the

division said. The unit currently has two participating areas,

the Sterling-Beluga Gas PA and the Tyonek Gas PA, on

2,595.34 acres.

As of July, the field was producing from three wells,

with production averaging 8,517 thousand cubic feet per

day in that month. Hilcorp has done a lot of work at the field

in recent years.

In its 2019 POD Hilcorp told the division that during the

2018 POD it “worked on a comprehensive field study that

would lead to possibly enhancing production.” The field

study “evaluated the Sterling, Beluga and Tyonek reservoirs

for further development,” the company said, and “included

pursuing efficiencies through various well, infrastructure

and facility repairs, including evaluation of shut-in wells for

potential return to service or utility.”

Alaska Oil and Gas Conservation Commission records

show the most recent drilling at the field, the IRU 11-06,

was completed in 2009.

The company has already achieved improved produc-

tion results.

Comparing production in July, the field produced 3,222

mcf per day in 2012, the year Hilcorp took over as operator,

and gradually declined, dropping to 444 mcf per day in July

2019.

But by July 2020, Hilcorp had increased production to

2,449 mcf per day, and this year, the July volume was 8,517

mcf per day, down from a recent peak of 11,358 mcf per day

in June.

In the 51st POD for the field, for 2021, submitted March

1, Hilcorp reviewed work from the 2020 POD. It told the

division it completed “three intervention jobs” during the

2020 POD period:

In the IRU 11-06 the Tyonek sands were isolated and the

Sterling A5 was perforated in July 2020. In the IRU 44-36,

the company isolated the Sterling C1 sand and the Sterling

B2 was perforated in September 2020. In the IRU 41-01 the

Sterling B1 was perforated in February 2021.

In approving the 2020 POD the division noted that

Hilcorp increased annual production at Ivan River by nearly

429% during the 2020 calendar year and said the “drastic

increase” could be primarily attributed to work at the IRU

11-06 and IRU 44-36 wells.

The IRU 44-36, the division said, had been shut-in since

2008.

In the plan proposed for 2021, Hilcorp was evaluating a

rig workover on the IRU 11-06. “The current completion in

the well does not allow for zonal isolation if producing per-

forations were to begin producing significant water and/or

sand. The RWO would replace the current tubing configu-

ration and allow for future isolation of perforations within

the well,” the company said.

—KRISTEN NELSON

continued from page 1

IVAN RIVER

continued from page 1

WILLOW DECISION“In order to determine the best

course of action for advancing the Willow project,” ConocoPhillips continues to review U.S. District Judge Sharon Gleason’s Aug. 18

decision.

In approving the 2020 POD the division noted that Hilcorp increased annual production at Ivan River by nearly 429% during the 2020

calendar year and said the “drastic increase” could be primarily attributed to work at the

IRU 11-06 and IRU 44-36 wells.

12 PETROLEUM NEWS • WEEK OF SEPTEMBER 5, 2021

The employees of NANA Worley specialize in engineering and design disciplines, as well as support services. Our team is made up of people with the expertise our customers rely on every day.

Resourceful. Reliable. Innovative.

Our people make the difference.

For more information, visit: nanaworley.com

In an Aug. 24 filing with the Louisiana

court, responding to the court’s injunction,

the Department of the Interior said that it

has been reviewing information relevant to

its lease sales and anticipates now opening

the EIS public comment period for the

Cook Inlet sale in September or October.

The public comment period had been

scheduled to last for 45 days and would be

followed by additional work on the EIS, in

response to the comments received.

The Louisiana court case was initiated

on March 24 when 13 states, including

Alaska, appealed President Biden’s

February executive order, arguing that the

order contravened the Administrative

Procedures Act, the Outer Continental

Shelf Lands Act and the Mineral Leasing

Act. On June 15, in response to the appeal

and pending final resolution of the court

case, the Louisiana court issued a prelimi-

nary injunction, banning the federal pause

in oil and gas leasing. On Aug. 16 the

Department of the Interior appealed the

injunction to the U.S. Court of Appeals for

the 5th Circuit.

As a consequence of the court injunc-

tion BOEM is also restarting its prepara-

tions for a lease sale in the Gulf of Mexico

— the agency had completed a final EIS

for that sale, which had been scheduled for

March of this year. The agency now antic-

ipates conducting the sale in October or

November.

Interior also said that, in response to the

injunction, the Bureau of Land

Management will continue to plan for

onshore lease sales for federal land without

the constraint of the Feb. 4 executive order.

Obviously, the eventual outcomes of all

of this will depend both on the 5th Circuit

response to the appeal against the injunc-

tion and on the outcome of the Louisiana

court case.

—ALAN BAILEY

continued from page 1

INLET SALE

Service Layer Credits: Sources: Esri,HERE, Garmin, Intermap, increment PCorp., GEBCO, USGS, FAO, NPS,NRCAN, GeoBase, IGN, Kadaster NL,

6634

Cook InletPlanning Area

6759

6809 68106808

6857

6907

6964

7015

7065

6006

6055

6114

6154

6202

6263

6301 6313

6363

6413

6463

6760

6811

68586859 6860 6861

6862

6908 6909 6910 6911 69126913

6957 6958 6959 6960 6961 6962 6963

7007 7008 7009 7010 7011 7012 7013 7014

7057 7058 7059 7060 7061 7062 7063 7064

7107 7108 7109 7110 7111 7112 7113 71147106

6007 6008 6009 6010 6011 6012 60136014

6056 6057 6058 6059 6060 6061 6062 60636064

6105 6106 6107 6108 6109 6110 6111 6112 6113

6155 6156 6157 6158 6159 6160 6161 6162 6163

6204 6205 6206 6207 6208 6209 6210 6211 62126203

6213

6252 6253 6254 6255 6256 6257 6258 6259 6260 6261 6262

6302 6303 6304 6305 6306 6307 6308 6309 6310 6311 6312

63516352 6353 6354 6355 6356 6357 6358 6359 6360 6361 6362

6401 6402 6403 6404 6405 6406 6407 6408 6409 6410 6411 64126436

6486 6451 6452 6453 6454 6455 6456 6457 6458 6459 6460 6461 646264856484

6536 65016535 65026534 6503 6504 6505 6506 6507 6508 6509 65106533 6511 65126532

6586 65516585 65526584 65536583 65546582 6555 6556 6557 6558 6559 6560 6561 6562

6636 66016635 6602 66036633 66046632

6605 6606 6607 6608 6609 6610 6611 6612

NP05-08Kenai

NO05-01Iliamna

NO05-02Seldovia

Nanwalek

Seldovia

Port Graham

Anchor Point

Homer

Ninilchik

151°30'W152°W152°30'W153°W153°30'W

Augustine Island

Kalgin Island

KenaiPeninsula

A L A S K A

Cook I

nlet

KachemakBay

2017 - 2022 Program Area

Cook Inlet Planning Area

OCS Protraction(s)

OCS Block(s)/Block Number(s)

Active OCS Lease(s)0 2010

Km

0 105Miles

Cook Inlet Planning AreaCall for Information and Nominations

Lease Sale 258ALASKA

Anchorage

BOEM Alaska OCS Region | Leasing and Plans | Leasing Section

NAD 83: Alaska Albers Projection

Map ID: AKR2020048v2APRIL 6, 2020

NO05-01

6453Map Location

Interior also said that, in response to the injunction, the Bureau of

Land Management will continue to plan for onshore lease sales for

federal land without the constraint of the Feb. 4 executive order.

To advertise in Petroleum News, call Susan Crane at 907-250-9769