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

“Yesterday is history, tomorrow is mystery,today is a gift, that's why

they call it present.”

—UNKNOWN

■ F I N A N C E & E C O N O M Y

■ N O R T H E R N G A S

I N S I D EBallard to head DEC 6

Canada ratifies Kyoto treaty 4

Feds approve Katalla’s plan of operations 3

Alaska MMS chief addresses permitting, access 7

Little gasline impact expected at Sourdough Pete’s 10

‘Free skimming’ in the Beaufort

See story on page 7 about an oil spill clean up plan that uses ice as a boom.

Cou

rtes

y M

iner

als

Man

agem

ent

Ser

vice Five bucks a barrel

For every barrel of oil leaving state, $5 needs to be reinvested, says Revenue;state must encourage investment to develop existing oil, find new fields

By Kristen Nelson PNA Editor-in-Chief

The Alaska Department ofRevenue estimates that it willtake an investment of $5 forevery barrel of crude oil leaving

the North Slope to maintain ANSproduction at a million barrels perday.

In its fall revenue forecast, issuedin late November, Revenue analyzed

oil productionas an eco-nomic oppor-tunity, tryingto answer the

questions of where additional oildevelopment might occur over thenext decade, and what state govern-ment could do to help that develop-ment.

Production is currently below the 1-million-barrel-a-day mark, and Revenue said it believes that begin-ning in fiscal year 2008 new fields should boost pro-duction back above 1 million bpd through 2012.Beyond 2013, unless companies have “significantexploration success, which will require the commit-ment of substantial money to the exploration anddevelopment of new fields,” production will againdrop below 1 million bpd.

What is the potential?

Revenue estimates oil potential at 7.172 billion

barrels of additional production from producing fieldsand 1.35 billion barrels from discovered but non-pro-ducing fields. The oil from discovered but non-pro-ducing fields includes 180 million barrels from Alpinesatellites (“Nanuq, Fiord, etc.”), 150 million barrelsfrom Liberty, 560 million barrels from PointThomson and others (Sourdough, Yukon Gold), 60million barrels from Sandpiper and 400 million bar-rels from the National Petroleum Reserve-Alaska(Rendezvous/Spark).

The heavy oil deposits at Ugnu, 7 billion barrels,

It’s time to get real about newgas supplies, says industryAmerican Gas Association wants barriers to exploration, production lowered;rates Alaska’s potential at 250 tcf, enough to meet U.S. needs for a decade

By Gary Park PNA Canadian Correspondent

The case for speeding up Arctic natural gasdevelopment has received a fresh lift from theAmerican Gas Association, which warns thatconsumers face sharply higher prices in the

next 10 to 15 years unless fresh supplies arebrought to market.

In a report released Dec. 11, the AGA saidAlaska gas and liquefied natural gas will “likelyaccount for a significantly larger share of the sup-ply mix” over the next two decades.

Describing the 35 trillion cubic feet of PrudhoeBay as just the tip of the state’s resource potential,the AGA said Alaska’s gas resource base has beenestimated at 250 trillion cubic feet — enough tosupport all of the United States’ needs for morethan a decade.

The study forecast that Alaska will be amongthe “non-traditional sources” providing the lion’s

see INDUSTRY page 15

The American Gas Association’s Dec. 11 report, “Fromthe Ground Up -- America’s Natural Gas SupplyChallenge,” can be found at AGA's web site,www.aga.org

Winter exploration drilling in the National Petroleum Reserve-Alaska.

see INVESTMENT page 2Tundra access looks good; Shivelyjoins Holland America; Peak tobuild Thetis ice roads

Despite the lack of cold temperatures intomid-December, Gary Schultz is predicting tun-dra travel will start earlier this year than last.

Warmer temps on the North Slope had oilcompany and state of Alaska personnel wor-ried about when the movement of vehicles thatare part of off-road exploration could begin,but it seems the lack of snow — i.e. insulation— has offset the warm temperatures.

Schultz, natural resource manager for theAlaska Division of Mining, Land and Water,told PNA Dec. 16 that the recent drop in temperatures combinedwith “a fair amount of wind and then rain,” has resulted in the

Forest announces beginning ofproduction at Redoubt Shoal

Forest Oil Corp. said Dec. 16 that it has begun production at itsRedoubt Shoal field in Cook Inlet. The field, which began produc-ing Dec. 9, is currently producing in excess of 4,200 barrels of oilper day from two of the four wells capable of production, the com-pany said.

Forest said production is expected to be maintained near this rateuntil new onshore production facilities at Kustatan are completed.Current production is flowing to Forest-owned facilities at the com-pany’s West McArthur River field. After completion work is final-ized on the other two wells in the field Forest will resume drillingactivity. The company received a drilling permit for the Redoubt

see FOREST OIL page 2

see INSIDER page 13

Judy

Pat

rick

THE REST OF THE STORY2 Petroleum News • Alaska Week of December 22, 2002

and 1 billion barrels at Kuvlum andHammerhead in the outer continental shelfare not included because there are not cur-rently considered economic.

But, Revenue notes, to recover the 7.172billion barrels in producing fields, invest-ment is required. Only 3.752 million ofthose barrels can be recovered with what thedepartment characterizes as modest addi-tional investment. The remaining additionalreserves, 3.42 million barrels, will requiremajor additional investment.

And all of the discovered non-producingfields will require major additional invest-ment.

Of the 8.5 billion barrels of additionalproduction from currently discovered NorthSlope fields, “approximately 3.8 billion ofthose 8.5 billion barrels could be recoveredwith only those investments needed to pre-serve the integrity and safety of the facilities.… Production of the other 4.7 billion barrelswould require significant additional invest-ment.”

New discoveries

Revenue uses U.S. Geological Surveyand Minerals Management Survey estimatesof economically recoverable reserves fromNorth Slope and Beaufort Sea discoveriesnot yet made to define discovery opportuni-ties.

The number here is 10.3 billion barrels ofestimated economically recoverable

reserves: NPR-A (excluding Rendezvous)900 million barrels; central North Slopesatellites 1.5 billion barrels; eastern thrustbelt and Foothills 900 million barrels; theArctic National Wildlife Refuge 4.4 billionbarrels; and Beaufort shelf federal offshore2.6 billion barrels.

The 10.3 billion barrels of “economicallyrecoverable reserves” is based on $22 perbarrel for Alaska North Slope crude,Revenue’s new long-term West Coast priceestimate (see story in Dec. 8 issue of PNA).

Costs of production

The finding cost for new oil is about $1 abarrel on the slope, Revenue said, a weight-ed average of a cost of more than $1 a barrelfor new fields and about 60 cents a barrel fornew satellite accumulations.

To develop those discoveries, “to drillthe necessary wells and provide the infra-structure to produce the additional 4.7 bil-lion barrels of discovered North Slope oilrequiring substantial investment,” thedepartment said it is estimating it will cost$3 per barrel.

In addition, the companies also mustspend $300 million a year in “license tooperate” capital, money the companies mustinvest in addition to routine operating andmaintenance expenses to keep facilitiesoperable and safe. Revenue said that basedon discussions with operators it estimatesthis at about 2 percent of “existing andplanned total capital expense for the facili-ty.”

“To maintain — and with luck increase— Alaska’s North Slope oil production at a

million barrels per day, this analysis leads tothe conclusion that for each barrel leavingthe North Slope, $5 must come back to payfor new exploration and development,”Revenue said.

$22 a barrel oil

What does this mean in relation to theprice of ANS crude?

At prices of $22 a barrel, the departmentsaid, “free cash flows attributable to NorthSlope production for both the Integrated-Producer at Prudhoe Bay and the Explorer-Producer in NPR-A would be about $7.30per barrel. We need to hope they will investmore than two-thirds of that amount in newexploration and production if we are toenjoy the benefits of million-barrels-per-dayproduction after 2010.”

And at $22 a barrel, after money is setaside for reserve placement through explo-ration and development, that leaves produc-ers roughly $2.25 to pay interest and divi-dends. The $22 barrel price for ANS crudeoil sold on the West Coast is the departmen-t’s new estimated long-term average. At $17a barrel, the department’s old long-termaverage price, investors essentially wouldget nothing after subtracting for reservereplacement.

What can the state do?

Future production — and future staterevenues — “depends in large part on theamount of money exploration and produc-tion companies spend to develop oilresources that have already been discoveredon the North Slope and to discovery addi-tional oil,” Revenue said. And those compa-ny decisions “depend — in great part — onworld oil prices and government regulatoryand fiscal policies.”

Some government policy makers willwant to maximize public revenue while oth-

ers will want to maximize private economicactivity, including jobs, the department said.

“The balance, sought by the host govern-ment in every oil province of the world, is totake a healthy share of the profits derivedfrom oil while remaining competitive in theworld marketplace for oil and gas invest-ment dollars.”

What changes could the state make in itsfiscal policies?

The state could require investment as acondition of leasing, but, Revenue said,“such lease terms would probably reduceboth the price and marketability of futureleases.”

The state could provide incentivesthrough tax deductions or tax credits, lower-ing its take and essentially rewarding indus-try for investing. And it could provide a taxbenefit for reinvestment in Alaska, some-thing the state doesn’t currently do. Thedepartment said “Alaska is particularlyalone among major oil producers in nottreating oil dollars that are reinvested heremore favorably than oil dollars investedelsewhere.”

Another thing the state could do is tomake its fiscal system less regressive, thussharing the risk of low oil prices and earningmore when oil prices are high. Alaska’s 20-mill property tax, production tax and royaltyprovisions in state leases are regressive,Revenue said, because they are not based onprofits. “Even when prices are so low that oilproduction operations are unprofitable, thestate continues to receive a share from someor all of these sources.”

If the state’s fiscal system were modifiedto be less regressive, the department said,and if such modifications were properlystructured, the state could receive more totalrevenue while at the same time it wouldbecome a less risky place to explore andproduce oil. ◆

continued from page 1

INVESTMENT

Shoal No. 6 development well Dec. 13from the Alaska Oil and GasConservation Commission.

“This is a significant milestone in thedevelopment of the Redoubt Shoal dis-covery,” Robert Boswell, Forest’s chair-man and CEO, said in a statement. “Thediscovery and development of RedoubtShoal in 22 months was a great accom-plishment by our team in Alaska. The

project demonstrates that large oil fieldscan be found in North America that arenot deepwater related.

“We believe that Redoubt Shoal willhave lower finding and developmentcosts and a shorter development schedulethan deepwater or international projectsof similar size.”

Boswell also said that Forest will bedoing further exploration on oil and gasprospects “in and around Cook Inletwhere we are now the largest oil produc-er and currently own one of the largestlease acreage positions.”

continued from page 1

FOREST OIL

ON DEADLINEPetroleum News • Alaska 3Week of December 22, 2002

Petroleum News Alaska, ISSN 10936297, Week of December 22, 2002Vol. 7, No. 51

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

P.O. Box 231651, Anchorage, AK 99523-1651)Subscription prices in U.S. — $52.00 for 1 year, $96.00 for 2 years, $140.00 for 3 years.

Canada / Mexico — $165.95 for 1 year, $323.95 for 2 years, $465.95 for 3 years. Overseas (sent air mail) — $200.00 for 1 year, $380.00 for 2 years, $545.95 for 3 years.

“Periodicals postage paid at Anchorage, AK 99502-9986.”POSTMASTER: Send address changes to Petroleum News Alaska, P.O. Box 231651,

Anchorage, AK 99523-1651.

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

Index

Kay Cashman, PUBLISHER

Dan Wilcox CHIEF EXECUTIVE OFFICER

Kristen Nelson EDITOR-IN-CHIEF

Steve Sutherlin MANAGING EDITOR

Gary Park CANADIAN CORRESPONDENT

Wadeen Hepworth COLUMNIST

Alan Bailey CONTRIBUTING WRITER

Allen Baker CONTRIBUTING WRITER

Paula Easley CONTRIBUTING WRITER

Mara Severin CONTRIBUTING WRITER

Patricia Jones CONTRIBUTING WRITER

Judy Patrick Photography CONTRACT PHOTOGRAPHER

Mary Craig CHIEF FINANCIAL OFFICER

Susan Crane ACCOUNT EXECUTIVE

Forrest Crane CONTRACT PHOTOGRAPHER

Steven Merritt PRODUCTION DIRECTOR

Tom Kearney ADVERTISING DESIGN MANAGER

Amy Piland CLASSIFIEDS MANAGER

Tim Kikta CIRCULATION REPRESENTATIVE

Dee Cashman CIRCULATION REPRESENTATIVE

Heather Yates ADMINISTRATIVE ASSISTANT

Petroleum News • Alaska and its supplement, Petroleum Directory, are owned byPetroleum Newspapers of Alaska LLC. The newspaper is published weekly. Several of theindividuals listed above work for independent companies that contract services to PetroleumNewspapers of Alaska LLC or are freelance writers.

P.O. Box 231651

Anchorage, AK

99523-1651

Editorial

907 522-9469

Editorial Email

edit@gci.net

Bookkeeping &Circulation

907 522-9469

Circulation Email

circulation2@gci.net

Advertising

907 770-5592

Advertising Email

adsales@gci.net

Classifieds

907 644-4444

Classifieds Email

classifieds@gci.net

Fax for all Departments907 522-9583

EXPLORATION & PRODUCTIONForest Service approves plan ofoperations for Katalla, drilling couldbegin in late March, says Chuck Frey

The Chugach National Forest said Dec. 12 it has approved Cassandra Energy Corp.’splan of operations for oil and gas drilling near Katalla, 56 miles southeast of Cordovaand the site of Alaska’s first commercial oil production in 1902.

Chuck Frey, planning staff officer for the Chugach National Forest, said work couldbegin as soon as the end of March if the agency’s decision is not appealed and, ifappealed, the decision is upheld on all points.

After a 45 day appeal period, which began Dec. 12, the Forest Service will have 45days to respond to all appeals. Fifteen days from the end of the response period, workcan begin at Katalla.

ACMP process nears completion

The project is nearing what appears to be successful completion of the AlaskaCoastal Management Program review, a Division of Governmental Coordination offi-cial told PNA. The agency expects to issue a proposed consistency determination Dec.18, as this issue of PNA goes to press.

The final determination will be issued five days later. The five-day period gives par-ticipants the opportunity to elevate the decision — i.e. appeal it to the next level ofauthority. Participants include the applicant, the Alaska Department of Fish and Game,the Alaska Department of Natural Resources and the Alaska Department ofEnvironmental Conservation.

The Forest Service permits will not be issued until that review is final and the pro-ject was found to be consistent with the ACMP.

Two parts to plan

There are two major components of the plan of operations: (1) exploratory oil andgas drilling operations, and (2) access to the drill site and crew camp site which consists

see KATALLA page 13

By Gary Park PNA Canadian Correspondent

Canada has plunged into the unknownby ratifying the Kyoto Protocol andsetting off a new wave of uncertaintyover the future of investment in vital

frontier projects. Against a background of warnings by

U.S.-based companies that they are pre-pared to pull back from Canada and investelsewhere, the Liberal party government ofPrime Minister Jean Chretien pushedthrough a motion to ratify Kyoto by 195votes to 77 on Dec. 10.

The focus now shifts to the direct fallouton the multi-billion-dollar plans to developAlberta’s oil sands, Arctic natural gas andEast Coast offshore oil and gas, which areviewed as an essential element of NorthAmerican energy security.

The parliamentary approval came with apromise from the government to place acap of C$15 per metric tonne on the priceindustry must pay to reduce greenhouse gasemissions, although Natural ResourcesMinister Herb Dhaliwal said “we’re prettyconfident” the costs will more likely fall inthe range of C$5-C$10.

In the long build-up to the vote, gov-ernment officials had offered worst-casescenarios where the cost could be as highas C$50 per tonne.

At C$10, the per-barrel costs for thepetroleum industry had been calculated at3 cents for conventional crude, 1.5 centsfor heavy crude and 10 cents for oil sands

production.

Implementation next phase ofdebate

Alberta Environment Minister LorneTaylor said the announced cap was a goodfirst step towards an implementation strat-egy — the next phase of the Kyoto debate.

“If there’s a signed and guaranteed dealon (the C$15 cap), that’s a good place tostart talking about an implementation planbecause it offers some certainty as to whatthe numbers will be,” he said.

But, from the Alberta government’sstandpoint, Taylor said the battle was far

from over.“I’ve always said the ratification was

going to pass and it’s really a non-issue,”he said. “All it does is allow the prime min-ister to stand on the international stage andthump his chest.”

Pierre Alvarez, president of theCanadian Association of PetroleumProducers, expressed frustration thatParliament had endorsed the treaty.

“We still can’t calculate the competi-tiveness implications,” he said, noting thatmany of the industry’s Kyoto-related issuesremain unresolved.

Alberta Premier Ralph Klein, whospoke to U.S. energy investors in the plushsurroundings of the New York Yacht Clubon Dec. 9, insisted his government will not“be rattled by Kyoto.”

“We’re prepared to do whatever it takes— including launching a constitutionalchallenge (to defend Alberta’s ownershipof its natural resources) — to ensureAlberta’s concerns are addressed in theimplementation plan,” he said.

But Klein told investors that a legal fightmay not be necessary, with Chretien sched-uled to step down in early 2004, likely to bereplaced by former finance minister PaulMartin, who has pledged to open up a freshdialogue in Canada about Kyoto.

Wide range of reaction

Across a broad spectrum of companieswith interests in Canada there has been awide range of reaction.

Among the U.S.-owned companies,Murphy Oil Corp. President Harvey Doerrsaid the global nature of most large oilcompanies allows them to “vote with theirfeet” if they are not happy about the Kyototerms.

ConocoPhillips Canada Ltd. PresidentHenry Sykes said that if the treaty punish-es his company’s investments then its bud-get — which includes a decision in 2003on whether to proceed with a C$1 billionoil sands venture — will shrink.

Duane Mather, president of theCanadian unit of Nabors Industries Ltd.,

said Kyoto in its present form could have anegative impact on the oilfield servicescompany’s spending in Canada, which hastotaled about C$700 million in the past 15months and involves a fleet of 650 drillingrigs and 1,000 service rigs.

Petro-Canada is also facing a decision inMarch on whether to spend C$200 millionon engineering and equipment purchasesleading up to a C$5.2 billion oil sandsdevelopment.

Chief Executive Officer RonBrenneman has repeatedly cautioned thatPetro-Canada, which is still 19 percentowned by the federal government, has littlehope that the government can provide thedetails needed for a commercial decision.

In that event, oil sands plans could endup on the shelf, where they would remainfor an indefinite period.

“The federal government, by adoptingthe Kyoto Protocol, is clearly discouragingthis type of investment in Canada,”Brenneman said in a statement. “So we willproceed cautiously and take a final deci-sions … only when the implications forproject economics are clear.”

Real Doucet, vice president of oil sandsat Canadian Natural Resources Ltd., saidthe C$15 emissions cap lasts only until2012, which offers no certainty to the com-pany, which is immersed in a possible C$8billion project with an operating life of 50years.

Canadian Natural Resources has alreadyslashed its capital spending on the projectby one-third to C$200 million and has saidit may locate its upgrading facilities in theUnited States to escape the penalties ofKyoto.

Not all oil sands players retreating

But not all of the oil sands players areretreating ion the face of Kyoto.

Syncrude Canada Ltd., the world’slargest producer of synthetic crude, decid-ed last month to push ahead with a C$5.67billion expansion aimed at raising output to360,000 barrels per day by 2005.

To date, the consortium has made nospecific changes that are directly linked toKyoto, although its newest expansionincludes C$1.4 billion in environmentalspending as part of its goal to reduce car-bon dioxide emissions by 35 percent perunit from 1990 to 2008 and sulfur dioxideemissions by 5 percent.

Nexen Inc. said Dec.12 it will decide in2003 whether to proceed with its C$2.5 bil-lion oil sands joint venture with OPTICanada Inc. to tap a 6-billion-barrel bitu-men reserve, starting to 70 barrels per dayin 2007.

Nexen Chief Executive Officer CharlieFischer, one of the most outspoken criticsof Kyoto, told analysts he is still lookingfor certainty from the government onKyoto’s costs.

But he is more confident that “claritywill come” in time to let Nexen make abusiness decision within the next 12months. ◆

ON DEADLINE4 Petroleum News • Alaska Week of December 22, 2002

■ C A N A D A

Canada rolls dice, ratifies Kyoto treatyThe Liberty Party government of Prime Minister Jean Chretien sets cap on costs of greenhouse gas emissions, but industry wary untilimplementation details are negotiated; U.S.-based companies ready to go elsewhere

Want to know more?If you’d like to read more about the Kyoto treaty debate in Canada and its expectedimpact, go to Petroleum News • Alaska’s web site and search for these recently publishedarticles, which represent only about half of the Kyoto articles in the archives. Web site: www.PetroleumNewsAlaska.com/

2002■ Dec. 8 Non-conventional crude won’t be enough to meet rising world demand■ Dec. 8 Canada’s Arctic operators chop staff, spending■ Dec. 1 Canada’s revised Kyoto plan ‘lipstick on a pig’ ■ Nov. 3 Major industries to carry up to 40% of Kyoto burden■ Nov. 3 Kyoto puts British Columbia’s energy goals at risk■ Oct. 27 Canadian E&P companies keep tight hold on purse strings■ Oct. 6 Kyoto could be billion-dollar boon for U.S. ■ Oct. 6 Mackenzie Delta pipeline could be victim of Kyoto■ Sept. 22 Canadian oil patch blindsided by Kyoto ratification■ Sept. 29 Kyoto Protocol cited as Alberta oil sands project scaled back■ May 26 NWT officials view climate change as threat to Arctic resource development ■ March 10 Canada edges further away from early ratification of Kyoto

2001■ Dec. 16 Alberta warns Kyoto could drive capital, companies from Canada ■ Jan. 28 Canada opposes Bush plans for ANWR exploration

Week of December 22, 2002

FINANCE & ECONOMY

Petroleum News • Alaska 5

■ A U S T R I A

OPEC agrees to trim oil productionby at least 1.5 million barrels a dayPlan increases quotas, with hope cartel members will adhere to them; membersestimated to be exceeding present quotas by as much as 3 million barrels a day

By Bruce Stanley Associated Press Business Writer

In an unusual decision aimed at keeping crude oilprices from falling, OPEC agreed to cut produc-tion by the time seasonal demand dips early nextyear. The Organization of Petroleum Exporting

Countries said the Dec. 12 agreement would leadto a net reduction of 1.5 million to 1.7 millionbarrels a day in OPEC’s actual output.

To achieve that goal, the group will take acounterintuitive approach: raising its official pro-duction target inhopes that mem-ber countries willbe more likely toadhere to thequotas instead ofexceeding themas they are now.

The pact isexpected to havelittle, if any, impact on consumers.

Analysts estimate that OPEC is producing asmuch as 3 million barrels a day above its existingtarget of 21.7 million barrels. This gap betweenOPEC’s target and its actual output widened dur-ing the autumn, leading many observers to ques-tion the group’s credibility.

“If you bring quotas and production closetogether, the market begins to believe in quotasagain,” said Raad Alkadiri of The PetroleumFinance Co., a consultancy based in Washington.

OPEC, which supplies about a third of theworld’s crude, is fearful of oversupplying themarket ahead of a seasonal, post-winter decline indemand in key markets in the NorthernHemisphere.

Six percent increase

Under the plan, which was proposed by SaudiArabia, OPEC’s most powerful member, the newproduction target will be increased by 1.3 millionbarrels a day, or 6 percent, to 23 million barrelseffective Jan. 1. At the same time, the groupurged its members to comply with their new quo-tas, OPEC President Rilwanu Lukman told anews conference.

The new target will last indefinitely, Lukmansaid, speaking after oil ministers reached theiragreement in a meeting at the cartel’s headquar-ters in Vienna.

Analysts said the agreement would have aminimal impact on consumers of refined productssuch as gasoline and heating oil.

“This isn’t designed to create a wholesaleupward shift in crude prices,” said MikeRothman, an energy analyst at Merrill Lynch inNew York.

Due to the current level of quota-busting,OPEC expects the quota increase to occur onpaper only and not add any fresh barrels to themarket. The plan’s success hinges on the willing-ness of OPEC members to show greater disci-pline in tightening their taps on production incoming months.

However, Lukman acknowledged that somemember countries might not have the politicalwill needed to pump less oil in the hope of keep-ing prices firm.

In fact, some analysts questioned whethermember countries wouldn’t just continue bustingthe new, higher quotas. Bill Edwards, an inde-pendent consultant based in Houston, likened theincrease in OPEC’s target to a tempting dessertoffered to a man on a diet.

Venezuela paralyzed

In assessing the oil market, OPEC delegateshad to consider immediate disruptions to globalsupplies in Venezuela and the Gulf. A nationalstrike in member state Venezuela has paralyzedoil shipments from that country, the world’s fifth-largest crude exporter. The strike entered its 12thday Dec. 13.

The unrest in Venezuela has compoundeduncertainty about the impact a U.S.-led militaryattack might have on crude production in Iraq,home to the world’s second-largest oil reservesafter Saudi Arabia.

“We wish to reassure consumers that we willdo everything we can to maintain steady, securesupplies of crude at all times, to cover any even-tuality that may arise. We have sufficient sparecapacity within our organization to do this,”OPEC’s Lukman told delegates at the start oftheir meeting. ◆

ADVICE

Editor’s note: David Gottstein is with Dynamic Research Groupin Anchorage.

The stock market has made an impressive advance since itsOctober lows. Corporate earnings up nicely against a quarter and ayear ago, a slight up-tick in consumer confidence, an improvementin unemployment claims, advancing productivity and modest eco-nomic growth, coupled with an aggressive move by the FederalReserve in lowering the Fed Funds rate by half a percent to 1&1/4percent have convinced many that we are on track for an economicrecovery.

Where do we go from here?

The Republicans are riding high, and add a measure of pro-busi-ness momentum. Both the prospect of lower tax rates and the fiscalstimulus brought on by the war against terrorism are already beingfactored into the stock market.

The question is where do we go from here? The market certainly has momentum in its favor, along with the

aforementioned fundamental factors. However it is no longer cheap. We peg the price earnings ratio on the S&P 500 at about 18, after

giving ample credit for earnings quality. Optimistically assuming theworst is over.

Government stimulus key

So PE rations might even be higher. Once again current market price levels are trading at historically

high PE’s. Therefore future price gains will have to rely more onearnings gains as opposed to PE expansion.

We believe that the deep rate cut by the Fed reflects their concernabout the strength of the economy, and its ability to sustain growth.Consumer demand is wearing thin on mortgage refinancing, as areauto sales propelled by cheap financing.

We believe if it were not for government stimulus brought on bygrowing deficits, that the economy would indeed be much more like-ly to be slipping backwards.

When job and demand growth pick up on a measurable basis, wewill believe a continuation of the bull market will be justified. Untilthen we believe it is wise to be cautious.

What if wars drags on?

It appears that the good news is now priced into the market. Theeconomy will grow, we will win the war quickly, if and when itcomes, and things will get back to normal. That means 2-3 percent

“If you bring quotas andproduction close together,

the market begins tobelieve in quotas again.”

—Raad Alkadiri, ThePetroleum Finance Co.

Portfolio strategy update

Mixed signalsBy David Gottstein

see GOTTSTEIN page 6

GOVERNMENT6 Petroleum News • Alaska Week of December 22, 2002

ANCHORAGEMajority, minority complete AlaskaSenate organizations

The Senate Republican majority named remaining committee chairs Dec. 4, aftercompletion of recounts and resolution of court challenges and Senate Democrats metDec. 9 to name minority leadership and committee assignments.

Johnny Ellis, D-Anchorage, will continue as Senate minority leader. Kim Elton, D-Juneau, is minority whip; Lyman Hoffman, D-Bethel, and Donny Olson, D-Nome,will serve on the Senate Finance Committee.

Senate majority leadership, announced in November, includes Gene Therriault, R-North Pole, Senate president, Ben Stevens, R-Anchorage, Senate majority leader; JohnCowdery, R-Anchorage, chairman of the Rules committee; and Lyda Green, R-Wasilla, and Gary Wilken, R-Fairbanks, co-chairs of the Finance Committee.

Standing committee chairs named Dec. 4 include Tom Wagoner, R-Kenai,Community and Regional Affairs; Fred Dyson, R-Eagle River, Health Education andSocial Services; Ralph Seekins, R-Fairbanks, Judiciary; Con Bunde, R-Anchorage,Labor and Commerce; Scott Ogan, R-Palmer, Resources; Cowdery, Transportation;and Robin Taylor, R-Wrangell, State Affairs.

Other majority members of the Finance Committee are Alan Austerman, R-Kodiak;Bunde; and Stevens. The other majority members of the Resources Committee are:Wagoner, Seekins, Dyson and Stevens. Taylor will chair the Legislative Council.

Minority members of standing Senate committees include Elton and GretchenGuess, D-Anchorage, on Resources.

■ J U N E A U

Murkowski names ErnestaBallard to head DEC, BillCorbus at RevenueGovernor says Ballard can foster cooperation between DECand EPA, Corbus can help bring participation ininfrastructure development from outside investors

By Petroleum News • Alaska

Gov. Frank Murkowski has namedErnesta Ballard as commissioner ofthe Department of EnvironmentalConservation and Bill Corbus as

commissioner of the Department ofRevenue.

In an announcement Dec. 9, the gover-nor also named Joel Gilbertson as com-missioner of the Department of Healthand Social Services, Marc Antrim as com-missioner of the Department ofCorrections and Greg O’Claray as thecommissioner of the Department ofLabor.

Murkowski said in a statement that heexpects to continue the process of select-ing qualified candidates for the remainingcabinet posts over the coming weeks.

“Together with the earlier appointmentof Gregg Renkes at the department of law,we now have nearly half of the cabinet inplace,” Murkowski said. “I am lookingforward to completing this process assoon as we can.”

Ballard at DEC

Ballard has served as budget director atthe University of Washington and seniorvice president for retail banking at SeattleTrust and Savings Bank. She was region-al administrator of Region 10 of theUnited States Environmental ProtectionAgency from 1983-86 and moved toAlaska in 1989 to become chief executiveofficer of the Cape Fox Corp. She holds abachelor’s degree from the University ofPennsylvania, attended Oxford Universityon a Thouron Scholarship, and received amaster’s in business administration fromHarvard University.

She has been an environmental consul-tant since leaving Cape Fox.

“For DEC, we were looking for anenvironmental professional, who is com-mitted to doing it right,” Murkowski said.“Ernesta brings a strong background inimplementing environmental policy atEPA Region 10, where she gained therespect of her colleagues. She is thusuniquely positioned to foster a new coop-eration between the state and EPA, and toremove the unnecessary roadblocks

between the agencies,” he said.

Corbus at Revenue

Corbus is the retired president ofAlaska Electric Light and Power, the elec-tric company that serves the Juneau area,where he has lived since 1970. Corbusholds a bachelor’s degree in industrialengineering from Stanford University anda master’s of business administration fromthe Amos Tuck Graduate School ofBusiness Administration at DartmouthCollege. He served as a Lt. J.G. in the U.S.Naval Reserve. From 1965-69, Corbusworked for Stone & Webster in New YorkCity providing public utility securityanalysis, financial planning, and account-ing.

In 1970, he joined Alaska ElectricLight and Power as assistant manager,becoming general manager in 1978 andpresident in 1988.

“Bill Corbus has a solid, stable back-ground in the management of financialresources, which, in these difficult timeson Wall Street, will be good protection forAlaska’s assets,” Murkowski said. “At thedepartment of revenue, we need a personwho, in addition to managing the depart-ment well, will be able to husband ourfinancial resources in the turbulent invest-ment atmosphere back East. We have toprotect our bond rating. Plus, I think it’sabout time that those outside Alaska, whohave benefited over the years by manag-ing and investing our financial resources,be called upon to bring some of it back toAlaska. I think this can be done in theform of participation in infrastructuredevelopment, and I think Bill Corbus isjust the man to make it happen.” ◆

Rutherford turns down DNR post Marty Rutherford, deputy commissioner of the Department of Natural

Resources, sent an email to DNR employees Dec. 13 saying that she had beenoffered the position of DNR commissioner by Gov. Frank Murkowski on the pre-vious Friday, December 7. Rutherford said she turned down the offer because sheis leaving public service. (See related news item on this page.)

“For the past eleven years it has been my privilege to work at the Department ofNatural Resources with all of you. … I was greatly honoredwhen Gov. Murkowski offered me the DNR commissionerposition. However, for various reasons I have decided it istime for me to leave public service. I will resign around themiddle of January,” Rutherford said in the email.

“During the past 30 days the senior management team andI have been working with Gov. Murkowski’s transition team,both the small department review team and the larger policygroup. These teams, led by Harry Noah and including JohnShively, have been collaborative, thorough and very non intru-sive. And, to your credit, they have determined that DNR is aneffective and well run organization,” she continued.

Rutherford said the transition from the Knowles to the Murkowski administra-tion has “proceeded very smoothly.”

She also said Murkowski’s new Cabinet appointments are “outstanding individ-uals” and that she was “very impressed with the pragmatic approach embodied inthe appointments and decisions to date.”

Editor’s note: See Oil Patch Insider for update on Marty Rutherford.—Kay Cashman

Marty Rutherford

GDP growth, and 8-10 percent corporateearnings growth.

The problem is what if things don’t goaccording to plan?

Even though we believe that Saddam’smonths are numbered, we believe the terror-

ist challenge is very broad and deep, and willact as a constant drag on the economy inmuch the same way that the cold war did.

We are unfortunately going to have togive up the peace dividend. And China willbe a constant force limiting future jobgrowth as well. What all this means is thatit is likely that the economy will advancevery modestly from here.

Until a new paradigm develops.

continued from page 5

GOTTSTEIN

Ballard has served as budgetdirector at the University ofWashington and senior vice

president for retail banking atSeattle Trust and Savings Bank. Shewas regional administrator of Region

10 of the United StatesEnvironmental Protection Agency

from 1983-86 and moved to Alaskain 1989 to become chief executive

officer of the Cape Fox Corp.

Week of December 22, 2002

LAND & LEASING

Petroleum News • Alaska 7

CANADAWestern Canadian land salesin tailspin

The strongest barometer of industry confidence, as well as a valu-able source of government revenue, has tumbled to one of its lowestlevels in the past decade.

Preliminary figures put total sales of government-owned explo-ration land in Alberta, British Columbia and Saskatchewan at C$893million for 2002, compared with C$1.58 billion in 2001 and C$1.49billion in 2000.

As a measure of how tight-fisted E&P companies have become,despite a year of robust oil and natural gas prices, land-buyers forkedover C$501.5 million in Alberta, the worst year since 1993.

In the process they dragged average prices per hectare (2.471acres) to C$180.65 from C$277.81 in 2001 and C$298 in 2000.

Operators in British Columbia also displayed a similar, but lesspessimistic mood, paying C$288.5 million to secure explorationopportunities, lagging far behind a record C$439.5 million in 2001,but still the province’s second best year on record.

Like Alberta, the average per-hectare prices in British Columbiawent into a tailspin, reaching C$339.75 compared with C$514.48 in2001, but close to the C$358 average in 2000.

Saskatchewan was the only region to buck the trend, with salessurging by 84 percent to C$103 million from C$56 million in 2001,propelled by investments of C$73 million in a lively new gas play insouthwest Saskatchewan.

Outside the three leading oil- and gas-producing provinces, it hasbeen an even more dismal year.

More dismal in other areas

Auctions have produced a mere C$14.3 million in work commit-ments in the Northwest Territories and C$1.16 million in the Yukon.

On the East Coast offshore, Nova Scotia, although it issued nonew exploration licenses, is sitting on C$1.56 billion in work com-mitments that could stretch over the next 8 years.

Newfoundland, which has C$500 million in exploration commit-ments, deferred its scheduled 2002 offshore land sale.

It said time is needed for the industry to shift its attention to deep-er waters and other basins and for major interest holders to completea process of consolidation.

Some observers say the decision to curb spending was not unex-pected following the torrid exploration pace of 2001.

Many E&P companies slashed their budgets for land and seismicwork after spending C$3 billion acquiring rights in the previous twoyears, said Dale Tremblay, chief financial officer of PrecisionDrilling Corp., Canada’s largest petroleum services company.

He said it makes no sense for companies to have idle investmentsif they have sufficient land to explore over the next five years.

In addition, many operators have taken the chance to divert cashflow into debt reduction and shore up their defenses for the nextdownturn, which history suggests is inevitable.

—Gary Park, PNA Canadian correspondent

■ A N C H O R A G E

Alaska MMS chief: Access, permittingof primary concern to industryAgency is looking at possible incentives for Beaufort Sea and Cook Inletleasing, but, John Goll tells Alliance, industry has told agency thatwithout access and clarification of permitting, incentives meaningless

By Kristen Nelson PNA Editor-in-Chief

The Department of the Interior’s MineralsManagement Service hasn’t yet decided whateconomic incentives it will offer as part of itsupcoming Beaufort Sea and Cook Inlet oil and

gas leases. “The department is still considering options and

if we finally do more forwardwith some incentives we willbe announce those formallyin the preliminary notice ofsale for the Beaufort Sea inFebruary,” MMS AlaskaRegional Director John Golltold the Alaska SupportIndustry Alliance Dec. 12.

But, Goll said, industryhas made it pretty clear that ifit doesn’t have access to landand if the permitting issueisn’t solved, incentives aren’t all that important.

All three areas, he said, are among theDepartment of the Interior’s national goals forAlaska: more access to prospective lands, “gettingbetter clarity and certainty in the permitting area”and economic incentives for companies to exploreand develop areas offshore Alaska.

Different EIS approach

MMS is working on the access issue, Goll said,taking a different approach than in the past withone environmental impact statement for threeBeaufort Sea sales included in the current five-yearplan and one EIS for two Cook Inlet sales, insteadof one EIS for each sale. The draft EIS for CookInlet is out for comment, with public meetingsscheduled for January (see sidebar).

The final EIS for the Beaufort Sea and the pro-posed notice of sale will be out in February, hesaid. The first of three Beaufort Sea sales isplanned for September 2003, with additional salesproposed for 2005 and 2007.

In the Chukchi Sea-Hope Basin and NortonSound areas, sales will be driven by industry inter-est.

“If there is interest,” Goll said, “we woulddevelop a sales proposal around that area and thenwork towards a sale.” If a call for interest producesno response, then the agency will ask the questionagain in a year.

Calls for both the Norton basin and Chukchi-Hope areas will be out early next year. A previouscall for interest in the Norton basin drew noresponse. This will be the first Chukchi-Hope areacall in this five-year plan.

“The Chukchi Sea shows tremendous potentialboth for oil and gas,” Goll said. “Several wellswere drilled there around 1990, but of course it’sfar from infrastructure…”

No wells have been drilled in the federal area ofthe Cook Inlet since the mid-1980s, Goll said.“With new technology today, new theories,” thefederal waters of Cook Inlet may be a place “tolook again with regard to potential for oil and gas.”

Why isn’t permitting timely?

On the permitting issue, Goll said, the questionis frequently asked: Why can’t projects be permit-ted in a timely way?

Goll said he thinks some of the permittinguncertainty over the last few years comes fromagencies wanting “to make decisions on issues thatmaybe are more rightly those of another agency.”MMS is working on that problem with both feder-al and state agencies, he said.

The other issue he’s seen crop up over the pastfew years, Goll said, is that many reviewers wantto scrap the application they receive. The approachof many has been, he said, “let’s forget what theapplicant gave us to review. And let’s redesign itourselves the way we want.”

Goll said MMS doesn’t agree with that. “If acompany brings a proposal that meets the laws andmeets the regulations … then why can’t they gettheir permits?” he asked. Some smaller adjust-ments may be needed, “but not a wholesaleredesign, and this is something that we believereally needs to be looked at.”

Senior management involvement

When President Bush took office he issued an

John Goll, MMS

see MMS page 8

LAND & LEASING8 Petroleum News • Alaska Week of December 22, 2002

STATEWIDEPotential state, federal oil, gas lease salesAgency Sale and Area Proposed Date

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

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

This week’s lease sale chartsponsored by:

PGS Onshore, Inc.

executive order on energy projects,“telling federal agencies that they need tomove ahead on energy projects with agood pace,” Goll said.

Principal agencies within theDepartment of the Interior — MMS, theBureau of Land Management, the Fishand Wildlife Service — are meeting onpermitting issues, Goll said, with CamToohey, special assistant to the secretaryfor Alaska, kicking off an all-day meetingDec. 6 at MMS in Anchorage. MMS isalso working with other major federalagencies including the EnvironmentalProtection Agency and the Corps ofEngineers.

“And a key to this,” Goll said, “is notjust meeting on a staff-to-staff level. It isreally getting some of the senior manage-ment in the agencies involved…” Thatinvolvement wasn’t always there, he said,but now Cam Toohey and Drue Pearceare working within Interior, “touchingbase with some of the senior managementwithin the federal agencies, to make surethey’re aware of what is going on and theimportance of these projects.”

MMS is also meeting with state agen-cies — the Department of NaturalResources, the Department ofEnvironmental Conservation, theDepartment of Fish and Game and theDivision of Governmental Coordination— to compare notes on offshore projects.

Spill response issue

One key joint federal-state issue is oilspill response planning, Goll said. Twoyears ago when BP and Alaska CleanSeas did broken ice oil spill trials, he said,there was a lot of publicity on failed tests.

Actually, Goll said, the barge-basedadvanced skimming system worked verywell at funneling: unfortunately it fun-neled ice, not oil, which clogged theskimmers, making the system ineffectiveon ice concentrations above 10-30 per-cent.

Last summer, however, a successful“free skimming” test got no press.

Free skimming, Goll said, “is a tacticused in some other countries which“relies on ice to be the containmentboom.” The vessel operator locates a con-centration of oil, maneuvers his vessel tothe site and deploys a skimmer to collectthe oil.

“You don’t really need anotherboom,” Goll said. “You’re using the iceas the boom.” The skimmer is thenmoved to the next location. Free skim-ming, he said, allows operators to “con-centrate on collecting oil, rather than try-ing to push the ice out of the way and icemanagement.”

The tactic increases the broken iceconcentrations in which skimmers canwork, he said. The vessels are also moremaneuverable and can reach quickly inchanging conditions, allowing retrieval ofmore oil.

Goll also noted that a recent NationalResearch Council report, “Oil in the SeaIII,” found a dramatic improvement inspillage from the oil and gas industry andsaid that one issue in oil spill require-ments is “how much credit can be givenfor the improvements that have occurred”in things like well control. (See sidebar.)

Another issue is differences in cleanuptechnique requirements. The staterequires mechanical recovery, Goll said,while MMS can allow other approachessuch as in situ burning.

Oil in the Sea III The study “Oil in the Sea III” is the third report from the National Academies on

petroleum released to the marine environment. “New estimates indicate that the overall amount of petroleum released to the marine

environment may be lower than earlier thought,” the Academies say in the study, amanuscript version of which is available online through the National Academies Pressat:

http://search.nap.edu/nap-cgi/naptitle.cgi?Search=Oil+in+the+Sea+III. The reduced amount of petroleum “reflects, in part, advances over the last decade in

marine transportation and oil and gas production techniques,” the report says. Spillagein North American waters from 1990 to 1999 was less than one-third that of the previ-ous decade, “and, despite increased production, reductions in releases during oil and gasexploration and production have been dramatic as well.”

The releases from extraction and transportation represent less than 10 percent ofreleases from human activities, most of which comes “during consumption of petrole-um, which include urban runoff, polluted rivers, and discharges from commercial andrecreational marine vessels,” which combined account for 85 percent of releases inNorth American waters, the study said.

The study’s “best estimate” numbers for North America are 260,000 tonnes ofreleases with 160,000 tonnes (62.5 percent) from natural seeps, 3,000 tonnes (1.2 per-cent) from petroleum extraction, 9,100 tonnes (3.6 percent) from petroleum transporta-tion and 84,000 tonnes (32.8 percent) from petroleum consumption.

continued from page 6

MMS

see MMS page 8

Cou

rtes

y M

iner

als

Man

agem

ent

Ser

vice

Cou

rtes

y M

iner

als

Man

agem

ent

Ser

vice

Above photos: “Free skimming” test conducted by BP and Alaska Clean Seas in the BeaufortSea, summer 2002.

LAND & LEASINGPetroleum News • Alaska 9Week of December 22, 2002

MMS issues draft EIS for proposed CookInlet sales

The Minerals Management Service issued a draft environmental impact statementfor two proposed Cook Inlet federal outer continental shelf oil and gas lease sales Dec.6.

The draft EIS is available for public comment, the agency said Dec. 11, and com-ments will be accepted until Feb. 11.

The EIS evaluates both Cook Inlet sales, sale 191 (2004) and sale 199 (2006). Aftercompleting the final EIS and proposed sale 191 in 2004, MMS said it will prepare aconsistency determination and either an environmental assessment or, if necessary, asupplemental EIS for sale 199.

MMS will hold public hearings in January in Kenai/Soldotna, Homer, Seldovia andAnchorage. Hearings will be:

Anchorage, Jan. 16, 4-6:30 p.m., MMS Alaska Region Office, 949 East 36th Ave.,Room 314;

Seldovia, Jan. 21, 7-9 p.m., Seldovia Community Center multi-purpose room; Homer, Jan. 23, 7-9 p.m., Homer City Council Chambers, 491 E. Pioneer Way; Kenai/Soldotna, Jan. 25, 11 a.m.-1 p.m., Kenai Merit Inn, 260 S. Willow St. MMS will also hold a teleconferenced hearing Jan. 28 from 4-6:30 p.m. To testify

at that hearing, call 1-800-764-2627. The draft EIS is available on the MMS web page: www.mms.gov/alaska, or from

MMS, 949 E. 36th Ave., Anchorage AK 99508-4302. The area proposed for leasing is in Alaska’s Cook Inlet in federal waters between

three and 30 nautical miles offshore and covers some 2.5 million acres from just southof Kalgin Island to just northwest of Shuyak Island in water depths ranging from 30to 650 feet. Shelikof Strait is not included in the proposed sale area.

Incentives still under discussion

On the incentive issue, Goll said fourterms of oil and gas lease sales (royaltyrate, primary term of the lease, minimumbid and rental rate) can be varied by sale,and the agency is looking at how thoseterms can be set to provide an economicincentive to industry. MMS is also look-ing at using royalty suspension volumesin Alaska, an amount of oil or gas whichcan be produced free of royalty.

MMS is also looking at price floors —it would suspend royalties if the value ofoil dropped below a certain price — andprice ceilings, where royalty suspensionvolumes would stop if the price exceeds acertain amount. The ceiling, he said, pro-tects the federal government and taxpay-ers from giving away too much of theroyalties.

Goll said the MMS is looking at allow-ing operators more time to inventorywhat is around a discovery and said ithopes to have a rule on that change pub-lished in the Federal Register within thenext month or two. ◆

continued from page 7

MMS

By Patricia JonesPNA Contributing Writer

Bill and Sandra Cockwill know howto make long-term campers com-fortable throughout the year attheir recreational vehicle park

located just south of this AlaskaHighway community.

Called Sourdough Pete’s RV Park,the facility offers a place to stay forcampers, whether they be tourists travel-ing up and down the Alaska Highway, orworkers employed in the area’s oil andgas fields.

Road construction workers also fre-quent the RV park in Fort St. John,British Columbia, which offers full-ser-vice spaces even in winter months.

“We have water and sewer out to thesites,” Bill Cockwill said. “We have tohave all the services or it would notmake much sense for them to stay, toonly sleep in a trailer. It’s their home.”

But as the cold sets in, costs to run the

park go up. Residents typically buy anduse electric plug-in heaters to supple-ment their propane gas heaters in theirrecreational vehicles. Heat tape to keepthe water and sewer lines open and flow-ing also contributes to electric bills thatare “thousands and thousands and thou-sands of dollars a month,” SandraCockwill said.

Despite close proximity to northernBritish Columbia gas fields and hydro-electric dam projects, utility bills seemto keep increasing in Fort St. John, thecouple said. “It should be the cheapest inthis area, but the further away you live,the cheaper it gets,” Bill Cockwill said.

Yet they don’t expect an economicreprieve, should a natural gas pipelineproject bring Alaska’s North Slope gassouth. “We didn’t see it in the lastpipeline (the Alliance project), butmaybe this will be different,” Cockwillsaid.

And the couple said they don’t antic-ipate an economic boost from anincrease in customers, should thatAlaska gas project be built.

“Oil companies usually bring theirown camp — like a 400 to 500-mancamp,” Cockwill said. “It’s not going toaffect us much.”

Furthermore, the actual constructioncould bypass Fort St. John, dependingon the route selected by developers.“They’ll go the shortest route, so it maybe miles from the highway,” he said.“The pipeline could miss Fort St. Johnby 50 to 100 miles.”

An Alaska gas pipeline project willlikely not make a huge impact on thecommunity, which is already used toaccommodating the ebb and flow of oilfield workers, Cockwill said.

“This area gets used to little booms,”he said. “The oil patch is up and downall the time — nothing steady.” ◆

NORTHERN GAS10 Petroleum News • Alaska Week of December 22, 2002

■ F O R T S T . J O H N , B . C .

Little gasline impact expected at Sourdough Pete’sEleventh in series, recreational vehicle park owner expects little economic boost from an Alaska gas pipeline project in Fort St. John

Bill and Sandra Cockwill

Pat

rici

a Jo

nes

An Alaska gas pipeline project willlikely not make a huge impact onthe community, which is already

used to accommodating the ebb andflow of oil field workers, Cockwill

said.

Maps for oil & gas industryand custom map work.Mapmakers Alaska (907) 745-3398.

Hoefler Consulting GroupServices include environmentalpermitting and studies, air quali-ty, and RCRA for Alaska oil andgas, mining and utility indus-tries. Call (907) 563-2137 oremail administrator@hoeflernet.com

Bill Vallee - PetroleumLand Services, 37 YearsField & Staff Experience,Contract or Day Rate, Phone:(907) 333-1277, FAX: (907)333-7889, E-Mail:wovallee@gci.net

ALASKA eCOMMERCEONLINE - Highly user friendly,affordable, interactive websitesfor automated business man-agement. Web based access tofiles and software all running onany designated servers, yours orours. Call us for a demo, you'llbe glad you did. Dave Nanney 1 907 766 2763 accounts@alaska-e.com

AVALON DEVELOPMENTCORP. Mineral ExplorationConsulting Services PropertyEvaluations, Exploration Design& Management, Field

Exploration and Logistics CurtFreeman, Cert. Prof. Geologist#6901 P.O. Box 80268Fairbanks, AK 99708 Phone907-457-5159 Fax 907-455-8069 email avalon@alaska.netweb site www.avalonalaska.com

WANTED EMPLOYMENT:Experienced operator/mechanicseeking employment on theNorth Slope, will work 4/2 or 3/3weeks-12 hour shifts. Has arcticclothing, good professionalresume, CDL w/ endorsements,NSTC training. contactdgnarum@yahoo.com or (907)766-2095.

WORK WANTEDJourneyman, Lineman!Please contact Frank(760) 791-6269

Immediate Positions For:Sr. Land Surveyor (10-15 yrexp) Managing survey crews,AutoCAD 2000 LDD.Civil Engineer (10+yr exp)water/sewer/site gradingexp/AutoCADAirport Planner (5 yr exp)

Call (907) 563-0090

Udelhoven Current ImmediateOpenings: 4 NICET level 2 and3 Certified Technicians. WorkSite: North Slope send resumesto Jgilbert@udelhoven.comPositions we are alwaysaccepting applications forinclude: Administrative, cleri-cal, As built, Material Handler,Carpenter, Electrician, ElectricalInspector, Engineer, EquipmentOperator, FCO Technician,HVAC, Instrument Technician,Laborer, Millwright, NICET,Operator, Pipe fitter, Plumber,Project Control, ProjectManager, Quality Assurance,Safety, Surveyor, Welder.Please e-mail your resume to:rfrontdesk@udelhoven.com orfax to: (907) 522-2541 Attention:Lisa

Confined Space $15.00Anchorage-based remediationcompany seeks candidates withcerts in Hazmat / Hazwop /Confined Space. Temporary toPerm positions avail. CallJennifer Paul @ Personnel Plus:563-7587 No fees

Class 'A' CDL Driver Oilremediation Company seeks

applicant. Hazmat cert; vactruck experience would be pre-ferred. $17.00 + DOE call forinterview. 563-7587

Petroleum News Alaska is seek-ing an experienced circulationsales representative.Position is FT, based inAnchorage. Personality is a plus!Submit your resume by email toDan Wilcox at ceo@gci.net.

Employment offers that suggestguaranteed out of state or over-seas positions, glamorous travel,gifts or high wages for limitedexperience may be deceptive orunethical in nature. contact the

following for possible informa-tion: Better Business Bureau562-0704 Wage & HourAdministration AK Dept. ofLabor 269-4900

Avalon Development is seek-ing personnel interested in antic-ipated 2002 field positions.These are no-nonsense geologyoriented field positions in remotecamps. Positions are as follows:Senior Geologists: +5 yearsexperience, Alaska experiencepreferable, expertise in PGE,Rare Metal or gold explorationrequired. Salary DOE. JuniorGeologists: Bachelors degree

in Geology required, Alaskaexperience preferable, experi-ence in PGE, Rare metal or goldexploration helpful. Salary DOE.Geotechnicians: Experiencein gridding, sampling, powerauger drilling drill sampling andGPS navigation preferable.Salary DOE If you are interestedin learning more aboutEmployment opportunities inAlaska with AvalonDevelopment, submit a resumealong with references. Resumesmay be emailed to:avalon2@alaska.net, Faxed to907-455-8069 or mailed to

Consultants

Employment

CLASSIFIEDSPetroleum News • Alaska 11Week of December 22, 2002

Process Operator - Field-Based -Alaska. Alaska Process Operator Roles andResponsibilities: The Operations Technicians are expected to assist during pre-com-missioning and commissioning activities, performing pressure/leak tests, equipmentflushing/cleaning, functional checkout of equipment/instrumentation, and valve tag-ging and operating procedure development. The Operations Technicians will be

required to perform both Control Room and field duties and be willing to undergo flexibility training toperform light maintenance tasks. Control Room duties will include: Plant operation via a DCS(Fischer/Rosemount Delta V) system to maintain safe operation at all times. Compiling daily produc-tion and environmental reports. Start up and shutdown of the facility. Operation and control trou-bleshooting. Assisting the technical support team with the demonstration program and technologydevelopment. Field duties will include: Operational troubleshooting, sample taking, instrumentationand equipment monitoring, routing blow down and maintenance tasks. The field technician will berequired to man the DCS panel for short periods. It is expected that this will be a very demanding andchallenging role working with cutting edge technology, including equipment, instrumentation and con-trol, and analytical equipment, developing and optimizing the operating envelope and gathering thedata necessary for commercial plant scale up. The successful candidates will work to a 12 hour shiftpattern but also be flexible enough to accommodate call out to provide absence and sick cover. Theselected candidates will be required to work within at team environment that is comprised of both shiftand day personnel and be accountable for the safe, reliable operation of the facility. Experience:·Minimum of Five (5) years experience in facility or production operations. ·Maintenance technicianswill to train in Operations encouraged to apply. ·DCS Operations experience preferred. ·Research,technology development experience would be an advantage. ·Steam Methane Reforming,Hydrocracking or other chemical/refinery operations experience would be an advantage. ·Strong oral,written and basic mathematical skills. ·Demonstrated ability to work well in a team and respond effec-tively to changing situations. ·Proven ability to learn quickly and utilize newly acquired skills. This is aRegular Full-time position, located in Kenai, Alaska. Please submit your resume to: RecruitingDepartment 949 E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to:Careers@VECO.com or fax (907) 762-1040 VECO Alaska Job Web site: www.veco.com Emailattachments should be in Microsoft Word or Rich Text format. VECO Alaska is an Equal OpportunityEmployer that Supports a Diverse Workforce. Positions Require U.S. Work Authorization Pleasequote the Job Title and Recruiting Authorization No. (if applicable) in all correspondence.

Legal NoticeLegal Notice U.S.D.A. Forest Service Alaska Region Chugach National Forest CordovaRanger District The purpose is to notify all interested persons that the following Decision Notice andFinding of No Significant Impact is available to the public pursuant to 36 CFR 215.9: Decision Noticeand Finding of No Significant Impact Revised Environmental Assessment Oil and Gas Exploration inthe Katalla Area, The purpose of the Decision Notice is to document the factors considered and therationale used in making a decision concerning the potential effects of approving Cassandra EnergyCorporation's Plan of Operations for oil and gas drilling near Katalla, Alaska. The decision consists ofwhether to approve the Plan of Operations. There are two major components of the Plan ofOperations: (1) Exploratory oil and gas drilling operations; and (2) Access to the drill site which con-sists of establishment of a temporary staging area, construction of approximately 550 feet of tempo-rary road, and use and maintenance of an existing temporary access road on National Forest Systemlands. The responsible official is: Dave R. Gibbons, Forest Supervisor Chugach National Forest 3301C St. Anchorage, Alaska, 99503-3998 The decision and accompanying Environmental Assessmentcan be obtained from the Cordova District Ranger, P.O. Box 280, Cordova, Alaska, 99574-0280; andthe Forest Supervisor's Office, 3301 C St., Anchorage, Alaska, 99503. They are also available on theInternet at: www.fs.fed.us/r10/plans_projects/katalla/index.html/. For more information on thisEnvironmental Assessment please call Ken Hodges, Cordova Ranger District at (907) 424-4738; orChuck Frey, Forest Supervisor's Office, Anchorage, at (907) 743-9557. The decision is subject toappeal pursuant to 36 CFR 215. Appeals must be filed with the appeal deciding officer: DennisBschor, Regional Forester U.S.D.A. Forest Service Alaska Region-Region 10 P.O. Box 21628Juneau, AK 99802-1628 The appeal must be postmarked and submitted to the Appeal DecidingOfficer within 45 days of the date of this publication in accordance with 36 CFR 215.13. The appealperiod ends January 27, 2003. Pub.: December 13, 2002

Fire & Gas Technician - Prudhoe Bay, Alaska Recruiting Authorization No. 1335Summary: Installs, maintains, calibrates and adjusts fire and gas detection systems,instrumentation and instrument lops. Essential Functions: Calibrates and adjusts,repairs and installs fire alarms and gas detection systems. Interprets test data.Performs functional testing including the interface to process control and shutdown

systems. Uses and maintains tools and equipment employed to perform calibration testing (precisionregulators and test gauges, volt-ohm meter, potentiometers, thermocouple calibrator, signal genera-tor, leak detection unit oscilloscope and manufacturers specialized test equipment; i.e. PyrotronicsSU-9 calibrators. Routinely performs safety and productivity observations; shop, field, and vehicleinspections and is required to attend various components of technical, developmental and safety train-ing. Must demonstrate support for the company’s environmental management system objectives.Qualifications: Five (5) years experience as a process instrument technician or electrician in the oil orchemical industry and two (2) years of related technical/vocational training preferred. Must be able towork as part of a team; communicate effectively with fellow workers and alternate; and demonstrateadherence to established safety policies and procedures. Must have knowledge of ISA Standards aswell as the functional operations and adjustments of the various components of instruments and instru-ment loops such as controllers, transmitters, and level indicators; calibration; and trouble shootinginstrument loops and loop tuning. Must have experience reading and interpreting drawings, specifi-cations, vendor data, and technical data sheets. Must demonstrate knowledge of OSHA safe workpractices associated with instrument power voltages; programmable controllers and distributed con-trol systems; and fire and gas alarm and shutdown systems as related to explosion proof atmospheres.Electronics skills a plus. Driver’s license required (note that this requirement may be waived at thecompany’s discretion for employees hired on a temporary basis). Must possess Alaska State licens-es 1B in Fire Alarms and IIIA in Special Hazards (and corresponding NICET certifications). Note:Skills tests may be required of new hires to demonstrate core proficiencies, or of existing employeesto advance to a new job level. Physical Requirements: The physical demands described here are rep-resentative of those that must be met by an employee to successfully perform the essential functionsof this job. Reasonable accommodations may be made to enable individuals with disabilities to per-form the essential functions. MOBILITY: Employee frequently required to stand; walk;reach withhands and arms; climb or balance; and stoop, kneel, crouch or crawl. The employee is occasionallyrequired to sit. Must be able to work from ladders and scaffolds to access instrumentation. FINEMOTOR SKILLS: Frequently required to use hands and fingers with sufficient dexterity to performclose, exacting and repetitive tasks. HEARING: Must be able to hear audible safety alarms and warn-ings. VISUAL ACUITY: Specific vision abilities required by this job include close vision. Vision mustbe adequate to perform above listed tasks in a safe manner. LIFTING: The employee must regularlylift, pull and /or move up to 40 pounds, and occasionally lift and /or move up to 70 pounds. COM-MUNICATION SKILLS: Must display ability to read and understand job descriptions, safety/technicalmanuals and safety/warning signs. Must display sufficient oral communication skills to be able to giveand receive oral safety warnings, instructions, and task assignments. ENVIRONMENT: While per-forming the duties of this job, the employee is frequently exposed to severe arctic weather conditions.The employee is frequently exposed to high, precarious places, confined spaces, and the risk of elec-trical shock. May be required to work with toxic or caustic chemicals. DISCLAIMER: The abovedescription covers the principal duties and responsibilities of the job, specific to, and intended for,VECO Greater Prudhoe Bay projects only and may or may not reflect general duties and responsi-bilities on other VECO projects. This description should not be construed as a complete listing of allduties that may be required. This is a Regular Full time position located in Prudhoe Bay,Alaska, witha rotation of 2 weeks on 2 weeks off. Please submit your resume to: VECO Corporation AlaskaRegion Attn: Ken Sigurdson 6411 A Street, Anchorage, Alaska 99518 USA Phone: (907) 277-5309Fax: (907) 550-8890 Email Resume to: Careers@VECO.com or fax (907) 762-1040 VECOCorporation Job Web site: www.veco.com. Please quote the Job Title and Recruiting AuthorizationNo. (if applicable) in all correspondence. VECO Corporation is an Equal Opportunity Employer thatSupports a Diverse Workforce. Positions Require U.S. Work Authorization.

TTo place a classified listing please contact:o place a classified listing please contact:Amy PilandAmy Piland

Classif ieds ManagerClassif ieds Manager

Phone:Phone: (907) 644-4444(907) 644-4444

Avalon Development, attn: AV-Jobs2002, PO Box 80268,Fairbanks, Alaska 99708

Alaska Equipment AppraisersMachinery and equipmentappraisals. Mike Tope 250-9083mrtope@yahoo.com

HEAVY CONSTRUCTION

EQUIPMENT FOR LEASECAT 245 Excavator, CAT D5BDozer, GROVE 25 ton HydraulicRT Crane, CASE 621B Loader,KELLY EQUIPMENT CO.907-566-2290

WASTE OIL INTO FREEHEAT Waste oil furnaces,

heaters, & boilers. NuERA Corp.Serving you since 1984. 1-800-347-9575.

Alaska Independent needsoperator to explore anddevelop prime NorthSlope/Cook Inlet prospects.Call Rick 907-456-2300 or email

bluemax@gci.net.

AVCG looking for qualifiedpartners for 104,000 acres onNorth Slope. Call Bo 316-263-2243.

Alaska Support IndustryAlliance events:

R.S.V.P (907) 563-2226Friday, January 24, 2003:Meet Alaska 2003 at SheratonAnchorage Hotel. Plan for a day-long conference! For informa-tion/registration, please call(907) 563-2226

Busy Beaver HandymanServicesPainting & drywall is our #1 ser-vice!Over 17 years experienceFREE ESTIMATES!- Interior/exterior painting

- Taping/texturing- Drywall repair - Wood staining/finishing - Remodeling- Power washing & cleaning- QUALITY WORK! Ph: 830-3680

SAFETY PARKA. Safety ratedto minus 70F. 920-864-7147www.zero-below.com

FINE ARTFine Art for office or home. Oneeach (out of only 100 ever print-ed) of the first 10 lithographs.By: Jacque & Mary Regat. Formore info contact:jdmacri@aol.com

PNA CLASSIFIEDS12 Petroleum News • Alaska Week of December 22, 2002

Doyon Drilling, Inc. is currently accepting resumes for Electricians, Pitwatcher(Solids Operator), and Mechanics. Doyon Drilling, Inc. accepts resumes fromindividuals with direct on or off shore drill rig experience at the floorhand level

and above. You may fax, mail or e-mail your complete resume to our Human Resources Department.Our mailing address is: Doyon Drilling, Inc., 101 W. Benson Blvd., Suite 503, Anchorage, AK 99503Phone: 907-563-5530, Fax: 907-561-8986, Email: jobs@doyondrilling.com Attachments should be inone of the following standard formats: Microsoft Word (Windows) or RTF. Resumes should containa listing of employment experience on oil and gas drilling rigs and should have a minimum of three ver-ified references. Other application paperwork will be provided at the time of hire.Electricians: Summary: Installs, maintains and repairs drill rig electrical systems, apparatus and elec-trical and electronic components of drill rig machinery and equipment. Essential Duties: Maintains andrepairs the electrical and electronic equipment associated with drill rig top drives, draw works, ironroughnecks, SCR's AC motor controllers, DC motors, AC generators, air conditioners PLC's and oil-field mud and gas monitoring systems. Installs power supply wiring and conduit for newly installedmachines and equipment such as mud pumps, motors and conveyors.Pitwatcher (Solids Operator): Summary: Performs drilling fluid mixing operations, drilling fluidproperty sampling, monitoring of well bore returns, maintenance of mud pumps and drilling fluid cir-culation system. Essential Duties: Maintain drilling fluid solids control and circulation equipment, Carryout routine drilling fluid property sampling, Mixing of drilling fluid chemicals and maintenance of drillingfluid properties, Cleaning and maintenance of rig drilling fluid pits, Follow DDI and customer operat-ing and reporting procedures, Maintain clear communications with relief, mud engineer, Derrickmanand Driller.Mechanics: Summary: Responsible for the operability, maintenance and repair of all drill-rig relatedmachinery and support equipment such as engines, motors, pumps, winches, pneumatic tools andconveyor systems as directed by the rig toolpusher. Essential Duties: Works on the following: Drill rigtop drive systems, Drill rig draw work systems, Drill rig mud pumps, SCR systems, Caterpillar andDetroit Diesel engines, Allison transmissions, air conditioners, glycol, hydraulic and pneumatic sys-tems, Drill rig heating and heat distribution systems including boilers and fans.

Meetings/Events

Leases/ProspectsAvailable

InvestmentOpportunities

Human Resources Technician - Anchorage, Alaska Recruiting AuthorizationNo. 4600. The Human Resources Department currently has an opening for an indi-vidual who is a service oriented, professional and enjoys working in a team environ-ment. Requires a 2-year degree; or 2 years plus experience and/or training or equiva-lent combination of education and experience. Prior customer service or human

resources experience a plus. Duties include helping administer VECO Alaska’s employee benefit pro-gram, in accordance with company policy and procedures, and records system input and filing.Having some knowledge of legal requirements and government reporting a plus. Successful candi-date will also research and resolve benefit issues and questions. Excellent interpersonal skills, oral andwritten communication skills, able to organize, prioritize work and meet deadlines. Proficient in the useof MS Access, Word and Excel preferred. Maintaining confidentiality is a must. Some travel required.Anchorage based. Regular Full-Time.Accounts Receivable Technician - Anchorage, Alaska Recruiting Authorization No. 2829.Accounts Receivable Technician One opening for an individual with previous accounts receivableexperience and cost coding experience in a fast-pace and high volume environment. Excellent com-munication skills ( both oral and written). Analytical and accurate. Excellent problem solving skills. Wellorganized and detail oriented. Ability to handle multiple tasks, prioritizes workload and meet deadlines.Computer experience and 10-key by touch a must. Anchorage based. Regular Full-time. This is anInternal Posting and is opened until filled. Please submit your resume to: Recruiting Department 949E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to: Careers@VECO.com or fax(907) 762-1040 VECO Alaska Job Web site: www.veco.com VECO Alaska is an Equal OpportunityEmployer that Supports a Diverse Workforce. Positions Require U.S. Work Authorization.

Principal Mechanical Engineer - Anchorage, Alaska Minimum 12 years engineering experience. B.S.M.E With a P.E(Alaska would bea plus). Experience in oil/gas or petrochemical design preferably in Production Facilities. Project Engineering as well as design engineeringbackground. Strong skills in analyzing all technical aspects of assigned projects and recommend design changes as appropriate. Ability todefine scope of work and develop and review schedules for assigned projects. Review drawings and check designs for conformance withclient and code requirements. Provide technical assistance to less senior engineering and design personnel and evaluate results. Review ven-

dor bids to assure compliance with specs. Participate in the development of engineering methods, techniques and criteria. Computer literate and familiarwith standard engineering software and Microsoft Office Products. Solid background and understanding of ASME B31.3 AND B31.4 piping codes. Abilityto lead a design team (one or more Mechanical Engineers and Designers). Previous supervisory or lead experience would be a plus. Good written and oralcommunication skills. Solid planning and organizational skills. Arctic engineering experience preferred. Position is Regular Full Time, based in Anchorage,Alaska. Process Control Engineer - Anchorage, Alaska (Principal level) with 15 years + in implementation of instrumentation, process control systems engi-neering. Strong background in PROGRAMMING DCS Controls. Knowledge of hardware as well as software control systems. Previous experience per-forming quality checks and fault testing of software for reliability. Experience designing graphics displays and configuring facility automation control consoles.Ability to write control codes . Familiar with the following Bailey Infi90,Moore,Wonderware,Honeywell,Bradley,Fisher Rosemont. Training in PLCProgramming, Advanced Process Control Techniques, Advanced Statistical Process Control. Evaluates, selects and applies standard design techniques,procedures and criteria to make design adaptations and modifications. Review design drawings and vendor submittal for assigned segments of a project fortechnical conformations to requirements to codes. Prepares design calculations, specs and sketches for instrumentation and control systems into overall pro-ject design. Assist with preparation to scopes of work, equipment estimates, installed cost estimates and budgets for project assignments. Strong comput-er literacy with good written, verbal and analytical skills. Familiar with standard engineering software. Has worked in refineries, oil and gas facilities is a must.Engineering degree required. Seeking an Alaskan P.E. Strong working knowledge of programming of DCS systems. Background in software and hardware.Comfortable working with programming and assisting less experienced engineers and designers with this aspect. Position is Regular Full Time, based inAnchorage, Alaska Please submit your resume to: Recruiting Department 949 E. 36th Avenue Suite 500 Anchorage, AK. 99508 Email Resume to:Careers@VECO.com or fax (907) 762-1040 VECO Alaska Job Web site: www.veco.com VECO Alaska is an Equal Opportunity Employer that Supports aDiverse Workforce. Positions Require U.S. Work Authorization

Equipment

Miscellaneous

Petroleum News • Alaska classi-fied ads are an affordable andeffective way to reach people inthe oil and gas industry. Ourweekly paper, combined withPNA’s eBook (electronic versionof the newspaper), is offered toseveral thousand readersaround the world each week andreaches 95% of middle andupper management in Alaska’soil and gas industry. Your ad willbe viewed on-line and in ourweekly paper for only $4/line forEmployment ads and $8/line forall other categories. Please call907-644-4444 or visit us on-lineatwww.petroleumnewsalaska.com

Long Term And Transient OfficeSpace At The DeadhorseAirport. Strategically located onthe Tarmac, Conference Room,Multi-Office Suites,TrainingArea, Break Room, CopyFacilities, Limited Yard Space,Passenger Waiting Area , NewHanger Facility, Large SingleOffices With Private Bath, NewHanger Facility Completion Date9/1/02 Perfect Location ForLogistics Support,Environmental And PermittingFor Remote Site ProjectsContact Kevin Starnes at 907-

659-2398 or Tom Hendrix 907-276-7797. Perfect Location ForLogistics Support,Environmental And PermittingFor Remote Site Projects

Class A offices avail. bymonth or longer. Incl. phone,recept, & much more. Fax andinternet. Single offices from$500 View suites avail. PacificOffice Center: 877.264.6600.

CAROL BUTLER (formerlyCarol Douthit) #1 Agent '00,'01, & ytd '02! Experience these

homes at www.alaskatopagent.com

Beautiful 5-bedroom home locat-ed in south Anchorage.Solarium, sauna, bar, backs togreenbelt plus 4,000 sq. ft. of liv-ing area. Perfect for entertaining.10,000 sq. ft. lot. $418,000.00.Please contact Steven Craig.Direct 907-265-9130 Cell 907-440-6777Email stevencraig@gci.net

Chilkat Eagle Inn - Historic Innwithin a National HistoricLandmark, Haines, Alaska -

Gateway to World HeritageInternational Parks and the AlcanHighway. Many amenities includ-ing guest kitchen,TV/Internet/email lounge, cour-tesy shuttle bus. Great for busi-ness travelers and vacationers.Check out our website athttp://www.kcd.com/eaglebb

A&J SupplyDistributor, oil eating microbesfor hydrocarbons, gas, oil, etc.Free sample available. PleaseCall (907) 349-8017 or fax (907)345-1367.

Recreation/Lodging

PNA CLASSIFIEDSReal Estate/Commercial

Real Estate/Fine Homes

THE REST OF THE STORYPetroleum News • Alaska 13Week of December 22, 2002

You fit inhere...

Let people know yourcompany is part of

Alaska's oil and gasindustry. Advertise inPetroleum News •

Alaska!Call (907) 644-4444

Supplies

coastal areas “starting to firm up.” “There aren’t many pockets of soft

ground under the surface,” he said.“Looking at what was happening earlierwith the warm temps, we thought it mightnot open up until February, but there hasbeen less snow this year to insulate theground. … And then it got cold. It was 31below in Deadhorse this morning.”

Schultz said he’s “optimistic,” and pre-dicts an earlier opening than last year,”which had the latest tundra access dates onrecord.

In 2002 the state broke the NorthSlope into two areas, Schultz said.

“The coastal area was opened to off-road travel on Jan. 25, 2002. Thefoothills had very deep snow and verylittle wind. This created a deep, fluffysnow layer that insulated the ground.There were areas in the foothills wherethe ground never did freeze completely,”Schlutz said.

“In spite of this, we thought that thedeep snow would protect the ground(especially since the seismic operator inthis area was using only tracked equip-ment). Therefore, again on Jan. 25, weallowed off-road travel in the foothillson a project-specific basis under twoconditions: a) that a DNR inspector hadto be present to verify that no tundradamage was occurring and b) that theoperator would have to fund a follow-upinspection the following summer to con-firm that no damage had occurred. Thiswork went well, and we did not find anysignificant tundra damage from thisoperation,” he said.

SHIVELY HEADS TO HOLLANDAMERICA…. Former Alaska Departmentof Natural Resources Commissioner JohnShively started a new career Dec. 16 pro-moting a different type of natural resource— Alaska’s wilderness, wildlife, glaciers,

fishing and Nativeculture.

Shively hasaccepted the positionof vice president ofexternal affairs forHolland America inAlaska.

But he’s not total-ly leaving JadeNorth LLC, the con-sulting firm he founded in 2000 afterresigning as commission. A partner in thefirm, Patty Bielawski, is assumingShively’s management duties, but she saidhe will retain his partnership in the compa-ny and the title of senior partner.

Instead of being a fulltime consultant,he “will now serve in the role of senioradvisor on strategic issues for the businessrather than handle day to day client repre-sentation. We envision this as analogous toa partner who serves in an “of counsel”role in the legal profession,” Bielawskisaid.

Anchorage-based Jade North providesconsulting services for the natural resource,Alaska Native and government sectors.

MARTY RUTHERFORD JOINSJADE NORTH…. In mid-January, AlaskaDepartment of Natural Resources DeputyCommissioner Marty Rutherford will leavestate government and become a partner atJade North LLC, the company said Dec.16. (See related article on page 6.)

Rutherford will “represent clients withnatural resource extraction and transporta-tion interests as well as assist clients withland management projects and issues withgovernment, Native and other private landowners,” Jade North said in a statement.

Earlier this year Bill Schoephoesterjoined Jade North. He does electric utilityand oil spill prevention and response plan-ning, as well as project management ser-vices.

DRILLING TO START ATKUPARUK-THETIS PROJECT INJANUARY…. Pioneer Natural Resources

Co. has all its permitsto drill three explo-ration wells at itsprospect betweenThetis Island and theKuparuk River unit.The company willbegin drilling the firstwell (Ivik) in lateJanuary, KenSheffield, presidentof the Calgary-based Pioneer subsidiaryand Alaska project manager, told PNADec. 16.

Peak Oilfield Service Co. has beenawarded the contract to build the project’sice roads, Sheffield said.

“As of today, we have not signed a rigcontract, but plan to address this issue inthe near term,” he said.

The proposed exploration wells are off-shore in approximately five to 10 feet ofwater. Drilling plans call for grounded seaice pad locations that will be accessed viaice roads from Oliktok Point dock. No tun-dra travel is planned.

All sea ice operations are expected to becompleted by the end of March.

continued from page 1

INSIDER

John Shively Ken Sheffield

of barging equipment and supplies up theKatalla River from the Gulf of Alaska. Italso involves construction of 550 feet ofnew temporary access road, establish-ment of a temporary staging area, and useand maintenance of an existing tempo-rary access road on National ForestSystem lands.

Anchorage-based Cassandra plans todrill two or three exploratory wells direc-tionally from private land acquiredthrough a lease-purchase agreement fromDel and Ginger Welch, who own the siteof the old 465-acre Katalla oil field, intomineral estates owned by ChugachAlaska Corp., a regional Native corpora-tion.

Under a 1982 agreement with the fed-eral government, Chugach Alaska has tolocate commercial quantities of hydrocar-bons on the acreage by Dec. 31, 2004, orthe subsurface rights revert to the govern-ment.

Cassandra has a lease-option for oiland gas rights on 10,134 acres fromChugach Alaska. The surface rights arecontrolled by the 5.9 million-acreChugach National Forest, the country’ssecond-largest national forest, after

southeast Alaska’s Tongass. Welch told PNA in earlier interviews

that 44 wells were drilled at Katallabetween 1901 and 1930, of whichapproximately 18 wells produced oilfrom fractured sandstone and siltstone ofthe Katalla formation at depths rangingfrom 360 to 1,750 feet. He said produc-tion per well varied from 15 to 240 bar-rels per month. Recorded production atKatalla over a 30-year period totaled153,922 barrels of oil. Production ceasedin 1933 when the Katalla refinery wasdestroyed by fire.

New wells will be deeper

The wells drilled from 1901 to 1930had depths of up to 2,300 feet. CassandraPresident Bill Stevens, who is the safetyand health program coordinator for InletDrilling Alaska Inc. in Kenai, told offi-cials he expects to find oil at deeper lev-els than previously drilled. He estimatesthe field could hold 200 million to 600million barrels of recoverable oil.

Stevens said he plans to use Inlet RigCC1 for an exploration drilling programthat would start with two or three wellsand, if they had commercial oil shows,could result in “as many as 12 wells onprivately owned acreage, for a total costof approximately $20 million.”

—Kay Cashman, PNA publisher

continued from page 3

KATALLA

ADVERTISER INDEX14 Petroleum News • Alaska Week of December 22, 2002

AAdvancial Federal Credit UnionAir Logistics of AlaskaAlaska Airlines CargoAlaska DreamsAlaska Interstate ConstructionAlaska Marine LinesAlaska Railroad Corp.Alaska SteelAlaska TelecomAlaska Tent & TarpAlaska Textiles . . . . . . . . . . . . . . . . . . . . . . . . .3Alaska Valve & FittingAlaska WalkFit OrthoticsAlaska West ExpressAlliance, TheAlpine-MeadowAmerican Marine . . . . . . . . . . . . . . . . . . . . . . .3Anchorage Hilton HotelAPI Systems GroupArctic ControlsArctic Pacific EnterprisesArctic Slope Telephone Assoc. . . . . . . . . . . . . . .6Arctic Wire Rope & Supply . . . . . . . . . . . . . . . .6Army/Navy StoreArrowHealthASCG Inspection (AII)Avalon Development

B-FBadger ProductionsBaroid Drilling FluidsBrooks Range SupplyCafe AmsterdamCameronCarlile Transportation ServicesChiulista Camp ServicesChugach Technical ServicesClarion SuitesCleanaire AlaskaCN Aquatrain . . . . . . . . . . . . . . . . . . . . . . . . . .9Coldwell BankerColvilleConam ConstructionConocoPhillips AlaskaContinental Auto GroupCook Inlet Tug & BargeCrowley AlaskaCruz ConstructionDowland - Bach Corp.Doyon DrillingDura-Wrap ContainmentsDynamic Capital ManagementEngineered Fire Systems . . . . . . . . . . . . . . . . .15ENSR AlaskaEpoch Well ServicesEra AviationEvergreen Helicopters of AlaskaEvergreen Resources AlaskaExecutive Suite HotelF.A.T.S.Fairweather Companies, TheFirst National Bank AlaskaFMC Energy SystemsFlowline AlaskaForest Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2Frontier Flying Service

G-MGBR EquipmentGolden North Van LinesGolder Associates . . . . . . . . . . . . . . . . . . . . . . .2Great Northwest . . . . . . . . . . . . . . . . . . . . . . . .2Hawthorne SuitesH.C. PriceIndustrial Project ServicesInspirations . . . . . . . . . . . . . . . . . . . . . . . . . . .5IRF GroupJava KingJackovich Industrial & Construction SupplyJudy Patrick Photography . . . . . . . . . . . . . . . . .9

Kenai AviationKenworth Alaska . . . . . . . . . . . . . . . . . . . . . .15KPMG LLPKuukpik Arctic Catering Kuukpik - Fairweather - Veritas . . . . . . . . . . . . .7Kuukpik - LCMFLounsbury & AssociatesLynden Air CargoLynden Air FreightLynden Inc.Lynden InternationalLynden LogisticsLynden TransportLynx EnterprisesMachinery Technical SupportMapmakers of AlaskaMI SwacoMichael Baker Jr.Midtown Auto Parts & MachineMillennium HotelMontgomery Watson Harza . . . . . . . . . . . . . . . .8MT Housing

N-PNabors Alaska Drilling . . . . . . . . . . . . . . . . . . .10NANA/Colt EngineeringNatco CanadaN.C. MachineryNeeser ConstructionNEI Fluid TechnologyNew World TechnologyNordic/Calista ServicesNorth Coast Electric Co. . . . . . . . . . . . . . . . . . .3Northern Air CargoNorthern Testing LaboratoriesNorthern Transportation Co.Oil and Gas Supply Co.Offshore Divers . . . . . . . . . . . . . . . . . . . . . . . . .4PDC/Harris GroupPacific Rim Leadership DevelopmentPanalpinaPeak Oilfield Service Co.PencoPetroleum Equipment & ServicesPetrotechnical Resources of AlaskaPGS Onshore . . . . . . . . . . . . . . . . . . . . . . . . . .8PSI Environmental & Instrumentation

Q-ZQUADCORolls Royce Energy SystemsR & R Scaffold ErectorsSchlumberger Oilfield ServicesSECORP IndustriesSecurity Aviation . . . . . . . . . . . . . . . . . . . . . . .4Seekins FordShred AlaskaSimplexGrinnellSnowbird ManagementSourdough ExpressSpan-Alaska ConsolidatorsSTEELFABTaiga AdventuresTec LabsTesting Institute of AlaskaThrifty Car RentalTOTETotem Equipment & SupplyTravco Industrial HousingUdelhoven Oilfield Systems ServicesUmiat Commercial . . . . . . . . . . . . . . . . . . . . .10Unitech of Alaska . . . . . . . . . . . . . . . . . . . . . . .4United Van LinesUnivar USAURSU.S. Bearings and DrivesWood Group (Alaska)XTO EnergyZY-TECH Global Industries

Companies involved in Alaska’soil and gas industry

ADVERTISER PAGE AD APPEARS ADVERTISER PAGE AD APPEARS

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

Oil and GasSupply

Located in Kenai andAnchorage, Oil and Gas Supply dis-tributes and fabricates industrialhose and fittings, Aeroquiphydraulic hose and fittings, rubberand synthetic gasket material,stainless steel hose assembliesand expansion joints. Hydraulic sys-tem design, sales, service andrepair, as well as Swagelok fittings,valves and stainless tubing, areavailable in Kenai. The staff hasmore than 100 years of industryexperience.

John Brunton, vice president,has been in the business for 25years. He purchased Oil and GasSupply in 1995 with wife Jackie,president and “boss.” They loveentertaining and wave running attheir Big Lake cabin, and golfing atnearby Settler’s Bay. When theschedule allows it, they’re off totheir casa in Cabo San Lucas.

BusinessSpotlight

John Holland, marketing manager,Helicopter Division

John Brunton, vice president

Forr

est

Cra

neFo

rres

t Cra

ne

Era Aviation Inc. Era Aviation, an Alaska corpora-

tion since 1948, maintains head-quarters in Anchorage. TheHelicopter Division operates 100aircraft for the oil and gas industryin Alaska, the West Coast and Gulfof Mexico. John Holland has beenthe division’s marketing managersince 1997. The company’s primaryfocus is meeting customer needswith the highest safety and perfor-mance levels.

Holland, a former Army UH-60helicopter crew chief, graduatedwith honors from Embry-RiddleAeronautical University and islicensed in fixed and rotor wing air-craft. Fishing and hunting — notwork — brought him to Alaska.John is the father of two year oldEmilie. He caught a 62-pound kingduring his first 10 minutes of fish-ing. “Unfortunately, it’s been down-hill ever since,” he says.

share of expected growth after 2010. “At the wellhead, Alaska is the third

largest gas producing state in the U.S.,”the AGA said. “Since 1995, wellhead gasproduction has averaged 9.4 billion cubicfeet per day, which is exceeded only byLouisiana and Texas.

“However, 86 percent of this produc-tion is reinjected in order to improve oilrecovery on the North Slope and becausethere is no pipeline” to the Lower 48.

But adding Alaska to the Lower 48supply chain depends on “overcomingeconomic factors and impediments to sit-ing facilities (as well as) the gap thatdevelops between domestic productioncapability and growing gas demand,” saidthe report, entitled From the Ground Up:America’s Natural Gas SupplyChallenge.

Government action urged

Among its recommendations, theAGA urged the federal government totake the lead in “overcoming the logjamcreated by a pervasive ‘not in my back-yard’ attitude toward energy infrastruc-ture development in this country.

“State officials must also recognizethat economic development and environ-mental quality for their citizens hinge onincreased natural gas supplies.”

The AGA also urged Washington towork “closely and cooperatively” withthe Canadian and Mexican governmentsto solve North America’s challenge of“supplying competitively priced gas, inan environmentally sound manner, to agrowing market.”

New technologies need to beshared

In calling for technologies and prac-tices to be shared among the three part-ners in the North American Free TradeAgreement, it noted that developmentCanada’s East Coast offshore has beensuccessful, while similar geological for-mations in the U.S. Atlantic are off-limitsto producers, along with most of the WestCoast and Eastern Gulf of Mexico.

Similarly, the development of coalbedmethane in the U.S. Rocky Mountainregion offers the potential for technologytransfer to the vast, but untapped CBMresource of Canada.

“At the very least, projects to movegas from Alaska to the Lower 48 willrequire cooperative foresight by both (theU.S. and Canada) in order to efficientlyand economically develop stranded gassupplies,” the AGA said.

Canadian report also out

The AGA report was released one daybefore Canada’s National Energy Boardissued what could be a distant early warn-ing for the Western Canada SedimentaryBasin, the largest single gas supply basinin North America and the source of atleast 15 percent of U.S. gas needs.

The federal regulator said the WesternCanada Sedimentary Basin — whichsprawls from the Northwest Territoriesand Yukon through northeastern BritishColumbia, Alberta, Saskatchewan andinto Manitoba — faces a drop of 4.3 per-

cent in deliverability over three years,lending weight to arguments that theArctic is a crucial new source just to sus-tain current output.

The study projected deliverability willslide to 15.9 billion cubic feet per day bythe end of 2004 from 16.6 billion cubicfeet per day at the end of 2001, when pro-duction was already 900 million cubicfeet per day short of a December 2000market assessment by the NEB.

In continuing to scale back its fore-casts for the basin, the NEB reinforced agrowing sentiment that Canada is in anera when ever-increasing drilling is yield-ing ever-decreasing supplies.

Noting that the Western CanadaSedimentary Basin must achieve 3 bcfper day of new production each year justto maintain current levels, the NEB said:“For the past several years, it has taken anincreasing drilling effort to accomplishthis.”

Move to riskier areas unlikely

But, despite a combination of lower ini-tial production rates and faster declinerates since 1996, the industry is not likelyto deviate from its strategy of recent yearsby making any sudden shifts to riskierareas of the basin, said the study.

It said that although low-cost, shallowwells in southeast Alberta and southwestSaskatchewan generally come on stream ata mere 200,000 cubic feet per day com-pared with 21 million cubic feet per day inthe deep Foothills, the average drillingcosts range from C$100,000 for a shallowwell to C$10 million per well in the deep-er, more complex Foothills plays, whichare outside the financial means of all butthe largest E&P companies.

Although the NEB forecast drilling inthe Western Canada Sedimentary Basinwill continue to rise over the next twoyears in response to growing NorthAmerican demand, that will not be enoughto compensate for lower initial productivi-ty per well connection, which is already 25percent below 1995 levels.

The only encouraging sign is that initialproduction rates for 2001 well connectionsappear to have stabilized at 2000 levels,while decline rates have shown some hintsof flattening out, the study said.

The NEB plans to release a report onCanada’s energy supply and demand out-look to 2025 in the spring of 2003.

Resources described as vast

But the American Gas Associationreport also gave hope in describing theNorth American gas resource base as“vast, diverse and dynamic,” noting that ithas kept pace so far with cycles in gas pro-duction and consumption.

It said current estimates of remainingU.S. and Canadian gas resource potentialare substantially higher than they were 20years ago, despite the consumption of 200trillion cubic feet in the United States overthat period.

Improvements in exploration and pro-duction technology and the momentum ofmarket forces have contributed to a dra-matic rise in the ultimately recoverableresource base in the United States, theAGA said, referring to estimates devel-oped by the Potential Gas Committee ofthe Colorado School of Mines.

In 1980, the committee calculated thecombined proved reserves, potentialresources and cumulate production to dateat 1,708 trillion cubic feet. At the end of2000, the committee raised that figure by30 percent to 2,208 trillion cubic feet.

Those revised figures reflected techno-logical advances that made opened thedoor to new sources of gas, such as gasfrom coal seams or production fromdeposits located under thousands of feet ofwater, which have seen U.S. production

migrate to the deepwater Gulf of Mexico,south Texas, north Texas/Louisiana andthe Rocky Mountain basins.

Non-traditional gas more pricecompetitive

On the price front, the AGA said ana-lysts believe gas from non-traditionaldeepwater, Alaska and LNG sources, thatmay not have been viable at wellheadprices of US$2 per million British thermalunits, are more competitive in the range ofUS$3-$4.

It said prices from the mid-1980s to2000 were stable and actually fell whenadjusted for inflation, but have since expe-rienced fluctuations because of a tighten-ing balance been supply and demand, cre-ating a “tightrope” effect that is sensitiveto even small changes in weather, eco-nomic activity or world energy.

The AGA also concluded that “currentresource estimates for many frontier areasappear to be very conservative,” arguingthat geologists tend to underestimate thesize of new fields.

“The simple act of exploring for natur-al gas in promising areas can, and oftendoes, result in new discoveries over andabove previous estimates,” it said.

In that context, the AGA said Canadianproduction can grow, but likely outside theWestern Canadian Sedimentary Basinexcept for development of coalbedmethane reserves in Western Canada.

“In many ways, development of newgas resources in Canada reflects the chal-lenges of discovery in the U.S.,” the studysaid. “Basins in Western Canada, particu-larly in Alberta and British Columbia,have been extensively drilled, although notfor as long a time as some producingregions in the U.S.

“More drilling will need to be targetedin Eastern Canada (offshore) and in theless explored northern tier of the Yukon,Northwest Territories and the ArcticIslands if Canadian production is to grow.”

Projecting sources of U.S. traditionalsupply, the AGA estimated the Lower 48will rise from 20.8-21.3 trillion cubic feetin 2005 to a range of 19.7-24.7 trillioncubic feet in 2020, while Canadian exportsto the United States will climb from 3.9trillion cubic feet in 2005 to between 4.5and 7 trillion cubic feet over the 15 years.

Consumption is expected to soar 50percent from 22 trillion cubic feet in 2001to 33 trillion cubic feet in 2020, underscor-ing the critical importance of migration tonew sources.

“Americans want a stable, reliablesource of environmentally friendly energythat is produced in North America,” saidAGA president and CEO David N. Parkerin a news release.

“They find it in natural gas. But, giventhe long lead time associated with produc-ing and transporting natural gas, criticaldecisions must be made now.

“As a popular television psychologistmight say, it is time to ‘get real’ aboutincreasing supplies of natural gas in theface of growing customer demand.”

Parker said the irony is that laws andregulations encourage the use of gas, butoutdated concerns about the environmen-tal impact of finding and producing gasmake it increasingly difficult for compa-nies to match consumer demand. ◆

THE REST OF THE STORYPetroleum News • Alaska 15Week of December 22, 2002

continued from page 1

INDUSTRY

On the price front, the AGA saidanalysts believe gas from non-

traditional deepwater, Alaska andLNG sources, that may not havebeen viable at wellhead prices ofUS$2 per million British thermal

units, are more competitive in therange of US$3-$4

AGA president and CEO David N.Parker said the irony is that laws

and regulations encourage the useof gas, but outdated concerns aboutthe environmental impact of finding

and producing gas make itincreasingly difficult for companies

to match consumer demand.

ADVERTISEMENT16 Petroleum News • Alaska Week of December 22, 2002