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

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

page 8

Vol. 25, No. 51 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of December 20, 2020 • $2.50

see ARCTIC FINANCING page 9

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

ANS production, prices, down this year; volumes to rise long term

The Alaska Department of Revenue

released its Revenue Sources Book Dec.

11, with projections reflecting a decrease

in Alaska North Slope crude oil prices

and decreasing production.

“Drilling and investment were sharply

reduced this year, and are reflected in the

lower near-term forecast, but we are

hopeful that new developments will con-

tribute to stabilizing production over the

coming decade,” Revenue Commissioner

Lucinda Mahoney said in a cover letter.

see CARBON TAX page 10

Suits ask injunctions to block Coastal Plain lease sale, seismic

Two suits were filed Dec. 15 against plans by the U.S.

Department of the Interior to offer oil and gas leases on the

Coastal Plain of the Arctic National Wildlife Refuge on Jan. 6.

The suits also contest winter seismic exploration on the

Coastal Plain, for which Interior’s Bureau of Land

Management released an environmental assessment Dec. 16

(see story in this issue).

The suits filed in U.S. District Court for the District of

Alaska ask for a temporary restraining order and preliminary

injunction against Secretary of the Interior David Bernhardt

and the North Slope Borough (case in which the Gwich’in

Steering Committee is the lead plaintiff) and for a preliminary

injunction against Bernhardt and the Alaska Oil and Gas

see ANWR INJUNCTIONS page 11

see REVENUE FORECAST page 10

State of Alaska approves Jade Energy’s Point Thomson Area F POD

Trudeau rolls out carbon tax of C$170 per metric ton by 2030

Canadian Prime Minister Justin

Trudeau has ended five years of promis-

es, pledges and commitments, all lost in

a mountain of stalling, by rolling out a

climate change policy that will see the

carbon tax soar from C$15 per metric ton

today to C$170 by 2030.

The goal is to reduce greenhouse gas

emissions to 30% below 2005 levels by

2030, a target the Trudeau government is

lagging far behind.

“This plan for a healthy environment and a healthy econo-

my was developed for the federal government,” Trudeau said,

Conditional approval RCA rules on Harvest Alaska acquisition of BP Pipelines (Alaska)

By KRISTEN NELSON Petroleum News

T he Regulatory Commission of Alaska has given conditional approval to the sale of BP’s midstream assets to Harvest Alaska, a process

which began after BP announced in August in

2019 that it was selling its Alaska assets to Hilcorp

(Harvest is Hilcorp’s midstream affiliate). The

companies filed with RCA for transfer of mid-

stream assets in September 2019.

Transfer of upstream assets in the sale, with the

state’s analysis headed up by the Alaska

Department of Natural Resources, was approved

this September.

In its Dec. 14 order, the company said it

received both public and confidential information.

Usually, it said, its evaluation of applications “is

usually based on publicly disclosed information.”

“The fact that we must base the decisions on

these applications in large part on confidential

information has complicated and lengthened our

review and slowed preparation of this order.

Oil makes steady price Various factors drive ANS, Brent above $50 for week; federal stimulus promised

By STEVE SUTHERLIN Petroleum News

O il prices are teasing at a new trading range above $50 per barrel. Alaska North Slope crude closed at $51.25 on

Dec. 15, up 84 cents on the day and above Brent

crude, which closed at $50.73, down 44 cents.

West Texas Intermediate closed at $47.62, a

gain of 63 cents on the day.

Brent traded at $51.13 and ANS at $51.61 at

Petroleum News press time Dec. 16, while WTI

traded at $47.82.

ANS and Brent have closed above $50 each day

beginning Dec. 10.

An air of optimism surrounded oil trading desks

as economic stimulus talks in the U.S. Congress

appeared to gaining support across party lines.

On Dec. 16, Congress was said to be near a deal

on a stimulus package nearing $900 billion,

including the surprise addition of a new round of

stimulus checks, albeit smaller than the last pay-

ments of $1,200 — part of the stimulus package

passed in March.

U.S. Treasury Secretary Jay Powell, in a post-

Federal Open Market Committee press conference

Conveyor belt of prospects Oil Search exec: Alaska North Slope ideal place for climate change transition

By KAY CASHMAN Petroleum News

Earlier this month Oil Search Alaska COO Matt Elmer said Alaska offers his company a “con-veyor belt of opportunities” from west to east across

the North Slope. The third largest

leaseholder in the state, Oil Search

drilled four new wells in the two

and a half years since it became a

North Slope operator, increasing its

contingent oil reserves from approximately 500 mil-

lion to 1 billion barrels.

“Pikka’s just the start. We have a number of

opportunities to develop after Pikka” from the west-

ern to the eastern North Slope, Elmer said in his

early December presentation to a virtual meeting of

the Resource Development Council in Anchorage.

He also said Alaska’s North Slope is “the ideal

place to be developing and managing the climate

change transition” for oil and gas companies. “It’s a

mature basin. It has existing and underutilized infra-

structure” such as a pipeline system across the Slope

that connects to the 800-mile trans-Alaska pipeline

which transports oil to the port of Valdez.

This is a story he hopes Alaskans will “get out

there” and tell naysayers, “especially in the

finance world where Arctic developments are get-

ting a bad rap.”

The “good thing” about a new field in northern

see HILCORP-BP SALE page 12

see OIL PRICES page 10

see ANS OPPORTUNITIES page 11

No, thanks! to red-lining banks: governor slams anti-Arctic bias

Alaska Gov. Mike Dunleavy said his

administration will introduce legislation

requiring state departments and agencies

to end existing relationships and partner-

ships with financial institutions that have

chosen to stop financing oil and gas

exploration and development in the

Arctic.

“We are the only arctic state in the

nation. For over 40 years, the United

States has benefited greatly from explo-

ration and development of our arctic resources,” Dunleavy

said in a Dec. 14 statement. “It makes no sense for Alaska to

GOV. MIKE DUNLEAVY

LUCINDA MAHONEY

JUSTIN TRUDEAU

“BPPA has retained the obligation to pay for most of what would otherwise

become, after closing of the Midstream Transaction, Harvest Alaska’s share of

TAPS DR&R,” RCA said.

OPEC crude oil production in November increased by 0.71 million bpd, month over

month, to average 25.11 million bpd, according to secondary sources.

http://www.petroleumnews.com

2 PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020

Petroleum News Alaska’s source for oil and gas newscontents

DDependa vable Ser e Sincvic 98e 18cDisitV

Dependadoug.Sourt www

vable Seroms.cseghExpr

e Sincvic 98e 18c

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

US drilling rig count jumps 15 to 338 By KRISTEN NELSON

Petroleum News

T he Baker Hughes U.S. rotary drilling rig count had its largest weekly increase this year, up by 15 for the week ending Dec. 11 to 338, but still down by 461

from a count of 799 a year ago.

When the count hit 244 the week of Aug. 14, it was

not just the low for 2020, but the lowest it has been since

the Houston based oilfield services company began issu-

ing a weekly U.S. rig count in 1944.

Prior to this year, the low was 404 rigs in May 2016.

The count peaked at 4,530 in 1981.

At the beginning of the year the count was in the low

790s, where it remained through mid-March, when it

began to fall, dropping below what had been the historic

low in early May with a count of 374 and continuing to

drop through the third week of August when it gained

back 10 rigs.

The Dec. 11 count includes 258 rigs targeting oil, up

12 from the previous week but down 409 from 667 a

year ago, 79 rigs targeting gas, up by four from the pre-

vious week but down 50 from 129 a year ago, and one

miscellaneous rig, down by one from the previous week

and down two from a year ago.

Seventeen of the holes were directional, 306 were

horizontal and 15 were vertical.

Alaska count unchanged Texas, with the most active rigs at 155, was up six

from the previous week, although still down 245 from

400 a year ago.

Wyoming (5) was up by four rigs from the previous

week; Pennsylvania (19) was up by two rigs.

New Mexico (60), Ohio (5) and Oklahoma (14) were

each up by a single rig from the previous week.

Rig counts were unchanged in the remaining states:

Alaska (3), California (6), Colorado (7), Louisiana (40),

North Dakota (11), Utah (3) and West Virginia (9).

Baker Hughes shows Alaska with three active rigs

Dec. 11, unchanged from the previous week but down by

three from a year ago.

The rig count in the Permian, the most active basin in

the country, was up by four from the previous week at

168, but down 232 from a count of 400 a year ago.

International count up Baker Hughes released its international count for

November on Dec. 4.

The international count averaged 669, up by 13 rigs

from the October average, with land rigs up seven to 509

and offshore rigs up six to 160.

The company said the international average rig count

for November is down 427 from 1,096 last year — with

land rigs down 340 and offshore rigs down 87.

The U.S. rig count averaged 310 in November, up 30

from the October average and down 500 year-over-year.

The average Canada rig count was 95 in November,

up from 80 in October and down 41 year-over-year.

The worldwide count for November (international

and North America combined) averaged 1,074, up 58

from October and down 968 from 2,042 in November

2019. l

Conditional approval RCA rules on Harvest Alaska acquisition of BP Pipelines (Alaska)

Oil makes steady price Various factors drive ANS, Brent above $50 for week

Conveyor belt of prospects Oil Search: Alaska North Slope ideal for climate change transition

ON THE COVER

No, thanks! to red-lining banks: governor slams anti-Arctic bias

ANS production, prices, down this year; volumes to rise long termTrudeau rolls out carbon tax of C$170 per metric ton by 2030Suits ask injunctions to block Coastal Plain lease sale, seismic

ENVIRONMENT & SAFETY6 Hilcorp has Trading Bay slop oil release

2 US drilling rig count jumps 15 to 338EXPLORATION & PRODUCTION

6 RCA continues drafting ERO regulations Ensuring balance in governance over management of Railbelt electrical system requires careful wording of certification rules

3 Whitecap rides waves of change Moves into ranks of Canada’s top 10 publicly traded oil and gas companies with takeover of Torc Oil & Gas

UTILITIES8 Congress approves more US icebreakers

7 KIC seismic environmental assessment out8 State of Alaska approves Jade 3rd POD

GOVERNMENT

FINANCE & ECONOMY

3 State approves PA expansion at Kuparuk Expansion at Kuparuk River unit is 13th for participating area, currently 194,428 acres, will grow by 3,360 to 197,788 acres

4 ConocoPhillips gets OK on Colville projects State of Alaska OKs CRU unit amendments to install temporary camp on Kuukpik pad, erect drilling support office on CD1 pad

http://www.sourdoughexpress.com

By GARY PARK For Petroleum News

Whitecap Resources is pullingz out the stops to bolster its position in the ranks of Canada’s mid-sized oil and

natural gas producers, opting for

takeovers rather than organic growth.

In its biggest strike yet, Whitecap is

buying Torc Oil & Gas in a C$565 mil-

lion all-stock deal, while assuming debt

estimated at C$335 million.

Once the transaction closes early in

2021, Whitecap estimates it will pump

out 100,000 barrels of mostly light-grade

oil equivalent per day

The deal comes four months after the

company announced it was acquiring pri-

vately held NAL Resources for C$155

million to gain output of 27,000 boe per

day.

“We believe this is a good time for

consolidation,” said Whitecap Chief

Executive Officer Grant Fagerheim.

“We believe sale and size does mat-

ter,” he said. “If you are not advancing or

growing you are regressing.”

Completion of the takeover will make

Whitecap the ninth largest publicly traded

oil and gas company in Canada, with an

enterprise value of about C$4 billion.

Cody Kwong of Stifel FirstEnergy

said that by rounding up Torc and NAL,

Whitecap will gain more attention from

investors by positioning itself as a “con-

solidator of choice.”

“You’re in an M&A market that favors

a buyer. It’s a lot more efficient to add

barrels through acquisition than it is to do

it on an organic basis by drilling,” he said.

“If the M&A market is hot for you,

you don’t want to just nibble at the edges

if there’s an opportunity. You want to

make a big sting when you can.”

Jeremy McCrea, an analyst at

Raymond James, said that as many com-

panies seek buyers because of their heavy

debt loads and constrained investment

capital, the market is rewarding mergers

that bring together well-run companies in

no need of rescue.

In order to attract more attention “so

that you can get access to outside equity”

companies must pursue size, he suggested.

Companies good fit Whitecap and Torc present an ideal fit,

with Torc’s oil operations in southeastern

Saskatchewan and west-central Alberta

having a 92% overlap with Whitecap.

Torc’s major shareholder with a 29%

stake is the Canadian Pension Plan

Investment Board, which manages C$456

billion in contributions from workers and

employers.

The buying opportunities have grown

with word from Imperial Oil (69.6%

owned by ExxonMobil) that it is writing

down up to C$1.2 billion of mostly oil

sands assets it never expects to develop,

while it concentrates on natural gas

prospects that are rich in petroleum liq-

uids.

That moves comes after France’s Total

said earlier this year it was taking a US$8

billion impairment on the value of its

mainly Canadian oil sands holdings.

Canadian Natural Resources, which

acquired debt-laden Painted Pony Energy

for C$461 million earlier this year, said it

plans to hike its capital budget to C$3.2

billion in 2021 (up C$500 million from

2020), and boost output by 5% or 62,000

boe per day to 1.23 million boe per day.

Canadian Natural Resources President

Tim McKay said that “as COVID-19

works through the system we will see

what the demand does to pricing. If we

see shipping opportunities (Enbridge’s

Line 3 and the Trans Mountain expansion

in 2022) come to fruition in terms of

egress (to the U.S. and Asia) and pricing

we are nimble enough to adjust.”

With its inventory of longer-life assets

Canadian Natural said it has near- and

mid-term growth potential to add

245,000-285,000 boe per day.

Production in Alberta is forecast to dip

by 250,000 bpd this year, reflecting shut-

ins following the spring price collapse,

but is expected to rebound by 7% in 2021

to 3.5 million bpd. l

PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020 3

®Providing integrated environmental and engineering solutions for the oil and gas industryRick Farrand (907) 343-2705

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

State approves PA expansion at Kuparuk Expansion at Kuparuk River unit is 13th for participating area, currently 194,428 acres, will grow by 3,360 to 197,788 acres

By KRISTEN NELSON Petroleum News

T he Alaska Department of Natural Resources’ Division of Oil and Gas has approved the 13th expansion of the Kuparuk participating area at the Kuparuk River unit on the

North Slope.

ConocoPhillips Alaska, the Kuparuk unit operator,

applied for the expansion in June. Prior to that the Kuparuk

PA was 194,428 acres. With the 3,360-acre addition, there

are now 197,788 acres in the PA.

The Kuparuk PA is the largest at the Kuparuk River unit.

Others are Meltwater, Tabasco, Tarn, West Sak and NEWS.

In its application the company said confidential informa-

tion included showed the 13th expansion area “is reasonably

estimated to be capable of producing or contributing to the

production of oil in paying quantities.”

The division agreed, approving the expansion Dec. 14.

The decision, signed by Director Tom Stokes, included a

brief history of the Kuparuk River oil pool, which was dis-

covered at the Sinclair Ugnu No. 1 well in 1969.

“In terms of area, this pool is the second largest on the

Arctic Slope of Alaska, occupying approximately 500

square miles,” and is defined as the accumulation of oil com-

mon to and correlated with the accumulation found in the

ARCO West Sak River State No. 1 between measured

depths of 6,474 and 6,800 feet, the division said.

Production from the Kuparuk PA began in December

1981 and peaked in 1992 at an average of 324,000 barrels

per day. In 2019, daily production from the KPA averaged

73,000 bpd, with cumulative production from the KPA of

more than 2.5 billion barrels of oil.

The KPA has been expanded 12 times “as drilling and

advancing technology has continued to expand the produc-

tive margins of the field,” the division said.

The acreage proposed for the 13th expansion is in two

areas along the western periphery within the unit — the

northern area, some 2,880 acres, between existing Kuparuk

drill sites 3G and 3S (Palm) and the southern area, some 480

acres, west of drill sites 2A and 2T.

Recent development The division said ConocoPhillips Alaska has, in addition

to infill drilling, “expended resources acquiring new and re-

interpreting existing seismic data to better delineate and

expand development along the periphery of the existing

developed Kuparuk reservoir.” This activity, along with

advances in drilling technologies, “have enabled CPAI to

detect and develop thinner net pay intervals found along the

margins of the reservoir.”

The 3S-08 well, drilled in 2003 between the 3S and 3G

drill sites, confirmed sands in both Kuparuk A and C inter-

vals, “but was sidetracked to another location prior to com-

pletion.”

The company drilled and completed the 3G-28, a produc-

er, and the 3G-27, an injector — both horizontal wells,

“directly south of the original 3G-08 well in State Lease

ADL 25546,” the division said. The initial peak oil rate from

3G-28 exceeded 2,700 bpd in September 2019; currently the

well is producing some 700 bpd.

“Since 3G-27 and 3G-28 are currently outside the exist-

ing KPA, they are both operated as Unit Tract Operations

until the KPA is expanded to include them.” Results of the

wells “demonstrate that a productive reservoir is present,

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

Whitecap rides waves of change Moves into ranks of Canada’s top 10 publicly traded oil and gas companies with takeover of Torc Oil & Gas in C$900 million deal

see PA EXPANSION page 4

http://www.lounsburyinc.comhttp://www.westonsolutions.com

4 PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020

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

OWNER: Petroleum Newspapers of Alaska LLC (PNA) Petroleum News (ISSN 1544-3612) • Vol. 25, No. 51 • Week of December 20, 2020

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

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

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

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Kay Cashman PUBLISHER & FOUNDER

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Kristen Nelson EDITOR-IN-CHIEF

Susan Crane ADVERTISING DIRECTOR

Heather Yates BOOKKEEPER

Marti Reeve SPECIAL PUBLICATIONS DIRECTOR

Steven Merritt PRODUCTION DIRECTOR

Alan Bailey CONTRIBUTING WRITER

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Renee Garbutt CIRCULATION MANAGER

ANWR: No Seismic? No Problem.

Learn about an alternative land valuation strategy using our proprietary modeling system

for undiscovered oil.

Explore a demo scenario in the ANWR 1002 Area here: https://bit.ly/3m0EBok

Contact: Erik Anderson

eanderson@quantitativefrontier.com Cell: (781) 307-5448

CORRECTIONW. Harrison Bay application filed in July

In the Sept. 6 and Sept. 13 issues of Petroleum News the filing date for the

West Harrison Bay unit application was given as June 27. On Dec. 10 Alaska’s

Division on Oil and Gas posted an Errata 1 item on its website, correcting the date

in its records from June 27 to July 27.

and in conjunction with updated mapping,

support the interpretation that a sufficient

resource is present to support drilling addi-

tional wells in the future within the proposed

northern expansion area,” the division said.

In the smaller, southern expansion area,

ConocoPhillips used a CTD rig to drill and

complete horizontal production lateral wells

2A-22A and 2A-22AL1 within a portion of

lease ADL 25571 outside the current KPL

boundary. Those two wells currently pro-

duce a combined rate of some 230 bpd. In

2018 the company drilled and completed

two CTD horizontal production lateral well-

bores from the existing Kuparuk 2T-37

wells in lease ADL 25568, one of which, 2T-

37L1-01, “extends, and is producing, from

beyond the current KPA boundary.”

The division said the southern portion of

the proposed expansion encompasses “lands

currently allocated production with an

approved tract operation.”

The division said it found that the 13th

expansion of the KRA promotes conserva-

tion of all natural resources, promotes pre-

vention of economic and physical waste and

provides for the protection of all parties of

interest, including the state. l

continued from page 3

PA EXPANSION

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

ConocoPhillips gets OK on Colville projects State of Alaska OKs CRU unit amendments to install temporary camp on Kuukpik pad and erect drilling support office on CD1 pad

By KAY CASHMAN Petroleum News

O n Dec. 9 and Dec. 10 Alaska’s Division of Oil and Gas approved Colville River unit plan of opera-tions amendments allowing operator ConocoPhillips to

install a temporary camp on the Kuukpik pad and erect a

permanent drilling support office on Colville Delta No.

1 pad, or CD1 pad. The new infrastructure will support

western North Slope oil and gas operations and activities

with work on both projects beginning soon.

The personnel camp and its supporting infrastructure

will be used for less than 12 months, with all the work per-

formed on the Kuukpik pad, which is in the North Slope

Brough Resource Development District on surface land

owned by Kuukpik Corp. Work will begin on Jan. 15.

The camp and its infrastructure will support activities

at CD1, CD2, CD3, CD4 and CD5 pads and consist of

“multiple modules, including personnel camps, offices,

water modules, waste modules, connector modules, con-

trol modules, smoke shacks, rec/lounge module, facili-

ties, connexes, equipment shops and storage facilities,”

per ConocoPhillips’ Dec. 4 application. Generators and

supporting diesel fuel tanks will also be located within a

generator module in the vicinity of the camp. Both the

generator modules and the waste/water tank modules

will be placed in secondary containment.

Erection of the drilling office on the CD1 pad, which

was applied for on Nov. 20, is scheduled to start imme-

diately and be completed by March

31. It will remain on the pad until

the end of field life.

The office will be placed on a

timber foundation and power con-

nected by trenching to the Remote

Electronic Instrumentation Module,

or REIM, in the nearby Titan Tent.

The trench to install the electri-

cal cables will measure approxi-

mately four feet in width, five feet

in depth, and 150 feet in length. The materials excavated

from the trench will be used as backfill after the electri-

cal cables are installed. Stairs, walkways, mobile bull

rails, and jersey barriers will also be installed as part of

the project.

CD1 is approximately eight miles north of Nuiqsut on

a state of Alaska lease.

Drilling activities planned ConocoPhillips Alaska President Joe Marushack said

Nov. 18 that in the wake of the defeat of Ballot Measure

1 and a stabilization of oil prices in the $40 range, the

company expects to restart drilling projects on the North

Slope beginning in mid-December, pending corporate

budget approvals.

The following activities are planned:

• Start up Doyon Rig 25 before year end 2020 to

resume the drilling that was halted at CD5 in April due

to COVID-19.

• To begin 2021, Doyon 25 will move from CD5 to

drill at GMT2. “We will start drilling there in the first

half of 2021 with first oil planned in the fourth quarter.

GMT2 will require an additional 35 miles of ice roads,

100-acre ice pad, and a 3-acre multi-season ice pad

which will be built starting in January,” Marushack said.

• A 25-day turnaround at Alpine in July 2021 “which

will allow us to execute the Alpine Brownfield expan-

sion projects that include the Slug Catcher, Gas

Expansion and Power Expansion.”

• In the second half of 2021, commission and start-up

the new build extended reach drilling rig, Doyon 26 (also

known as the Beast), which will begin drilling the Fiord

West field from the Alpine CD2 drill site.

• Also, in the second half of 2021, drilling in the

Kuparuk River unit will restart. “We are planning on

bringing a coiled tubing drilling rig back to the field, as

well as a rotary rig workover program.”

Marushack also said Prudhoe Bay unit activity “is

dependent on reaching a consensus with the major work-

ing interest owners. That discussion is still under way.”

More on Fiord West The CD2 pad was extended to 12 acres to accommo-

date the big ERD rig and development.

Other drilling rigs do not have the capability to access

JOE MARUSHACK

see COLVILLE PROJECTS page 6

http://www.nalcochampion.comhttp://www.petroleumnews.com

PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020 5

Welcome to Alaska Mr. Gardes

Acuren

AES Electric Supply, Inc

Afognak Leasing LLC

Ahtna, Inc.

Airport Equipment Rentals

Alaska Dreams

Alaska Frontier Constructors (AFC)

Alaska Fuel Services

Alaska Marine Lines

Alaska Materials

Alaska Railroad

Alaska Steel Co.

Alaska Tent & Tarp

Alaska Textiles

Alaska West Express

Arctic Controls

ARCTOS Alaska, Division of NORTECH

Armstrong

AT&T

Avalon Development

Bombay Deluxe

BrandSafway Services

Brooks Range Supply

C & R Pipe and Steel

Calista Corp.

ChampionX

Chosen Construction

Colville Inc.

Computing Alternatives

CONAM Construction

CTG

Cruz Construction

Denali Universal Services (DUS)

Doyon Anvil

Doyon Associated

Doyon Drilling

Doyon, Limited

EEIS Consulting Engineers, Inc.

Egli Air Haul

exp Energy Services

F. R. Bell & Associates, Inc.

Flowline Alaska

Frost Engineering Service Co. – NW

Fugro

GCI

GMW Fire Protection

Greer Tank & Welding

Guess & Rudd, PC

HDR Engineering, Inc.

ICE Services, Inc.

Inlet Energy

Inspirations

Judy Patrick Photography

Little Red Services, Inc. (LRS)

LONG Building Technologies

Lounsbury & Associates

Lynden Air Cargo

Lynden Air Freight

Lynden Inc.

Lynden International

Lynden Logistics

Lynden Transport

Maritime Helicopters

Nabors Alaska Drilling

NANA Worley

NEI Fluid Technology

Nordic Calista

North Slope Borough

North Slope Telecom

Northern Air Cargo

NRC Alaska, a US Ecology Co.

Oil Search

PND Engineers, Inc.

PRA (Petrotechnical Resources of Alaska)

Price Gregory International

Raven Alaska – Jon Adler

Resource Development Council

SeaTac Marine Services

Security Aviation

Shoreside Petroleum

Soloy Helicopters

Sourdough Express

Strategic Action Associates

Tanks-A-Lot

Weston Solutions

Wolfpack Land Co.

Alaskans welcome Bob Gardes of Gardes Holdings to Alaska’s Cook Inlet basin as the soon-to-be new operator of the North Fork unit.

We hope this and the other acquisitions you are negotiating

will prove fruitful.

Bob Gardes

By ALAN BAILEY For Petroleum News

Work is still in progress in developing proposed regulations for the certifi-cation and governance of electric reliability

organizations in Alaska, Regulatory

Commission of Alaska Commissioner

Antony Scott told a public meeting of the

RCA on Dec. 9. The immediate purpose of

allowing ERO certification is to enable the

formation of an ERO for the Alaska

Railbelt electrical system, to enable more

unified management and planning for the

system. Ultimately, the expectation is to

minimize the cost of electricity for con-

sumers within acceptable levels of power

supply reliability.

The Railbelt utilities are in the process of

forming the Railbelt Reliability Council, or

RRC, to become an ERO for the Railbelt.

However, clarity is needed over the criteria

that the RRC needs to meet, to achieve cer-

tification. Governance and the structure of

an ERO board of directors is a particularly

difficult issue, given the importance of bal-

ancing the needs of various stakeholders,

including electricity consumers, electric

utilities and independent power producers.

Scott commented on the length of time

that it is taking to develop the regulations,

which are designed to enable the implemen-

tation of Senate Bill 123, a bill passed this

year to enable the formation of EROs in

Alaska. He talked about some modifica-

tions made to an earlier draft of the regula-

tions and encouraged members of the pub-

lic to comment on the concepts and word-

ing in the latest regulation draft. However,

he emphasized that the regulations are not

yet complete and have not yet reached the

stage of being published as proposed regu-

lations. The regulations have yet to be

reviewed by the state attorney general.

ERO responsibilities Scott emphasized that an ERO does not

directly supply services that are consumed

and is not, therefore, a utility that would

operate under a conventional certificate of

public convenience and necessity. An ERO

certificate would encompass ERO responsi-

bilities, which, in the latest draft of the reg-

ulations, would consist of the development

and enforcement of reliability standards for

the electrical system and for interconnec-

tion and non-discriminatory access to the

system; and the development of integrated

resource plans for the system.

There has been a suggestion that an

ERO could also administer an open access

tariff for the transmission system. But,

although the commission recognizes that,

given the small size of the Railbelt system,

there is an argument for cost efficiency by

including this function within an ERO, the

current regulation draft excludes this from

the scope of ERO responsibilities. If the

ERO’s role is to enforce standards, the ERO

should not at the same time be conducting

operations subject to the standards that it

enforces, Scott commented.

Another question revolves around

whether the ERO should have responsibili-

ty for oversight of economic dispatch

across the electrical system. Economic dis-

patch involves the continuous use of the

most efficient available power generation

capability. While the Southcentral Alaska

utilities are already in the process of jointly

implementing economic dispatch across

their service areas, expanding this arrange-

ment to other Railbelt regions would

require new transmission infrastructure,

involving system developments that are

unlikely to be carried out for some years.

So, there is time to resolve the further eco-

nomic dispatch issues at some time in the

future, Scott said.

The board structure A key issue revolves around the need to

ensure that an ERO board is appropriately

structured, and that the structure remains

appropriate after the ERO is certified, tak-

ing into account changes that may happen

in the business structure of the electrical

system. The revised draft regulations envis-

age the commission reviewing the board

structure as part of the ERO certification

process. A certificate, once granted, would

expire after six years, with the ERO being

required to have its own rules for ensuring

continuation of board balance during that

six year period.

The ERO would then have to apply for

re-certification when the certificate expires,

with the possibility at that point of some

other entity competing for the certificate.

The question of what constitutes a bal-

anced ERO board, representative of the var-

ious stakeholders in the electrical system, is

particularly difficult to adjudicate. At the

risk of becoming somewhat prescriptive,

rather than giving an ERO complete free-

dom to develop its own proposals, the new

regulation draft includes, for example, spe-

cific definitions of what the RCA would

recognize as valid groups of stakeholders to

be represented on the board, and criteria for

determining whether the board is appropri-

ately balanced.

For example, the new regulations draft

requires an odd number of board members,

no ERO employee can be a director on the

board, and board votes would need to come

from directors representing at least three

stakeholder groups. An ERO applying for a

certificate must also have procedures to

ensure that board decision are technically

sound, the draft says. l

6 PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020

Holiday Savings Offer

By KAY CASHMAN Petroleum News

On Oct. 1, operator Brooks Range Petroleum Corp., or BRPC, and Finnex LLC filed the

eighth annual plan of development for the

Southern Miluveach unit on behalf of the working

interest owners with Alaska’s Division of Oil and

Gas. Sustained oil production from the unit’s

Mustang field is planned by third quarter of next

year.

The eighth POD, which will run from Jan. 1 to

Dec. 31, 2021, takes up where work in the 8,960-

acre, five-lease, unit left off in December 2019.

Note: As previously reported in Petroleum News,

on Sept. 16 the Alaska Industrial Development and

Export Authority passed a resolution approving the

negotiation and execution of a debt settlement

restructuring agreement, or DSRA, and authorized

the sale of the Mustang oil field leases to Finnex.

Finnex is the special purpose vehicle, or SPV,

page 5

l F A C I L I T I E S

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

Vol. 25, No. 40 • www.PetroleumNews.com A weekly oil & gas newspaper based in Anchorage, Alaska Week of October 4, 2020 • $2.50

August ANS down marginally; Cook Inlet production off by 2%

see INSIDER page 11

Parks redo hangs on offshore O&G; Rivalry for oil investment heats up CONSERVING NATURAL RESOURCES

has “long been tied to and directly support-

ed by oil and gas development in the United

States,” Walter Cruickshank, Ph.D., acting

director of Interior’s Bureau of Ocean

Energy Management, wrote in a recent

release.

“This may seem counterintuitive to some,

but offshore energy development revenues

from qualified leases go right back into conservation initia-

tives throughout the United States via the Land and Water

Conservation Fund,” Cruickshank said in the story, which

was first published by The Vindicator.

Established in 1964, the LWCF supports federal, state and local land, water and wetlands purchases to expand public

access to public lands, “so more Americans can experience

see ICEBREAKER page 11

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

Russia’s new nuclear icebreaker completed, heads to Murmansk Construction of the Arktika, Russia’s newest nuclear ice-

breaker, has been completed and the vessel is heading from St. Petersburg to Murmansk, according to Rosatom State Atomic Energy Corp. Russia claims that the new vessel is the world’s largest nuclear icebreaker. Rosatom reports that the vessel is 173 meters in length, with a displacement of 33,540 tons. Two nuclear reactors power the vessel’s propulsion system. The ves-sel is the first of a series of four similar icebreakers, planned to

be built in a program referred to as “project 22220.”

The Barents Observer has reported that one of the vessel’s three electrical propulsion engines is broken and will need to be

replaced.

Russia’s particular focus is the operation of the Northern Sea route, the Arctic route around the north of the country, linking the Baltic Sea with South Korea and the north Pacific. With the continuing shrinkage of the Arctic sea ice extent and thinning of the ice, there is international interest in the potential for opening

Vol. 25, No. 2 October 2020

ArcticArcticCovering Arctic oil and gas operations and the logistics, construction and service firms that support them

Oil & Gas DirectoryOil & Gas Directory

Latest Arctic Directory released

BlueCrest’s 7th POD Maintain production; trident fishbone well on hold until prices firm up

By STEVE SUTHERLIN Petroleum News

BlueCrest Alaska Operating LLC will implement well work in order to main-

tain production under its seventh plan of

development for the Cosmopolitan unit, in

effect from Jan. 1, 2021, through Dec. 31,

2021.

In a Sept. 25 letter to the Alaska

Department of Natural Resources Division

of Oil and Gas, BlueCrest said plans in its sixth POD

to drill at least one trident fishbone well in 2020,

which were delayed due to COVID-19 oil market

disruptions, will remain on hold for 2021 “until the

current market environment improves.”

Each trident fishbone well, built on the

company’s success with its single fishbone

wells, will “provide the same amount of

reservoir contact as 21-27 individual

wells.” J. Benjamin Johnson, BlueCrest

Energy CEO and president told Petroleum

News in 2019.

A complete well plan stands ready for

the company’s proposed H10 trident well,

Johnson said in a Sept. 29 interview.

“It’s on indefinite hold. We’re ready to

go but we’re waiting to have some confidence in oil

prices,” he said. “It’s a moving target; the oil prices

are down but costs have also come down.”

The company said the pause in drilling has

Trump bolsters A2A Says will issue presidential permit for Alaska-to-Alberta import and export line

By GARY PARK For Petroleum News

From the time it was floated five years ago, the lat-est version of an Alaska-Alberta rail link has

been openly scorned by many and quietly given the

brush off by others.

For 130 years, various proposals have been made

for such a project to bolster imports and exports in

Alaska and Western Canada and have just as quickly

evaporated in the absence of financial backers.

But the idea keeps resurfacing as a serious plan to

move oil and other resources to and from the Pacific

Basin through Alaska.

The current proposal involves a venture by the

Alaska to Alberta Railway Development Corp., A2A.

In mid-2019 A2A announced it had reached an

agreement with the Alaska Railroad Corp. to develop

a joint operating plan to upgrade and extend the 515-

mile Alaska Railroad mainline between Seward and

North Pole.

Apparently the mega-undertaking has attracted

the attention of President Donald Trump, who

announced on Sept. 25 that he would issue a presi-

dential permit for the A2A project, a permit which the

president signed Sept. 28.

The plan involves building a 1,600-mile track

linking Anchorage, the Yukon, the Northwest

Territories and northern Alberta at a current cost esti-

mate of C$22 billion, with Alberta’s oil sands bitu-

men exports being carried by rail to Interior Alaska,

see MUSTANG PLAN page 9

see BLUECREST page 10

see A2A RAILWAY page 10

J. BENJAMIN JOHNSON

Mustang plan filed Oil production from the North Slope Southern Miluveach unit to start 3Q 2021

BRPC/Finnex said the Mustang project lost a year in its planned development schedule, “but the project remains fundamentally sound and (capable) of being brought to fruition.”

A special offer from Petroleum News!

Purchase a one year Petroleum News subscrip�on, and receive a gi� subscrip�on for just $1! Sign up today! CONTACT Renee Garbutt I 281-978-2771 rgarbutt@petroleumnews.com (Gift subscriptions must be used toward new subscribers. Special offer ends Dec. 31)

Fiord West without building a new

gravel pad, additional pipelines and

more roads, which would increase the

development footprint in an environ-

mentally sensitive area.

About 65 Doyon employees will

work on Rig 26. Workers will also be

needed for camps, transport and other

oilfield support services, ConocoPhillips

said. l

continued from page 4

COLVILLE PROJECTS

l U T I L I T I E S

RCA continues drafting ERO regulations Ensuring balance in governance over management of the Railbelt electrical system requires careful wording of certification rules

ENVIRONMENT & SAFETYHilcorp has Trading Bay slop oil release

The Alaska Department of Environmental Conservation reported Dec. 16 that

Hilcorp Alaska discovered a slop oil release at its Trading Bay Production Facility on

Dec. 15.

The product spilled, slop oil, consists of 80% crude oil and 20% water.

“Slop oil is defined as crude oil emulsified with water and solids rendering it a

waste stream that cannot be sold down the pipeline,” DEC said.

The release was 190 barrels from a leak in an underground line in the slop oil pro-

cessing system.

During a transfer of slop oil from Tank 4 to the slop oil tank, TK-9500, the operator

noticed that the tank level in the TK-9500 tank was not increasing proportionately to

see OIL RELEASE page 8

http://www.petroleumnews.com

By STEVE SUTHERLIN Petroleum News

T he U.S. Department of the Interior Bureau of Land Management has released the environmental assessment of

the application from Kaktovik Inupiat

Corp. to conduct seismic exploration within

the Coastal Plain of the Arctic National

Wildlife Refuge, according to a notice filed

Dec. 16 in the Federal Register.

The Marsh Creek East 3D survey is pro-

posed for the 2020-21 winter season, to

encompass approximately 350,000 acres of

private Alaska Native corporation and fed-

erally managed public lands in the eastern

portion of the ANWR 1002 Area.

BLM said public scoping for the appli-

cation and plan of operations generated

more than 100,000 comment submissions,

which were considered in the analysis.

Federal, state and tribal partners provid-

ed substantial input, said BLM Alaska State

Director Chad Padgett, adding, “It’s impor-

tant that we are responsive to our commu-

nity’s needs while providing a responsible

path forward for economic opportunities for

our North Slope communities.”

Seismic exploration over the last 12

years in the National Petroleum Reserve

Alaska and Cook Inlet — including lands

within the Kenai National Wildlife Refuge

— was analyzed through environmental

assessments, which determined there would

only be minimal impacts, BLM said.

“Modern seismic techniques in the

Arctic are well understood and have

evolved to include technologies and prac-

tices that minimize impacts” said BLM

Arctic District Manager Shelly Jones.

“These techniques continue to be success-

fully used in the National Petroleum

Reserve in Alaska, an environment similar

to the Coastal Plain, with no significant

impacts, including to wildlife, subsistence

or vegetation.”

SAE to conduct survey The proposed seismic exploration, spon-

sored by KIC, would be conducted by third-

party acquisition company SAExploration

Inc.

Surveys would begin when frost and

snow cover are at sufficient depths to pro-

tect tundra and would continue through the

winter season until tundra travel has been

closed, the assessment said. Mobilization to

the project area would begin in January,

after forward looking infrared radar surveys

had been conducted to detect polar bear den

sites.

Known polar bear den sites would be

avoided with a 1-mile buffer in all direc-

tions from the beginning of operations

through April or until a female with cubs

abandons an area.

A polar bear awareness training project

will be provided to all workers prior to the

start of operations, and polar bear aware-

ness refresher briefings will be a part of reg-

ular safety briefings.

BLM said the program area is little used

by overwintering caribou overall, so direct

impacts during winter activities would like-

ly be negligible. Summer cleanup activities

will be shifted to late summer to avoid cari-

bou calving times.

KIC has commissioned a cultural

resource study of historic and cultural

resources in the project area, the assessment

said. A licensed archaeologist will work

with the North Slope Borough, State of

Alaska and the refuge manager to review

existing records of all known existing cul-

tural studies in the project area. All cultural

or historic sites would be avoided and have

500-foot non-activity zone buffers placed

around them.

The Tax Cuts and Jobs Act of 2017

directed the secretary of the Interior,

through BLM, to establish and administer a

competitive program for the leasing, devel-

opment, production, and transportation of

oil and gas in and from the Coastal Plain.

The act also directed BLM to issue any

rights of way across the Coastal Plain for

exploration, development, and/or produc-

tion, including seismic exploration activi-

ties.

The EA and draft finding of no new sig-

nificant impact are available for a 14-day

review period, at:

https://eplanning.blm.gov/eplanning-

ui/project/2003258/510. l

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

KIC seismic environmental assessment out BLM EA finds no significant impact for Marsh Creek East 3D in ANWR 1002 Area proposed by Kaktovik Inupiat Corp. for this winter

PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020 7

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8 PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020

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

State of Alaska approves Jade 3rd POD Independent gets go ahead on latest annual plan of development for drilling Sourdough prospect in Point Thomson Area F, Tract 32

By KAY CASHMAN Petroleum News

O n Dec. 14, Alaska’s Division of Oil and Gas approved Jade Energy’s third plan of development for Area F, Tract 32, of the Point Thomson unit, which con-

tains BP’s mid-1990s Sourdough oil discovery where Jade

plans to drill an appraisal well in first quarter 2022.

The 2012 Point Thomson Unit Settlement Agreement

between the State of Alaska and certain Point Thomson

Unit working interest owners, including operator

ExxonMobil, required a separate plan of development for

Area F by Dec. 31, 2018. The settling working interest

owners were also required to maintain approved plans of

development for this area or relinquish the Area F acreage.

Independent Jade acquired a portion of working interest

in ADL 343112, a portion of but not the entire Area F, in

2018 and submitted a POD for that lease by Dec. 31 of that

year. Jade is not a party to the Point Thomson settlement

agreement, but the division determined that the POD it sub-

mitted satisfied the settling working

interest owner’s obligation to pro-

vide an Area F POD.

Jade’s plans for the 2020 POD

consisted of seismic data evaluation,

well design and permitting for

drilling in the winter of 2021-22,

conducting a bathymetric survey and

dredging the Point Thomson service

pier approach. These activities were

conducted, including the bathymetric

survey, however dredging was not attempted.

Jade’s plans for the 2021 POD include:

• Equipment and materials mobilization by snow trail to

Point Thomson in first quarter.

• Permitting for 2021-22 winter drilling.

• Mobilization planning to Point Thomson.

• Third bathymetric survey of the service pier

• Service pier approach dredging.

• Rig mobilization by barge to Point Thomson

“Plans beyond the next 12 month period remain to drill

a well to explore the Brookian interval. Drilling will likely

begin in early 2022,” the division said in its approval.

The decision is only for a general plan of development.

Specific field operations require separate approval in a Unit

Plan of Operations.

The 2022 POD is due Oct. 2, 2021, 90 days before the

2021 POD expires.

Erik Opstad, who oversees Jade’s operations in Alaska

and is a 50% owner, is a State of Alaska certified profes-

sional geologist who has worked the North Slope for 35

years, including a stint with BP in various roles and as a

principal and general manager of Savant Alaska. He cur-

rently heads up operating subsidiaries of 88 Energy in

Alaska.

See related story in the Nov. 8 issue of Petroleum

News. l

ERIK OPSTAD

l G O V E R N M E N T

Congress approves more US icebreakers Statute approves funding for construction of a second Coast Guard icebreaker, contracts for eventual construction of six vessels

By ALAN BAILEY For Petroleum News

T he Coast Guard Reauthorization Act, recently passed by Congress, includes provisions to continue the con-struction of new Coast Guard icebreakers, referred to as

polar security cutters. In 2018 Congress approved the even-

tual construction of six polar-class icebreakers, and in 2019

approved funding for the construction of the first of the ves-

sels. Currently the Coast Guard only operates two polar

capable icebreakers: the Healy, a medium duty icebreaker,

much used as a base for polar research, and the Polar Star,

which is a heavy icebreaker but is nearing the end of its

operational life.

The icebreaker construction program comes in the con-

text of Coast Guard concerns regarding its technical capa-

bility to fully conduct its role in a dynamic Arctic region.

Statute provisions The new legislation authorizes $745 million for the con-

struction of a second icebreaker, while maintaining the

existing contract for the first three of the new icebreakers

and authorizing the award of contracts for the construction

of the remaining three icebreakers, according to a press

release from U.S. Sen. Dan Sullivan, a co-author of the leg-

islation. Construction of the first of the icebreakers is

expected to start in 2021. Sullivan has been a strong advo-

cate for icebreaker construction.

U.S. Sen. Lisa Murkowski has also been an ardent sup-

porter of the icebreaker program.

“As a member of the Senate Appropriations Committee,

I have worked aggressively to help secure a robust fleet of

polar security cutters to meet our nation’s needs in the

Arctic, to protect our interests in the region, and to strength-

en our national security,” Murkowski said in a Dec. 13

release. “I’m proud of the progress that we have made to

help the U.S. strengthen its capacity and presence in the

Arctic as other Arctic and non-Arctic nations expand

theirs.”

Center for Arctic security studies The Coast Guard Reauthorization Act came as part of

the National Defense Authorization Act for Fiscal Year

2021. The National Defense Authorization Act also

includes a provision to form the Ted Stevens Center for

Arctic Security Studies, the first Department of Defense

regional center in the Arctic. The center will support

defense strategy objectives and policy priorities through a

“unique academic forum,” while also fostering strong inter-

national networks of security leaders, according to a release

by the Alaska Congressional Delegation. The specific loca-

tion of the center has yet to be determined.

“My friend, our late Sen. Ted Stevens, was not only a

steadfast advocate for Alaska, but he also fully recognized

the strategic importance of the Arctic to America's national

security,” said Congressman Don Young. “Establishing the

Ted Stevens Arctic Center for Security Studies has been one

of my highest priorities, and I am proud that our delega-

tion has always fought for its creation.” l

The icebreaker construction program comes in the context of Coast Guard concerns regarding its technical capability to fully conduct its role

in a dynamic Arctic region.

the decrease in the level in Tank 4.

After visual inspection the operator

observed oil under and around the edges of

the secondary containment liner. DEC said

upon discovering the leak the operator

immediately isolated tank TK-9500 and the

leaking line.

Nine Hilcorp personnel are on site

recovering the slop oil, DEC said, with 15

barrels recovered Dec. 15. Cook Inlet Spill

Prevention and Response has been activat-

ed to assist and is mobilizing personnel and

equipment to the site, DEC said.

Hilcorp and CISPRI personnel were

expected to fly out to the facility the after-

noon of Dec. 16 to assist the nine operators

already on site.

“Initial recovery will be conducted by

cutting the liner at the low spots to enable

suctioning out product above and below

the liner,” DEC said, with response, sam-

pling and waste disposal to be coordinated

with Hilcorp, DEC and the U.S. Coast

Guard.

—PETROLEUM NEWS

continued from page 6

OIL RELEASE

http://www.nanaworleyparsons.com

PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020 9

Oil Patch Bits

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

Companies involved in Alaska’s oil and gas industry

A Acuren AES Electric Supply, Inc Afognak Leasing LLC Ahtna, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Airport Equipment Rentals Alaska Dreams Alaska Frontier Constructors (AFC) Alaska Fuel Services Alaska Marine Lines Alaska Materials Alaska Railroad Alaska Steel Co. Alaska Tent & Tarp Alaska Textiles Alaska West Express Arctic Controls ARCTOS Alaska, Division of NORTECH Armstrong AT&T Avalon Development

B-F Bombay Deluxe BrandSafway Services Brooks Range Supply C & R Pipe and Steel Calista Corp. ChampionX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Chosen Construction Colville Inc. Computing Alternatives

CONAM Construction Cruz Construction Denali Universal Services (DUS) Doyon Anvil Doyon Associated Doyon Drilling Doyon, Limited EEIS Consulting Engineers, Inc. Egli Air Haul exp Energy Services F. R. Bell & Associates, Inc. Flowline Alaska Frost Engineering Service Co. – NW Fugro

G-M GCI GMW Fire Protection Greer Tank & Welding Guess & Rudd, PC HDR Engineering, Inc. ICE Services, Inc. Inlet Energy Inspirations Judy Patrick Photography Little Red Services, Inc. (LRS) LONG Building Technologies Lounsbury & Associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Lynden Air Cargo Lynden Air Freight Lynden Inc. Lynden International Lynden Logistics

Lynden Transport Maritime Helicopters

N-P Nabors Alaska Drilling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 NANA Worley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Nature Conservancy, The NEI Fluid Technology Nordic Calista North Slope Borough . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 North Slope Telecom Northern Air Cargo NRC Alaska, a US Ecology Co. Oil Search PND Engineers, Inc. PRA (Petrotechnical Resources of Alaska) Price Gregory International

Q-Z

Raven Alaska – Jon Adler Resource Development Council SeaTac Marine Services Security Aviation Shoreside Petroleum Soloy Helicopters Sourdough Express . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Strategic Action Associates Tanks-A-Lot Weston Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Wolfpack Land Co.

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

Denali Universal Services announces new leadership Denali Universal Services said Dec. 14 that it is announcing that

Bob Kean, who has spent the last 20 years with DUS, is retiring after a long and esteemed career of both public and private serv-ice, effective Dec. 31. Kean has made significant contributions to the growth of DUS during his tenure and will continue to serve DUS and Sodexo in an advisory role. DUS wishes Kean well in his retirement and thanks him for his many contributions.

Following Kean’s departure, DUS is pleased to announce that Maria Bourne has been promoted to president, effective Jan. 1. Over the past five years as senior vice president of operations and chief financial officer, Bourne has been responsible for DUS’s finan-cial management. Her responsibilities included supervising opera-tional execution, assisting in company growth, facilitating development, and supervising internal management. Along with her Bachelor of Business Administration in accounting from the University of Alaska, Bourne is a certified public accountant and has spent over a decade in senior financial management positions. Prior to DUS, she worked at KPMG, where her work focused on auditing, advisory, and valuation services.

“I am grateful to have spent 20 years with this company and am very proud of what the DUS team has accomplished together,” said Kean. “As the future unfolds, I have great confidence that DUS is in terrific hands for future success. Maria Bourne has been prepar-ing for this and the timing is right for her to transition into the role as president of DUS.”

Bison relocate to Sitkalidak Island with Lynden’s help As reported by Lynden News Dec. 8, earlier this year the Alutiiq Tribe of Old Harbor,

Alaska, was awarded three bison bulls from Yellowstone National Park to improve the genetic diver-sity of its Sitkalidak bison herd. The catch: the bison required transport from Montana to Seattle, from Seattle to Anchorage and from Anchorage to Homer Spit. The final destination required a boat ride to Sitkalidak on Kodiak Island.

“I was informed that on special occasions Lynden Transport may transport livestock,” said Cynthia Berns, vice president of community affairs for the Old Harbor Native Corp. “So, I called Paul Friese in Anchorage.”

Paul Friese, vice president of Alaska sales for Lynden Transport, responded to the call with the usual can-do attitude. Gathering all the details, he quickly put the team in motion. Lynden driver Clay Bonty met the FedEx plane in Anchorage, carefully loaded the special 20-foot container containing the three bison and headed to Homer. “This was a very spe-cial project,” Paul says. “We were happy to be involved and assist the Alutiiq Tribe.”

The transfer was a historic moment in returning Yellowstone bison to tribal lands. These particular animals are important to tribes because they are the genetically pure descen-dants of the bison that tribal ancestors lived with. In the case of the Sitkalidak herd, the new bulls will introduce genetic diversity for herd survival.

“Our herd is managed to provide food security for our community of 230 residents and tribal members throughout the state,” Cynthia explained. “In 2017, DNA testing was con-ducted on the herd, and it was suggested that we integrate new genes into the herd for long-term health and survival.”

The bulls are settled in and doing well. For more information visit info.lynden.com/blog.

CO

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MARIA BOURNE

allow financial institutions to benefit handsomely from

Alaska’s financial activities on one hand, while working

against our interests on the other.”

Dunleavy’s action aims to put some financial teeth into

the consequences for lending discrimination across a

wide, strategically and financially important swath of the

state.

The federal Office of the Comptroller of the Currency

has put offending banks on notice that red-lining arctic or

energy lending is inconsistent with the Dodd–Frank Act

mandate.

An OCC investigation found that major banks had

indeed engaged in such discrimination during 2019 and

2020. In response, the office proposed a rule Nov. 20

directing fair access to banking services.

The Goldman Sachs Group Inc. initiated the controver-

sy in late 2019, announcing it would decline to finance any

new arctic oil exploration or development. Other major

U.S. and international banks — including JPMorgan

Chase & Co., Citigroup Inc., Wells Fargo & Co. and Swiss

bank UBS — followed with similar announcements.

Dunleavy said oil and gas exploration in the Arctic has

benefitted Alaska and the country with “thousands of jobs

and billions of dollars in revenue.”

“Alaska’s environmental standards for oil and gas

development are widely considered among the best in the

world,” Dunleavy said. “Other states, and even other

countries have reached out to the State of Alaska to learn

how to explore and produce oil and gas reserves safely and

responsibly.”

The OCC said large banks influence the price of finan-

cial services, and only the largest have the diversified bal-

ance sheets and sophisticated risk management systems to

serve certain industries.

“It is fair to place particular responsibilities on the

largest banks because their systemic importance often

results in their receiving assistance and favorable treat-

ment from the government during periods of financial dis-

tress,” the OCC said.

“If a group of financial institutions want to make a

political statement with their investment strategy, that is

their prerogative — but if Alaska does not have a robust

oil and gas industry our future is not bright,” Dunleavy

said. “It is my job to protect Alaska and its economic

future.”

—STEVE SUTHERLIN

continued from page 1

ARCTIC FINANCING“It is fair to place particular responsibilities on

the largest banks because their systemic importance often results in their receiving

assistance and favorable treatment from the government during periods of financial

distress,” the OCC said.

Contact Steve Sutherlin at ssutherlin@petroleumnews.com

10 PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020

She said the revenue forecast for fiscal year 2021 is

based on ANS crude oil prices averaging $45.32 per bar-

rel, rising to $48 for FY 2020 and — based on inflation

— reaching $57 per barrel by FY 2030.

“The oil price forecast is based on future market

prices and reflects expectations of sluggish oil demand

and ample global supply over the long term,” Mahoney

said.

Revenues from oil and gas, which powered state unre-

stricted general fund spending for years, have been sup-

planted, as production declines, by investment dollars,

primarily from the Alaska Permanent Fund. In FY 2020,

investment provided $3 billion in unrestricted funds,

66%, compared to petroleum at $1.1 billion, 24%.

(Petroleum also contributed some $600 million, 15%, to

restricted state revenues, which collectively accounted

for 48% of state revenue, $4.1 billion, compared to $4.5

billion in unrestricted.)

In the RSB, the department said petroleum revenue —

production tax, royalties, property tax and corporate

income tax — is projected to provide between 19% and

22% of unrestricted revenue over the next 10 years.

ANS price, production ANS oil prices averaged $52.12 per barrel in FY

2020. The department noted that it changed how oil

prices are forecast in 2019, with the short-term price

forecast — for the current and next fiscal year —

“derived from futures market expectations for Brent

crude.” Beyond that, “the price forecast is held constant

in real terms, increasing with inflation.”

ANS crude oil production averaged 471,800 barrels

per day in FY 2020 — a volume which excludes 10,000

bpd of natural gas liquids from Prudhoe that are sent to

Kuparuk to be used in enhanced oil recovery. Those bar-

rels, Revenue said, are counted by the Alaska Oil and

Gas Conservation Commission but are not counted by

Revenue when they are produced at Prudhoe to avoid

double counting when the barrels are ultimately pro-

duced at Kuparuk.

Production is forecast to average 477,300 bpd in FY

2021 and then decline to 439,600 bpd in FY 2022, after

which “production is forecast to stabilize and increase to

481,800 barrels per day by the end of the 10-year fore-

cast period.”

Expenditures, revenues Allowable oil and gas lease expenditures in FY 2020

were an estimated $6 billion statewide, $5.5 billion of

that on the North Slope, Revenue said. For FY 2021, the

expectation is that those will decrease to $4.3 billion

statewide, $3.9 billion on the North Slope.

Expenditures are expected to increase in FY 2022 and

FY 2023, “as activity increases at existing fields and as

companies make expected investments in new develop-

ments,” including billions to bring Pikka and Willow into

production.

ANS transportation costs averaged $8.16 per barrel in

FY 2020 and are expected to average $9.21 in FY 2021

and $9.91 in FY 2022. “Transportation costs are subtract-

ed from the ANS price to form the basis for tax and roy-

alty calculations,” Revenue said.

Total petroleum revenue — unrestricted and restricted

— was $1.7 billion in FY 2020, Revenue said, down

$915 million, 34.9%, from FY 2019, and is projected to

be $1.187 billion in FY 2021, down $518 million, 30.4%,

dropping to $1.090 billion in FY 2022, down 8.1% from

the previous fiscal year.

Production forecast In its 10-year production forecast, broken out by

North Slope fields and Cook Inlet, Revenue sees

statewide production rising from 485,300 bpd in FY

2020 to 488,900 bpd in FY 2021, dropping off to

450,900 bpd in FY 2022, and then rising to 458,200 bpd

in FY 2023, and climbing fairly steadily to 494,100 bpd

in FY 2030.

The biggest contributors to the increase by FY 2030

are fields which fall in the department’s “other” category

— projects under development and evaluation outside of

existing production areas. The list includes Alkaid,

Guitar, Narwhal, Pikka, Placer and Smith Bay. Pikka is

the largest of these currently under development. The

“other” category grows from no production in FY 2021,

to nominal volumes in FY 2022 and 2023, is estimated at

9,000 bpd for FY 2024, 23,600 bpd in FY and grows

steadily thereafter to an estimated 96,500 bpd in FY

2030.

The other large growth area is the National Petroleum

Reserve-Alaska, which includes GMT1, GMT2, Willow

and Umiat. Production is forecast at 2,200 bpd in FY

2021, growing to 19,900 bpd in FY 2023, 41,400 bpd in

FY 2024, with volumes up and down thereafter but esti-

mated at 55,000 bpd in FY 2030.

Most current producing areas have reduced produc-

tion over the 10-year period, but the Kuparuk satellites

— Meltwater, NEWS, Nuna-Torok, Tabasco, Tarn and

West Sak — estimated at 30,900 bpd in FY 2021, drop

slowly through FY 2027 and then increase to 33,600 bpd

in FY 2030.

—KRISTEN NELSON

continued from page 1

REVENUE FORECAST

while his Environment Minister Jonathan Wilkinson said

the C$170 goal has yet to be negotiated with the

provinces and territories.

“We know that Canadians understand they can no

longer be free to pollute anywhere in the country,” he said.

The tax is part of a C$15.2 billion plan to help fund

development of hydrogen, electric vehicle infrastructure

and incentives for existing industries to decarbonize their

operations.

The announcement will be followed, likely before the

end of 2020, with a Clean Fuel Standard that will stipulate

that fuel providers and refiners must reduce their GHGs

by 12% below 2016 levels by 2030, positioning Canada to

drive innovation and attract investment.

Goal 30 million tons The goal for the CFS is a 30 million metric ton reduc-

tion in carbon emissions, helping put Canada on track to

achieve its global climate goals.

On the carbon tax plan, the Canadian Association of

Petroleum Producers said it was analyzing the announce-

ment to “fully understand its implications” for the industry

It said new technologies and innovation “will play a

major role in ensuring Canada can meet its domestic emis-

sions reduction goals” while contributing to a lowering of

global carbon output “by providing lower emission natural

gas and oil to world markets.”

Tristan Goodman, president of the Explorers and

Producers Association of Canada, said Trudeau’s Dec. 11

announcement will give his mid-sized member companies

what they have been looking for — a timeline and price on

carbon taxes.

He said that stability will allow the sector to “imple-

ment some green technologies,” but he expressed some

unease about whether consumers will be able to absorb the

higher costs.

Goodman said the exemption for natural gas, as well as

other gaseous fuels, is “a wise, sensible decision” that will

prevent natural gas prices from heading “significantly

higher.”

Cost per family Trevor Tombe, an economist at the University of

Calgary, said the C$170 tax will raise the cost of fuel taxes

by 37.57 cents per liter over the next decade.

He said the tax hike would cost an Alberta family of

four C$3,200 a year, which will be rebated through quar-

terly checks or a direct deposit to bank accounts.

Tombe said that if Alberta chose to create its own car-

bon tax it would be able to use the rebate money as it saw

fit, including paying down its deficit.

Alberta Environment Minister Jason Nixon said that

ratcheting up the federal carbon tax (currently C$30 per

metric ton) is “another attack on Alberta’s economy and

Alberta’s jurisdiction” over the use and taxation of its nat-

ural resources.

He said Alberta is already making headway on pro-

grams to reduce methane emissions and promote initia-

tives to develop hydrogen and capture carbon emissions.

The Supreme Court of Canada is expected to rule soon

on a challenge by Alberta, Saskatchewan, Ontario and

Newfoundland that argues the existing federal carbon tax

is an “unconstitutional” overreach by the Trudeau govern-

ment.

If the court rules against the federal government,

Trudeau may be forced back to the drawing board on the

climate plan.

—GARY PARK

continued from page 1

CARBON TAX

Dec. 16 said that the Federal Reserve would also contin-

ue to add stimulus to the economy.

Essentially the Fed wants to see sustained inflation

above its target — before it considers ending emergency

policies. It committed to continue buying bonds until the

economy reaches full employment and inflation stays at

2%.

The Fed will continue at least $120 billion a month in

bond purchases, but it did not — as some investors were

expecting — extend the duration of the bonds.

The Fed also voted, as expected, to maintain short-term

borrowing rates near zero.

The stimulus news bolstered a rally sustained over the

past few weeks by a wave of good news on COVID-19 vac-

cine approvals, and news that the first doses of the vaccines

were being delivered throughout the United States and else-

where in the world.

The COVID-19 vaccine rally has been held in check to

an extent by concerns that increasing lockdowns due to

widespread spikes in coronavirus infections may put a

damper on demand recovery as the winter season plays out.

Most analysts in fact now do not expect vaccines to have

a major impact on the demand scenario until mid-2021.

OPEC trims demand projections World oil demand projections by the Organization of the

Petroleum Exporting Countries for 2020 held steady month

over month, according to the OPEC Monthly Oil Market

Report, published Dec. 13.

Demand was adjusted down a marginal 9.77 million bar-

rels per day from the cartel’s November assessment.

The December report was the first assessment released

by OPEC since the organization and its affiliated producing

countries, known as OPEC+, agreed to a 500,000-bpd pro-

duction increase starting on Jan.1. Rather than instituting a

scheduled increase of 2 million bpd, the group moderated

its increase due to recent slower-than projected demand

recovery.

Demand in Organization for Economic Cooperation and

Development countries was revised down 0.18 million bpd,

mainly due to lower transportation fuel demand in the

United States and OECD Europe.

OCED woes were offset by an upward revision for non-

OECD demand, of 0.16 million bpd.

A surprising pop in oil demand from China — staging

steady recovery in various economic sectors — and a bit of

demand pull from India support the rising assessment.

Total oil demand is estimated to reach 89.99 million bpd

in 2020.

For 2021, world oil demand growth is revised lower by

0.35 million bpd, to growth of 5.90 million bpd. Total oil

demand is projected to reach 95.89 million bpd in 2021.

Non-OPEC liquids production in 2020 was revised

lower by 0.08 million bpd, month over month, to average

62.67 million bpd. The drop owed to downward revisions in

Brazil, the United States, the UK and Norway, and was par-

tially offset by upward revisions to production in Russia and

Canada.

For the year, oil supply declined in Russia, the U.S. and

Canada. Production in Norway, Brazil, China and Guyana

is estimated to have grown.

Non-OPEC supply for 2021 was adjusted down by 0.1

million bpd, now forecast to grow by 0.85 million bpd to

average 63.52 million bpd — mainly due to downward

revisions in Russia’s output.

The main drivers for supply growth are expected to be

the United States, Canada, Brazil and Norway.

OPEC crude oil production in November increased by

0.71 million bpd, month over month, to average 25.11 mil-

lion bpd, according to secondary sources. l

continued from page 1

OIL PRICES

Contact Steve Sutherlin at ssutherlin@petroleumnews.com

Alaska is “we take advantage of North

Slope best practice and all those that have

come before us, so as you look at Pikka it

will be the next generation oil field. …

The facilities are designed for even lower

greenhouse gas emission intensity and a

small footprint,” Elmer said. “When you

compare Pikka to similar sized fields

around the world its (greenhouse gas

emissions are) extremely low — it’s

going to be in the top quartile.”

“Alaska, as we know, has one of the

most robust regulatory environments in

the world. We don’t flare for production

on the North Slope. There are a lot of

things that are done to really drive a lower

environmental impact,” he said.

Bill Armstrong agrees Bill Armstrong, the man whose com-

pany brought Oil Search to the North

Slope, agrees with Elmer’s comments.

“People misunderstand Arctic devel-

opment; they picture offshore production

platforms in an iceberg rich sea with

whales swimming about or big drilling

rigs in a gorgeous, pristine mountain

landscape. North Slope Arctic develop-

ments are on a flat, barren landscape with

nearby underutilized infrastructure

already in place,” Armstrong told

Petroleum News in a Dec. 8 email.

Equivalent to 3 moon missions In addition to drilling two exploration

wells with three penetrations and making

three major discoveries (see part one of

this story) this past winter, Elmer talked

about Oil Search’s massive gravel lay for

Phase 1 of its Pikka development.

“The gravel lay was one of the most

significant gravel lays that has been done

on the North Slope in the last 20 to 25

years. If you looked at the scope of it, we

built 200 miles of ice roads, 111 acres of

ice pads. We had 17 camps on the Slope

and 1,100 people to execute on both the

civil works and the two exploration

wells,” he said.

“As part of the civil work we laid

almost two and a quarter million cubic

yards of gravel. We used two mine sites to

do it, so it was greater than 50,000 truck-

loads, so if you lay that out, we actually

did the equivalent of three moon mis-

sions.”

“There were a lot of miles driven and

I’m very proud to say that the safety

record we achieved was just outstanding.

So not only did we get the roads down,

we got three pads. We also had to install

one bridge over the Miluveach River,”

Elmer said.

As for North Slope activities this win-

ter, he said Dec. 3 that “most of our activ-

ities next year will be in the engineering

area Now that we’ve got the civil work

done and our pads and our roads are down

we are looking to take FEED on the proj-

ect in the first quarter. We hope to get to a

final investment decision by the end of

the year.”

“So, most of 2021 will be to support

that FID decision,” Elmer said. l

Editor’s note: See part 1 of this story in last week’s edition of Petroleum News.

PETROLEUM NEWS • WEEK OF DECEMBER 20, 2020 11

Association (case in which the National

Audubon Society is the lead plaintiff).

“The Department of the Interior and

BLM rushed their environmental review

and adopted an extensive and harmful

leasing program that is inconsistent with

numerous laws and regulations,” plain-

tiffs’ attorneys said in the Gwich’in case

Plaintiffs in one suit, represented by

Trustees for Alaska, are the Gwich’in

Steering Committee and numerous envi-

ronmental organizations, among them the

Alaska Wilderness League, Canadian

Parks & Wilderness Society-Yukon,

Friends of Alaska National Wildlife

Refuges and the Alaska Environmental

Center.

Plaintiffs in the other are the National

Audubon Society et al., represented by

attorneys with Earthjustice and the

Natural Resources Defense Council.

The suits ask rulings by Jan. 6, the date

set for the Coastal Plain lease sale.

In the Gwich’in Steering Committee

case, plaintiffs argue for a temporary

restraining order and preliminary injunc-

tion