ConocoPhillips announced today (Nov. 18) that it will move ahead with construction of a $900 million project in the North Slope’s National Petroleum Reserve.
The project, called the Greater Moose’s Tooth Unit, joins Conoco’s CD5 development, which started production earlier this fall on nearby Alaska Native lands. The two projects are the first full-fledged oil development within the National Petroleum Reserve – Alaska.
Conoco says construction will begin in early 2017, with first oil planned for 2018 and an expected peak production of 30,000 barrels per day.
ConocoPhillips was also the only big oil company to bid on oil and gas leases during state and federal auctions held today. The company spent nearly $800,000 to expand its holdings in the National Petroleum Reserve.
But when it came to lease sales, the real story was smaller independent companies, who collectively spent $9.5 million for the right to drill on state land on the North Slope.
For over an hour today, the state’s annual North Slope lease sale sounded like this…
Feige: 77.54912 percent interest to Accumulate Energy Alaska, 22.45088 interest to Burgundy Xploration LLC…something tells me I’m going to be saying this in my sleep for a long time to come… (Laughter)
That’s Corrie Feige, director of the State Division of Oil and Gas. In all, the state took in more than $9.5 million for 131 tracts — and 121 of those tracts went to a pair of independent companies hoping to try oil shale drilling in the region.
Houston-based Burgundy Xploration teamed up with Accumulate Energy Alaska, a subsidiary of the Australian company 88 Energy, to bid on a significant chunk of acreage at the southern edge of existing development.
“What we’re doing is we’re chasing, rather than the oil, we’re chasing this thing called a vapor phase,” said Paul Basinski, Burgundy’s founder. “And a vapor phase means where you get a little bit deeper, and where the oil is no longer oil in the reservoir, it’s actually a gas. But when you get it to the surface, then it becomes rich in liquids.”
Basinski says there isn’t yet a productive play in the world in this kind of rock.
“So I don’t know if this is going to work. I think that we’ve got a darned good shot,” he said. “All the pieces are there. The question is, can it be drilled, and can it be fracked?”
Burgundy will control about 20 percent of the project, while Accumulate Energy Alaska will hold about 80 percent. The two companies have one other existing project on the Slope, Project Icewine.
Meanwhile, the company 70 & 148, a subsidiary of Denver-based Armstrong Oil and Gas, spent $4.8 million to beat out ConocoPhillips for several tracts near the larger company’s existing holdings around Nuiqsut.
Conoco did better at the federal lease sale held later in the afternoon. The Bureau of Land Management offered 143 tracts — or 1.4 million acres — of the National Petroleum Reserve. But there were only six bids — all from ConocoPhillips.
BLM officials said it was the first time they have had only one bidder, though it’s not unusual to have only two or three.
During the sale, a half-dozen protesters with the environmental group Alaska Rising Tide sat in the back holding signs that read “Clean Energy Now” and “We only have one earth.”