TION & PRODUCTION New unit proposed

1 Page Statewide forecast for 2022: more 2 recovery; jobs not back to 2019. Vol. 27, No. 2 A weekly oil & gas newspaper based in Anchorage, Alaska Week of January 9, 2022 $ l E X P L O R AT I O N & P R O D U C T I O N. AOGCC fines Hilcorp $64,000 for two Cook Inlet drilling violations In separate orders issued Dec. 29, the Alaska Oil and Gas Conservation Commission has fined Hilcorp Alaska a total of New unit proposed $64,000 for violations one of regulations and one of condi- tions in a drilling permit in the company's Cook Inlet fields. Oil Search says Quokka, next to Pikka, would include Placer unit acreage The drilling permit violation, for a Swanson River unit well, By KRISTEN NELSON acreage in the proposed unit, anchored in drew the higher fine, $39,000.

2 The regulation violation, at the Petroleum News the north by the Placer unit (acquired by company's North Cook Inlet unit, drew a $25,000 fine. Oil Search and Repsol from ASRC. The commission required Hilcorp to indicate how it would act to ensure violations did not occur in the future and in both cases the commission was not confident in the company's response. O il Search has applied to the Alaska Division of Oil and Gas to form the Quokka unit in an area where there have Exploration in 2021), extending south for more than 30 miles and including some 70 state oil and gas leases. In the case of the drilling permit, the commission said it finds been a number of discoveries, most Dingeman said the three WIOs collec- that the steps listed in Hilcorp's November 24, 2021 response to recently Mitquq, drilled in 2020.

3 Tively control 100% of working interest the notice of violation are unlikely to prevent recurrence of this Quokka is east of Pikka, and like that in the leases. Acreage includes the Placer type of violation unless they are systematically applied on every unit, the primary focus is the Nanushuk. BRUCE DINGEMAN leases which are pending assignments approved PTD (permit to drill) and Sundry application. Hilcorp The application, signed by Bruce from ASRC Exploration, and a number has not addressed how that will be managed. Dingeman, president of Oil Search (Alaska) LLC, of leases pending assignment from Armstrong In the case of the regulation violation, the commission said was filed on behalf of working interest owners Energy and GMT Exploration (jointly owned leas- Hilcorp's proposed actions to prevent recurrence appear OSA, Repsol E&P USA LLC and Finnex LLC.)

4 Es) and from Armstrong Energy. see HILCORP FINE page 8 OSA would be the unit operator. The majority of the Quokka leases are held 51%. OSA and Repsol hold the majority of the see NEW UNIT page 6. Tougher Alberta standards target thousands of abandoned wells l FINANCE & ECONOMY. Alberta's oil and natural gas producers are starting to feel the screws tighten as the provincial government and its energy regu- lator get serious about addressing the grow- ing problem of inactive and abandoned Rally rings in 2022. wells at the same time landowners, taxpay- Bullish: US inventories fall; OPEC+ vies to up output; Bakken frozen ers and environmentalists demand even tougher measures.

5 By STEVE SUTHERLIN rel per day increase in PRODUCTION for February. In the latest set of new rules, which have In the nine sessions that began on Winter Solstice Petroleum News already taken effect and mark the first sig- Dec. 21, the only red ink seen amongst the three nificant overhaul of the well liability frame- work, the Alberta Energy Regulator said the changes represent a major milestone.. A laska North Slope crude paused a nine-trading- day advance Jan. 5, slipping 2 cents to close at $ per barrel. West Texas Intermediate gained 86. indexes was a 3-cent loss for Brent on Dec. 30. Otherwise, prices advanced in a dramatic turn- around from heavy losses Dec.

6 20 and Dec. 19 ignit- With these new requirements, we're LAURIE PUSHOR ed by omicron variant demand worries. cents to close at $ and Brent gained 80 cents to pushing industry to clean up its sites sooner and ensuring the cost ANS shot up Dec. 21 by $ to close at $ , close at $ and responsibility of the cleanup rests on the shoulders of industry, while WTI leapt $ to close at $ and Brent The indexes were coming off a strong trading day where it should be, said AER President and Chief Executive jumped $ to close at $ , as traders began to Jan. 4 that saw ANS jump $ to close at $ , Officer Laurie Pushor. gain a measure of clarity as to future demand under while WTI rose 91 cents to close at $ and Brent The scope of the challenge is summed up by the AER, which the omicron scenario.

7 Popped $ to close at $ Traders reacted pos- estimates Alberta has 95,000 inactive wells, while another 73,500 The bullish case for oil was boosted over the nine- itively to news that the Organization of the Petroleum see WELL STANDARDS page 4 Exporting Counties and its allied producing countries day rally by dramatic drawdowns on commer- would stick with a previously scheduled 400,000 bar- see OIL PRICES page 4. Foreign-based operators pressured to quit tarnished oil sands sector l ENVIRONMENT & SAFETY. The revolving door out of Alberta's oil sands is expected to spin even faster in 2022 as foreign-based operators pack their bags. Arctic continues to warm A report by analysts at RBC Capital Markets said that given the pressures being applied to international oil companies to NOAA's '21 Arctic Report Card highlights rising temperatures, shrinking sea ice quit the tarnished oil sands a further exodus from Canada is conceivable.

8 By ALAN BAILEY Record low ice volume They suggest the results of such a move would be wel- For Petroleum News The total volume of Arctic sea ice in April 2021. comed by those investors who see a future in fossil fuels, given was at the lowest level since records began in the chance for Canadian-controlled companies to seize multi- billion-dollar acquisitions that carry no integration risks and would be tantamount to a common share buyback.. T he National Oceanic and Atmospheric Administration's Arctic Report Card for 2021. emphasizes that rapid and pronounced warming 2010. September, at the end of the summer ice melt, saw the second lowest amount of multiyear sea ice on record.

9 And from 1982 to 2021 there has Observers note that raising cash for an asset purchase is not continues to drive the evolution of the Arctic envi- been a statistically significant warming trend in the an issue since the rise in oil and gas prices over the past year ronment. Under the impact of climate change the sea surface temperatures in most Arctic regions has strengthened the balance sheets of potential buyers. Arctic region is warming twice as quickly as other that are ice-free in August, the Report Card says. In parts of the world, the Report Card says. addition, the Arctic sea ice extent has shown a Prospective sellers, buyers The average surface air temperature across the declining trend since 1979, when microwave satel- The list of prospective sellers includes companies that are Arctic between October 2020 and September 2021.

10 Lite observations began. In 2021 the Laptev Sea, in minority partners in oil sands projects, such as was the seventh highest on record, while 2021. particular, saw a record low sea ice extent in May turned out to be the eighth consecutive year with see SANDS EXODUS page 7 and June. surface air temperatures at least 1 C above the long-term average. see ARCTIC REPORT page 7. 2 PETROLEUM NEWS WEEK OF JANUARY 9, 2022. l F I N A N C E & E C O N O M Y. State sees more economic recovery in 2022. January issue of Alaska Economic Trends says most industries fully recover this year, but there are long-term dampers on growth By KRISTEN NELSON after losses of 2,100 industry jobs in Petroleum News 2020 and another 1,100 in 2021.