l NATURAL GAS 54 tcf possible - petroleumnews.com

1 Page EIA forecasts record US crude 2 volumes this year, lower prices Vol. 24, No. 37 A weekly oil & gas newspaper based in Anchorage, Alaska Week of September 15, 2019 $ l N AT U R A L G A S. Feds might not allow Conoco to operate Prudhoe Bay; Gil Mull and Richfield at Katalla AS THE THREE MAIN OWNERS of the Prudhoe Bay oil field hash out who will 54 tcf possible operate the unit when the deal between BP USGS estimates undiscovered, recoverable gas trapped in North Slope hydrates and Hilcorp closes in 2020, their conversa- HELEN GIBBONS/USGS. tions undoubtedly involve concerns about By KAY CASHMAN. federal and state approval of Hilcorp's Petroleum News acquisition of BP Exploration (Alaska) and its assets, especially if ConocoPhillips elects to operate all or part of the Prudhoe unit. (See story in the Sept. 8 edition of Petroleum News, titled A n estimated trillion cubic feet of undis- covered, technically recoverable NATURAL gas is trapped within methane gas hydrate formations Prudhoe operator?)

2 ConocoPhillips and Hilcorp in talks in Alaska's North Slope, the Geological about operatorship.) Survey says in a new geology-based assessment The deal will result in the ownership of the state's main released Sept. 10. producing oil field, Prudhoe Bay, split three ways, with The area assessed extends from the National Conoco holding 36% working interest, ExxonMobil 36% Petroleum Reserve-Alaska on the west through the and Hilcorp 26%. Arctic National Wildlife Refuge on the east and see INSIDER page 11 from the Brooks Range northward to the state-fed- In 2010, the Geological Survey recovered white eral offshore boundary, 3 miles north of the coast- chunks of gas hydrate (methane ice) mixed with gray sediment a few feet below the seafloor in the Arctic Changing of the guard on North see GAS HYDRATES page 14 Ocean at a water depth of approximately 8,000 feet. Slope; no longer a mature basin l LAND & LEASING. The $ billion sale of BP's Alaska business to Hilcorp demonstrates a growing trend and the differing strategies of the majors and private oil and gas players, industry observers say.

3 BP was a pioneer in Alaskan drilling Expanded sale? JUDY PATRICK. and one of the key players in building the Alaskan oil industry, including drilling State looks at adding exploration license area to Cook Inlet areawide for the massive Prudhoe Bay field in the 1960s and participating in the Trans By KRISTEN NELSON. Alaska Pipeline in the 1970s, Enverus' The earliest exploration wells in Cook Petroleum News senior M&A analyst Andrew Dittmar Inlet were drilled near Oil Bay and the was quoted as saying in press reports. Their exit and replacement by Hilcorp marks a changing of the guard for the GREG LALICKER. T he Alaska Department of NATURAL Resources'. Division of Oil and Gas has a request out for substantial new information for its 2020 Cook Week Creek oil seeps by the Alaska Petroleum Co., beginning in 1902. Alaskan petroleum industry. Inlet and Alaska Peninsula areawide oil and gas opening up acreage on the southwest side of the In departing Alaska, BP is choosing to focus on higher lease sales.

4 Inlet for leasing. growth opportunities elsewhere, including in unconven- The Alaska Peninsula rarely draws interest and The division received a proposal for a tionals, Dittmar said. The company made a major commit- typically there would be limited interest in Cook Southwest Cook Inlet exploration license in April ment to growth in shale by acquiring Permian, Eagle Inlet because so much of the prospective acreage 2013; when it asked for comments and competing see ANS CHANGES page 12 in that area has already been leased. proposals it received a competing proposal. The But the division said it is considering augment- division prepared a written finding and, because ing the Cook Inlet sale area by including the there were competing bids, held a sealed bid open- XCD IDs 1st lead in Peregrine project; Southwest Cook Inlet exploration license area, see EXPANDED SALE page 13. Ferguson's take on BP-Hilcorp deal Alaska-focused oil junior XCD Energy said Sept. 10 that it l PIPELINES & DOWNSTREAM.

5 Has identified the first lead within its wholly owned Peregrine project, which is west of the central North Slope on 149,590 acres. The acreage is on the same Nanushuk The unending legal fight oil trend as ConocoPhillips' big Willow discoveries about 22 miles to the north. Court gives First Nations another chance to show they've not been fully consulted An internal estimate, for its Merlin prospect lead calculating a best-estimate By GARY PARK Justice David Stratas said in his written unrisked recoverable prospective For Petroleum News judgment that the duty to consult does resource is 255 million barrels of oil, Perth, Australia independent XCD says. According to the ASX-listed compa- DOUGAL FERGUSON. ny, Merlin is the first of many leads mapped within XCD's T he legal roller-coaster ride by the Trans Mountain pipeline expansion project, TMX, has taken another downward lurch. not require the consent .. of First Nations and Indigenous peoples before projects like (Trans Mountain) can proceed.

6 National Petroleum Reserve-Alaska lease area south of Canada's Federal Court of Appeal has allowed Willow. an extension of legal challenges by six First off the British Columbia coast, ruling those chal- This best estimate is based on a calculated billion Nations along the pipeline right of way against the lenges were just attempts to re-litigate previous barrels of original oil-in-place with a 23% recovery factor, latest re-approval of the project. court cases. the company says. They continue to make a case that the govern- The low to high recoverable resource estimates range from ment of Prime Minister Justin Trudeau has failed Consult not consent 59 million barrels to billion barrels, XCD says. to properly consult them. Justice David Stratas said in his written judg- But the court denied six other applications see XCD ENERGY page 10 ment that the duty to consult does not require the focused on the potentially negative environmental impacts of TMX, especially to whale populations see LEGAL FIGHT page 12.

7 2 PETROLEUM NEWS WEEK OF SEPTEMBER 15, 2019. l F I N A N C E & E C O N O M Y. EIA short term: production up, prices down Record US crude volumes this year and next, agency says, with prices down from last forecast on falling global liquids consumption By KRISTEN NELSON Linda Capuano. The August price reflects a less than 1 million bpd. Petroleum News decrease of nearly $5 per barrel from July and more than $13 per barrel compared with last year. West Texas Intermediate T he Energy Information Administration said in its September Short-Term Energy Outlook, released Sept. 10, that Brent crude oil This month's forecast is that Brent spot prices will average about $60 per barrel during the fourth quarter of this year, followed by prices that EIA said it expects West Texas Intermediate to average $ per barrel less than Brent next year, with the spread between Brent and WTI narrowing. The price spread was spot prices averaged $59 per barrel in August, will range in the low $60s per barrel through the $ on Aug.

8 19, the agency said, the narrowest since down $5 from July and down $13 per barrel from end of 2020, she said. March 2018. August 2013, leading EIA to reduce its 2019 Part of the lower price forecast is due to lower Crude oil prices in the Permian region increased during Brent forecast to $63 per barrel, down $2 from LINDA CAPUANO global oil demand growth, which the agency said this period with the addition of two pipelines mid-month the August forecast, with Brent expected to aver- it has reduced to 900,000 barrels per day this that reduced takeaway constraints to the Gulf Coast, . age $60 in the fourth quarter. year, down 100,000 bpd from the August forecast. EIA also EIA said. An estimated 670,000 bpd were added by the The 2020 Brent price is now forecast at $62 per barrel, attributed the drop to recent global crude oil price fluctua- tions. Cactus II crude oil pipeline and the repurposing of the EPIC. $3 lower than the agency's August forecast. If 900,000 bpd is the average growth for the year, EIA Midstream from NATURAL gas liquids to crude added about Average spot prices for Brent crude oil in August were slightly below $60 per barrel, said EIA Administrator Dr.

9 Said it would be the first time since 2011 that growth was see EIA OUTLOOK page 6. contents Petroleum News Alaska's source for oil and gas news ON THE COVER 4 Whither the North Slope crude price? 54 tcf possible ANS crude holds pricing edge on WTI and Brent prices, for now; state forecasts call ANS prices in $60 range, USGS estimates undiscovered gas trapped in North Slope hydrates but Saudis seek $80. Expanded sale? 6 Crescent Point sheds assets, targets debt State looks at adding exploration license area to Inlet areawide The unending legal fight GOVERNMENT. Court gives First Nations another chance on disputed consultation 6 BLM extends Willow comment period Oil Patch Insider: Feds might not allow Conoco 7 Alberta facing deep cuts, big fights to operate Prudhoe Bay; Mull, Richfield at Katalla Review calls for province to swallow some bitter medicine Changing of the guard on North to rescue ailing finances, tied to spending with low resource revenues Slope; no longer a mature basin XCD IDs 1st lead in Peregrine project; LAND & LEASING.

10 Ferguson's take on BP-Hilcorp deal 8 Next step for ANS Guitar unit is Superior Court, Feige says EXPLORATION & PRODUCTION OBITUARY. 7 Drop in rigs continues, count down six 8 Oil tycoon T. Boone Pickens dies at 91. FINANCE & ECONOMY To advertise: Contact Susan Crane 2 EIA short term: production up, prices down at SALA. Remote Medics On-site Remote and Offshore Health and Safety Deploying highly trained, eld-expe- rienced physicians, physician assis- tants, registered nurses, paramedics, and health and safety advisors to operations anywhere in the world. Services include medical audits, risk assessments, site assessments, on-site weather monitoring, and contingency planning for your project location. 907-331-8140. PETROLEUM NEWS WEEK OF SEPTEMBER 15, 2019 3. Farewell & thank you Farewell & thank you BP. A round of applause for Janet Weiss &. her team at BP Exploration (Alaska) for their hard work, dedication and community commitment in Alaska. Best wishes in the future. Janet Weiss ABR Inc.