Investing in Alaska O&G properties

Sutherlin works to facilitate objectives of companies and investors in regard to projects and leases — from Cook Inlet to the North Slope

Kay Cashman

Petroleum News

This section features individuals who deal with the acquisition and/or sale of Alaska oil and gas leases, projects and associated properties; a service that often includes guidance to private individuals and public groups looking at investing in Alaska and/or considering operations in the state. The last time Investor Corner appeared, in the May 27 edition of Petroleum News, veteran investor Paul Craig was interviewed.

Every month or two another qualified individual’s name is drawn from a jar to be featured. They are each given the opportunity to offer advice they think is most pertinent.

Stephen “Steve” Sutherlin, founder and operative of Strategic Action Associates, has a background that makes him particularly suited for the role he plays with prospective investors, as he is knowledgeable about Cook Inlet, the North Slope and areas in-between.

Raised in Anchorage, Sutherlin is a former reporter for Petroleum News; he now owns a small piece of the newspaper and its associated publications, although he has no editorial control. Writing for the newspaper soon after its inception in 1995, he covered everything oil and gas related statewide.

Sutherlin left the editorial staff of Petroleum News in 2005 to work for Escopeta Oil and Gas as strategic officer and spokesman and was instrumental in a Jones Act waiver that allowed the company to bring a jack-up rig to its Kitchen Lights prospect in Cook Inlet.

When Escopeta president and founder Danny Davis was replaced and the newly re-organized company became known as Furie, Sutherlin remained in the same position. In addition to heading government and public affairs, he interfaced with contractors, planned and negotiated transport and winter storage of the jack-up rig, instituted programs to protect the endangered Cook Inlet Beluga whales and avoid conflicts with the local fishing fleet. He was responsible for underwater safety, coordinating operations with Furie’s diving contractor and other marine assets and is cross-trained in a variety of positions in spill response and prevention.

After leaving the Kitchen Lights project in 2013 Sutherlin conducted a forensic study of the 1989 Exxon Valdez oil spill response, which led to a consultancy on a proposed spill response center for the Gulf of Mexico, and later to an invitation to address an international leadership conference in Equatorial Guinea.

One of the key initiatives of the Africa conference was to adopt the “Alaska Model” of oil spill prevention and response for the Gulf of Guinea. Sutherlin returned to Alaska and formed a company which developed a comprehensive oil spill prevention and response plan for Equatorial Guinea and the 16 nations that line the Gulf of Guinea.

Also in 2013, Sutherlin reported for Petroleum News Bakken - from its inception until its closure in 2015 due to low oil prices. This was a period of remarkable advancement in horizontal drilling and fracking technology.

In 2016, he began doing consulting work and geologic studies on the undeveloped Stinson discovery on the eastern North Slope near the Arctic National Wildlife Refuge, or ANWR.

Sutherlin has worked with numerous small investors and leaseholders, and large companies as well, such as Shell Oil from 2007 to 2015 as a scientific and historical researcher during its nine-year effort to explore the Chukchi and Beaufort seas. There he proposed the use of air curtain technology to mitigate the effect of industrial percussion on whale communication and navigation.

Sutherlin is an oil and gas historian with numerous publications to his credit. A scientific generalist, he studied environmental chemistry and did extensive field work with the late Dr. J. Calvin Giddings - the inventor of field-flow fractionation - at the University of Utah as well as geology, meteorology and engineering. At the University of Alaska Anchorage he studied biology, anthropology, astronomy, music theory and aircraft mechanics, graduating with a Bachelor of Arts in journalism with film and television specialty. At UAA he worked professionally in distance education, including the live series “TalkBack” - over Rural Alaska Television Network - and the “Crossroads for Justice” series. He was awarded two CINE Golden Eagle awards for production of Alaska Center for International Business educational documentaries on Alaska value-added businesses.

Sutherlin continues scientific inquiry in non-university settings, notably in marine acoustics and ecosystems, exploring commercial applications for the GEDEX High Definition Airborne Gravity Gradiometer, and with Dr. Robert B. Blodgett in the field of stratigraphy and paleontology.

Advice to investors. The state sets the rules

“The large players” in Alaska’s oil industry “are well capitalized, and well connected in government and in the business community.

“In Alaska, most of the non-federal lands that are prospective for oil and gas are centrally owned by the state government. The state sets the rules, and if you, the lessee, have a dispute with your landlord, your landlord is the arbiter, the regulator, and the enforcer,” he cautioned.

“Under Alaska’s constitution, any party 18 and older may buy state oil and gas leases. The state can, and has, set lease terms that make it expensive to acquire leases, and it has recently set its terms to make it brutally expensive to hold leases more than a few years. For an investor, time is short and the clock is ticking loudly once possession of a lease is taken.”

What about the small investor? “The small investor is not particularly welcomed to the table - but the potential rewards are high,” Sutherlin said.

“Do not invest money you can’t afford to lose. Do not invest money until you invest time in understanding the industry,” he said, noting things are very different in Alaska than in other states.

“It is said that information is the coin of the realm in the oil and gas business. Remember this, because for the smaller investor, information is the key to survival. Information - and the ability to act quickly on it - is the only advantage the smaller investor can gain or hope for.

“The big oil companies, for all their strength, cannot be everywhere. There are opportunities that have been overlooked; there are opportunities that have been discarded in the past. There are challenges for which study and ingenuity can find a solution,” Sutherlin said.

“The smaller investor must have knowledge of geology, finance, oil markets, politics, the competition and of which companies may become interested in Alaska.

“There are resources for the small investor. State meetings and hearings are open to the public. The doings of the Alaska Legislature are televised. Luncheons of the Alaska Geological Society have informative speakers and are open to the public, as are those of the Alaska Association of Professional Landmen. State and federal oil and gas lease sales are open to the public.”

Sutherlin’s final piece of advice: “There is no oil and gas arena quite like Alaska. Alaska has never been forgiving for the unprepared. Alaska can be harsh - but the potential rewards are high.”

Note: You can contact Steve Sutherlin at Strategic Action Associates, PO Box 112546, Anchorage, Alaska 99511, email [email protected], mobile 907 250-1533.