|
Oxy taking hard look at Alaska? Crude oil price predictions upbeat
Kay Cashman Petroleum News
Rumors that Occidental Petroleum is taking another look at Alaska have surfaced in the past few weeks - the latest spurred by the state’s upcoming SALSA lease sale.
Melissa Schoeb, Oxy’s vice president of corporate affairs, told Petroleum News July 31 that as a matter of company policy she could not comment on the rumors.
Oxy is an American multinational petroleum and natural gas exploration and production company headquartered in Houston, Texas, that used to be involved in Alaska as a minority owner of the North Slope Milne Point oil field.
The Alaska Division of Oil and Gas is combining unleased acreage backed by a multitude of information on those leases to offer three blocks of leases in Special Alaska Lease Sale Areas to be held concurrently with its fall oil and gas lease sale.
One of the large, contiguous acreage SALSA blocks is 23,040 acres at Gwydyr Bay on the central North Slope coast between Milne Point and Northstar north of Prudhoe Bay (see July 29 article in Petroleum News titled “Bids on Blocks”).
There are six wells in the Gwydyr Bay SALSA block, including Northstar 3, Long Island 1, Gwydyr Bay wells either drilled in or with bottom holes in the block, and the Sak River 1A which has a bottom hole in the block.
Each of the SALSA lease blocks has 3-D seismic available; data which was acquired through the state’s tax credit program and is available through the Alaska Department of Natural Resources for a modest fee, the division said.
Unless a separate deal is announced earlier, Oxy’s level of interest in Alaska should be revealed at that time.
World supply risks bolster oil prices In early July analysts at Sanford C. Bernstein & Co. warned crude could rise past $150 a barrel on chronic capital underinvestment.
This prediction was followed by a flurry of liquidations by hedge funds and other money managers profiting on their bullish positions in crude futures rather than concern that a downturn was ahead.
But very real-world supply risks once again took hold July 30 to boost Alaska North Slope crude $1.12 to $76.40 a barrel, West Texas Intermediate oil $1.44 to $70.13, and Brent crude 68 cents to $74.07.
The reaction was instigated by Syncrude Canada’s oil sands facility near Fort McMurray, Alberta, not returning to full production as soon as expected but longer term and more worrisome supply concerns include ongoing declines in Venezuela, fluctuating production in Libya and Nigeria, the loss of Iranian oil due to U.S. sanctions and an emerging U.S.-China trade war.
Other analysts have recently concurred that a shortfall in supply is possible and could result in a super-rise in prices, potentially much larger than the $150 a barrel spike that occurred in 2008.
That said, they also indicate the increase to $150 a barrel or above won’t be smooth or fast. There are still bumps in the road, such as on July 31 the American Petroleum Institute reported a crude oil inventory build of 5.59 million barrels in U.S. inventories for the week ending July 28, compared to analyst expectations that the week would see a draw in crude oil inventories of 2.794 million barrels.
Walker gets poor grade for Alaska Alaska Gov. Bill Walker, an Independent, says the budget deal he recently signed into law will help Alaska recover from its current economic woes.
The budget legislation creates a formula to allow the state to continue tapping into Permanent Fund earnings, plus it provides more than $30 million for public safety next year, and $50 million in new school funding over the next two years.
Walker called his budget and the restructuring of the Permanent Fund “the biggest steps Alaska has taken in the last five years to turn the corner toward a stable future.”
But not all Alaskan agree, including business people across the state who benefit from citizens spending their annual dividends; not to mention the men, women and children whose dividends have already been cut by the governor and his supporters (dropping this year’s dividend to $1,600 from the original estimate of $2,700).
Seeking a second term in November, Walker faces Republican and Democrat opponents that intend to make the dividend cuts a central issue in their campaigns.
Alaska under the Walker administration has recently been relegated to the bottom of CNBC’s Top States for Business rankings while fellow oil producing state Texas has taken the No. 1 position, despite also having to deal with lower oil prices since 2014.
According to CNBC, it scores all 50 states on more than 60 measures of competitiveness, developed with input from a broad and diverse array of business and policy experts, and official government sources.
- KAY CASHMAN
| 