French oil company top bidder in NPR-A lease sale

Posted: Tuesday, June 04, 2002

ANCHORAGE (AP) -- The big French oil company TotalFinaElf SA dominated bidding Monday in a sale of oil and gas leases for the National Petroleum Reserve-Alaska that netted $63.8 million. The money will be split 50-50 between Alaska and the federal government.

TotalFinaElf, until now a minor factor in Alaska's oil fields, paid more than $10 million each for two parcels on the way to shelling out $52,913,000 -- 83 percent of the total winning bids -- for 19 tracts.

The surprise participation by TotalFinaElf came as fellow European oil giant BP PLC submitted not a single bid. BP spent $32 million on 25 tracts at the first NPR-A sale in 1999 and drilled two wells in the reserve in a partnership that included Phillips Petroleum Co.

But BP has said in recent months that it plans to concentrate on development in and around its current Alaska fields, not new discoveries.

Phillips Alaska Inc., in partnership with Anadarko Petroleum Corp., had winning bids on 34 of the 39 tracts it sought Monday, spending $9.6 million.

Most of that acreage is near the leases where Phillips already has drilled nine wells and a couple of sidetracks over the last three winters, with Anadarko as minority partner. Three wells were drilled this past season, but the results of those wells have not been made public, said Dawn Patience of Phillips.

Just a year ago, Phillips announced it had struck oil on five of six wells drilled in the area, which is not far from the Alpine field that has been a surprisingly good producer for Phillips and Anadarko. Phillips Alaska president Kevin Meyers said then that the company was hoping for a find similar to the estimated 430 million barrels at Alpine.

TotalFinaElf representatives at the bid opening in Anchorage on Monday did not want to talk about the company strategy. A spokeswoman for TotalFinaElf E&P USA in Houston said an announcement was expected from the company's Paris headquarters Tuesday.

Phillips welcomed TotalFinaElf's arrival, even though the French company outbid Phillips on several parcels.

''Overall, it's good to see a diversity of players in NPR-A,'' said Patience of Phillips. ''It offers new partners for Phillips in NPR-A.''

TotalFinaElf bid $10,187,000 for one tract where Phillips made a bid of $250,000. A neighboring block went to TotalFinaElf for $5,117,000, over a Phillips bid of $350,000.

TotalFinaElf submitted the largest bid for a single tract, $10,480,000 for roughly 11,800 acres, or $888 per acre.

Another new player at the auction Monday was Canada's EnCana Corp., formed in April by a merger between Alberta Energy Co. Ltd. and PanCanadian Energy Corp. EnCana won five tracts for $920,000.

Altogether, 579,269 acres were leased Monday, out of 3,031,000 available. Much of that had been offered in the 1999 sale, which also involved the northeast fifth of the 23-million-acre reserve. That sale brought in $104.6 million.

The government plans another lease sale two years from now on 10 million acres to the west, all the way to Wainwright and the western border of NPR-A, said Edward Bovy of the Bureau of Land Management, which administers the reserve. The remaining 7 million acres along the southern border is planned for leasing two years later.

A recent report from the U.S. Geological Survey estimates that NPR-A holds 9.3 billion barrels of technically recoverable oil altogether. But as Bovy noted, it will take a lot of new infrastructure to develop fields across the span of the reserve, which runs about 250 miles from east to west.

TotalFinaElf is not a total stranger to Alaska, holding 19 state leases totaling about 23,600 acres, according to James Hansen, lease sale manager for the state oil and gas division. Those holdings are in the Beaufort Sea, in and around Point Thomson, and in the Badami field.

The Paris-based company, formed in a series of mergers, is the fifth-largest international oil firm, about the same size as ChevronTexaco Corp.

In the United States, TotalFinaElf produces the equivalent of about 49 million barrels of oil daily, most of it in and around the Gulf of Mexico. The company also has refineries and is a major domestic chemicals producer. TotalFinaElf operates in 100 countries around the globe.

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