Apache Corp., the newest oil and gas company on the Alaska scene, says it hopes to acquire additional Cook Inlet acreage to build on its new toehold in the state -- 238,000 acres of undeveloped oil and gas leases the company acquired recently from a group of individual investors -- company officials said Aug. 24 in a meeting with reporters.
Apache is bullish on prospects in the state but wants a modest start in Cook Inlet before taking on a North Slope project, although Apache did talk with BP about acquiring part of the Prudhoe Bay field. Apache decided not to do that.
The company is known for its ability to take on older producing properties and rejuvenate them, but the Alaska initiative is also part of a broader new exploration strategy for Apache, according to John Bedingfield, the vice president for worldwide exploration and new ventures.
For its current acreage, Apache plans to do seismic across its new leases beginning later this year. Two-thirds of the acreage is onshore, on both the east and west sides of Cook Inlet, where seismic will most likely be done in winter, followed by summer marine seismic across the offshore acreage, Bedingfield said.
Exploratuib drilling will be planned based on the seismic results, and would be done most likely in 2012, he said. The acquired acreage has had little or no seismic done but Apache has investigated data from exploration wells drilled nearby in the early days of Cook Inlet exploration in the 1960s and 1970s.
Bedingfield led a group of senior Apache executives who were in Alaska to meet with state officials on the company's plans.
Apache sees its current leases as the first step in a larger presence that will eventually be established in Cook Inlet, Bedingfield said. Chevron Corp. has been reported to be interested in selling its existing holdings in several Cook Inlet fields, but Bill Mintz, Apache's director of public affairs, said the company couldn't comment on possible acquisitions.
Apache has also talked with Escopeta Oil and Gas, which holds acreage in deeper Cook Inlet offshore waters, according to Escopeta President Danny Davis, but Bedingfield said he was not familiar with discussions with Escopeta.
The company is interested in getting an initial position in Cook Inlet and expanding its understanding of the regional oil and gas system, Bedingfield said.
Escopeta's acreage requires bringing a jack-up rig to Cook Inlet, while the offshore acreage now held by Apache, on the Inlet's west side, is mostly near the shore and can mostly be reached from wells drilled from onshore, he said.
The company also has experience with certain seismic and drilling technology that will give it an advantage in developing its Cook Inlet leases.
Bedingfield said Apache's interest in Cook Inlet is mostly in its oil potential, although the smaller gas market looks strong, he said. A U.S. Geological Survey assessment that Cook Inlet has a billion barrels of potential undiscovered liquids caught the company's interest, as well as a belief that the Inlet is basically under-explored.
"Cook Inlet was a basically a casualty of the early big North Slope discoveries in the late 1960s, which shifted all the exploration out of the Inlet to the Slope," Bedingfield said.
As a result of that, Cook Inlet has not seen the level of exploration investment that would occur in the normal cycle of a major producing province, he said.
Despite Apache's optimism, several major and small independent companies have had their hopes dashed in Cook Inlet over the years, including Forest Oil Corp. and Pacific Energy Resources, which purchased the small Redoubt Shoal field from Forest.
Anadarko Petroleum also explored in on the west side of the Inlet and made a small discovery but then withdrew to focus its efforts on the North Slope.
Another company, Pioneer Resources, is attempting to develop the Cosmopolitan oil deposit on the Inlet's east side, while a smaller independent, Armstrong Oil and Gas, is developing a small gas field on the Kenai Peninsula. Aurora Gas, another small independent, is producing from several gas wells on the Inlet's west side, but has faced technical challenges and disappointing results in efforts to expand production.
The large companies operating in Cook Inlet include ConocoPhillips and Marathon Oil producing gas, and Chevron with its oil production. Those firms have been operating in the Inlet since the 1960s.
Tim Bradner can be reached at email@example.com.
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