Shell returns to Alaska with lease bids

Posted: Tuesday, November 06, 2001

ANCHORAGE (AP) -- The company that discovered the Northstar oil field is once again showing an interest in Alaska. Shell Exploration and Production Inc., a subsidiary of Royal Dutch Shell Group, was one of the two top bidders in a North Slope lease sale last month.

Houston-based Shell Exploration bid on 13 leases and was high bidder on 10, committing a total of $2.4 million. The company's tracts are south of the Colville River area. Shell put up most of its money for a lease south of areas held by Phillips Alaska Inc. and Chevron.

Shell essentially bowed out of Alaska in 1999 when it sold the last of its major assets, the Middle Ground Shoal field in Cook Inlet, to Cross Timbers Oil Co., now XTO Energy Inc.

In earlier decades, Shell was an explorer in just about every area of the state, including Cook Inlet, the Chukchi Sea, Gulf of Alaska and the Beaufort Sea.

Shell has never been major player on the North Slope, but it intends to be, Rich Hansen, public affairs manager for Shell Exploration, told Petroleum News Alaska.

''This is the first time we bid on Alaska properties in some time. The world has changed considerably since we sold our holdings up there. Those holdings weren't strategic to long-term growth at the time. Some were mature assets and that's not where we want to be.

''Shell is committed to growth in North America. Alaska looks very promising. We're very interested in establishing a presence on the North Slope,'' he said.

For Shell, one of the world's three largest oil companies, a $2.4 million investment is a minor one. And the company historically has preferred to have a major presence in areas where it looks for oil.

Shell has just 10 people in its Alaska group at this point, all based in Houston.

''We have no plans at this time to open an office in Alaska, but we are making the airlines and hotels happy,'' Hansen said.

Oil is Shell's primary objective for the leases it acquired in the Oct. 24 sale, ''but beggars can't be choosy, so we'll take what we can get,'' Hansen said.

''We will carefully evaluate the leases we picked up in Alaska with seismic and other data. It will be two years before we get down to serious drilling. I'd say the winter of 2003-2004,'' he said.

Aside from Shell's $2.4 million, the other big bidder in the lease sale was newcomer Armstrong Resources LLC of Denver, the largest spender with $4.2 million in winning bids.

The third bidding group, by dollar amount, was Bachner, Forsgren and Fedderson, which had apparent high bonus bids of nearly $873,000 on 31 scattered tracts.

Altogether, bidders spent $12.9 million on the leases.

Mark Myers, director of the state's oil and gas division, said officials appreciated the ''breadth and depth'' of interest in the sales.

North Slope tracts drew 146 bids for 110 tracts, for a sale total of $7.4 million. The state received $51.8 million at the first North Slope areawide sale in 1998; $2.6 million in 1999 and $10.7 million in 2000.

There were 31 bids for 24 tracts in the Beaufort Sea sale, for a total of $5.4 million. The state received $338,922 at the first Beaufort Sea areawide sale last year.

Other major bidders in the lease sale included James D. Weeks of Anchorage, Phillips Alaska Inc., Anadarko Petroleum Corp., Alaska Venture Capital Group LLC of Kansas, BP Exploration (Alaska) Inc., Unocal and Chevron.

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