AD Main Menu

From new offices to new oil, Alaska sees signs of life after The Big 3

Alex DeMarban

Apache Corp., an independent oil company engrossed in an ambitious seismic exploration program to hunt for oil in Cook Inlet, has opened up digs in Anchorage.

Apache's move is another sign that smallish and independent oil companies may be the wave of the future in Alaska, thanks in part to the state's tax credits designed to spark exploration -- something Alaska's big oil companies aren't doing much of these days.

With several oil and gas companies staking new claims in Alaska in recent years, does that mean the 49th state is transitioning to an era less dominated by the so-called "Big Three," Exxon Mobil Corp., BP and ConocoPhillips?

A recent article by Dermot Cole of the Fairbanks Daily News-Miner addresses that very question.

In his article, Cole explores a recent letter from William Armstrong, president of Armstrong Oil and Gas to members of the Alaska Legislature. The letter has to do with oil taxes, that perennial debate that has consumed lawmakers for years now. The Legislature is currently enmeshed in a debate over whether to lower oil taxes in the hopes that the Big Three will use that extra profit to go find more oil in Alaska.

Armstrong was weighing in on the debate. In his letter, he notes that small companies led the way in the Gulf of Mexico oil exploration revival after big companies began pulling out in the 1970s.

That's now happening in Alaska on the aging North Slope, Armstrong said in his remarks to lawmakers. According to Cole's article, Armstrong says his company, a Colorado independent oil firm,  is "at the forefront of the movement to find and develop these smaller fields" on the North Slope, home to the nation's largest but aging oil fields. As an example, Armstrong Oil and Gas helped lead the way for the last two significant developments in Alaska's Arctic oil and gas fields -- the Oooguruk Field and the Nikaitchuq Field.

In his letter to lawmakers, Armstrong also commented on legislative proposals to cut Alaska's oil production taxes -- a significant funding source for state government. Supporters, including the biggest oil producers in the state, allege the taxes must be lowered to encourage them to search for more oil.

Armstrong seems of a different mind: "It is not necessary (for the state) to give up significant revenues," Armstrong writes in the letter.

He supports an idea expressed by state oil and gas consultant Pedro Van Meurs, who told the Legislature earlier this year that tax cuts are needed on lands that are not producing. However, Armstrong said, taxes on producing fields could remain close to their current levels

Proponents of a major tax cut, such as Gov. Sean Parnell, argue differently. They want to give substantial tax cuts on producing fields, and have supported a proposal that would cost Alaska an estimated $2 billion a year in tax revenue.

Read more from Cole about the changing of the North Slope guard here.

Apache opens Anchorage offices

As for Apache's new offices in Alaska's largest city, the Houston-based independent will be located at 510 L St., suite 210, in downtown Anchorage, according to John Hendrix, head of the company's Alaska operations, in a press release.

Hendrix is a local boy, having graduated from Homer High School in 1975, according to KBBI-Homer, which briefly profiled him and covered a presentation he delivered to his home town's chamber.

Lisa Parker, a lifelong Alaskan with experience working in the resource industry, will manage government relations. 

"Apache has acquired approximately 800,000 acres in the Cook Inlet basin and commenced a multiyear seismic acquisition program with initial operations on the basin’s west side," the press release said.

Alaskans started to take notice of Apache in summer 2010 in the wake of the BP's Deepwater Horizon oil disaster in the Gulf of Mexico, as Alaska Dispatch first reported in July 2010:

Apache Corp. is on a growth spurt, with its most recent surge occurring just this week. On Tuesday, the Houston-based oil and gas exploration company announced it had successfully snatched up $7 billion of BP's assets, a deal designed to help BP raise cash quickly to cover the financial fallout from the oil spill in the Gulf of Mexico. BP's Alaska holdings were absent from the final package -- yet behind the scenes, as Apache and BP wrangled over which properties would be exchanged and at what price, Alaska was very much in play, although at lower latitudes.

Before swooping in to help BP's disaster-motivated fundraising efforts, Apache had already set its sights on gaining a foothold in Cook Inlet. By July 14 -- nearly a week before it announced its multibillion dollar deal with BP -- the company had successfully convinced a handful of existing leaseholders to part with their acreage...

In June 2011, Apache was the big bidder in a state oil and gas lease sale for Cook Inlet. It picked up about 500,000 acres throughout the inlet, making it the largest leaseholder in Cook Inlet ever since.

Contact Alex DeMarban at alex(at)alaskadispatch.com.