TG WORLD ENERGY PROVIDES CENTRAL NORTH SLOPE ALASKA JOINT VENTURE UPDATE
TG World Energy Corp. has set a budget for a 2006-2007 exploration drilling program on North Slope joint venture lands has been agreed to among joint venture participants. The North Slope joint venture was formed in March, 2006, between TG World and Brooks Range Petroleum Corp., which also acts as project operator. Brooks Range is a wholly owned subsidiary of Alaska Venture Capital Group, LLC. The Brooks Range/TG World joint venture was formed as an exploration partnership covering a large area of mutual interest on the Alaskan North Slope. Membership in the joint venture was expanded in June, 2006, with the addition of Ramshorn Investments, Inc., a wholly owned subsidiary of Nabors Drilling USA, LP, the world's largest oil and gas drilling contractor. For further information on the joint venture and current prospect areas, please refer to TG World's March 20, 2006, and May 18, 2006 news releases in Stockwatch and on the company's website.
2006-2007 joint venture exploration plan
The joint venture participants have approved a budget to finance a 2006-2007 Alaska exploration program, which contemplates the drilling of two exploration wells in the Gwydyr Bay prospect area, located to the north of the Prudhoe Bay unit. The current plan is to drill both wells from the same onshore well surface location to offshore subsurface targets. Both prospects have been identified from mapping of 3-D seismic data and are interpreted to potentially have stacked oil reservoir targets. TG World will finance 50 per cent of the well costs to earn 35 per cent in the Gwydyr Bay prospect area.
The current budget also allows for the drilling of a third well during the 2006-2007 winter drilling season. Management of TG World is confident that technical work currently under way will lead to the identification of a third well location for addition to the 2006-2007 drilling program. If a suitable location is identified, the third well will be drilled under the drilling contract described later in this news release.
In addition, negotiations are continuing for the purchase of several trade 2-D and 3-D seismic data sets covering joint venture prospect areas. A proprietary 3-D seismic program is also planned and budgeted for the 2006-2007 winter season on joint venture lands. That seismic data are expected to be used to generate a prospect inventory for exploration drilling during the 2007-2008 winter season.
The joint venture also plans to participate in the state land lease sale in October, 2006. As well, efforts to acquire additional existing leases on the North Slope are continuing, as the joint venture seeks to consolidate the land position in joint venture prospect areas.
TG World's share of the planned Alaska exploration program described above, which includes all project-related general and administration, is approximately $17-million (U.S.). On Aug. 24, 2006, the company completed the closing of a $22.7-million equity financing, net proceeds of which are to be used to finance continuing exploration and development of oil and gas assets in Alaska, in Niger, and for general corporate purposes.
A map showing the exploration locations referred to in this news release is available on the company's website.
Nabors drilling rig 16E contract signed
Brooks Range, as operator of the joint venture, has signed a contract with Nabors Drilling Alaska for use of Nabors rig 16E for the 2006-2007 winter season. Nabors operates 17 highly specialized arctic rigs in Alaska and has been a leading North Slope contractor since 1963. Rig 16E is a 2,000-horsepower beam leg mast rig with a 24,000-foot-depth rating. The rig is currently in Deadhorse, Alaska, the Nabors service base for the North Slope. Routine maintenance work has commenced to prepare the rig for the upcoming drilling season. Permitting of surface access leases associated with the targeted drilling location is well under way and field operations are expected to commence with the building of an ice road to the drilling sites. Depending upon weather conditions, this could be as early as Dec. 15 or as late as Jan. 7. The North Slope winter drilling season typically lasts until mid-April.
Baker Energy contract signed for provision of exploration and development support services
On Aug. 14, 2006, Brooks Range, as operator of the Alaska joint venture, signed a contract with Baker Energy, a unit of Michael Baker Corp., under which Baker Energy is to provide exploration support services and, if discoveries are made, to assist in the development phase. Under the contract, Baker Energy has agreed to provide a broad range of managed services, including general project management, infrastructure design, data management, capital work program implementation, supply chain management, operations and maintenance, and production reporting.
Brooks Range's Bart Armfield, vice-president of field operations, stated: "For a start-up independent operator like Brooks Range Petroleum, it is cost-effective and it makes technical sense to outsource key operational services to a world-class firm like Baker Energy who has a proven track record in field development and operations in challenging environments such as the Gulf of Mexico offshore and elsewhere. We are also very impressed with Baker Energy's record of accomplishments in safety and environmental protection which are critical success factors for any operator in Alaska."
With respect to 2006-2007 exploration activities, Baker Energy is providing early logistical support in obtaining permits for ice road and drilling sites and is working to complete an HSE plan for the field operations. Baker Energy is also providing logistical and purchasing support for third party services and materials needed in the drilling operations. Baker's Alaska office is located in the same building as Brooks Range. The Baker project manager reports directly to a vice-president at Brooks Range.
Under the terms of the contract, Baker Energy will also provide services in the development of any North Slope oil discoveries. The joint venture participants believe that having Baker Energy committed to provide services during any development phase is crucial, as the joint ventures' goal is to tie in a discovery and commence production in the following winter season, analogous to the Kerr-McGee Ataruq field plan.
Jim Winegarner joins Brooks Range as vice-president of land and external affairs
Brooks Range recently announced that Mr. Winegarner has joined the Brooks Range management team in Anchorage, as vice-president of land and external affairs. Mr. Winegarner was most recently employed at ConocoPhillips Alaska and has extensive experience in Alaska.
Brooks Range has now completed the staffing of its management team in Anchorage. Earlier in 2006, Doug Hastings joined as vice-president of exploration and Larry Smith joined as chief geophysicist. Both Mr. Hastings and Mr. Smith have extensive Alaska experience.
These three individuals join Alaska venture-associated staff Ken Thompson, Bo Darrah (president and chief executive officer of Brooks Range) and Bart Armfield (vice-president, field operations) in Anchorage.
Industry exploration success continues
On July 14, 2006, ConocoPhillips announced that an overlying satellite field (named Qannik) had been added to its Alpine unit. A 19-day test in the CD-404 well, in a 25-foot-thick sandstone at 4,000-foot subsea, is reported to have produced an average of 1,200 barrels of oil per day (bopd) of 30-degree API oil. ConocoPhillips and partner, Anadarko, have also announced that delineation and development drilling for 2006-2007 is scheduled and first production expected in late 2008.
Cliff James, TG World president, commented, "The ConocoPhillips announcement is significant to the joint venture in two aspects:
first, this is the first discovery in a sandstone play fairway that is believed to extend from the coast, south to the joint venture held Titania, Itkillik River and Ocean Point prospect areas. We expect that the joint venture will evaluate the potential of the Qannik sand play in these areas during the coming year; and
second, the ConocoPhillips' plan for first production by 2008 highlights the relatively short discovery-to-production cycle possible on the North Slope."
The ConocoPhillips release is the latest in a series of announcements concerning new discoveries in recent years. In 2005, Kerr McGee announced the Ataruq onshore discovery with initial plans for going on stream in 2006 at 15,000 bopd. In 2004, Kerr McGee made the offshore Nikaitchuq discovery. Appraisal drilling is continuing, but last reports indicated this field has 60,000 bopd potential. In 2003, Pioneer made two discoveries -- Ooguruk and Tuvaaq.
"We believe that these discoveries demonstrate the exploration potential remaining on the North Slope," commented Mr. James. "They are also significant because they were made by new entrants to the North Slope, companies that farmed into lands assembled by an independent during the same time period that Brooks Range assembled its leases."
In its May 18 news release in Stockwatch, TG World noted that ConocoPhillips/Pioneer was drilling the Antigua prospect near the joint venture's Whiskey Gulch prospect area. This exploration well has since been reported as abandoned. The significance of the abandoned well to Whiskey Gulch's prospectivity is uncertain at this time and further analysis is expected following the future release of the well data. The immediate consequence for the joint venture has been postponement of drilling of the Whiskey Gulch Kuparuk sand prospect until the Antigua well results are integrated into the prospect mapping. As a result, the joint venture does not anticipate any drilling at Whiskey Gulch in the upcoming winter season.
Overall industry exploration drilling activity on the North Slope (including national petroleum reserve area NPRA lands) for the upcoming winter season has been estimated between 10 and 19 wells. As a result, the company believes that the joint venture's drilling plans represent a significant portion of overall industry activity for the upcoming season.
© 2006 Canjex Publishing Ltd.
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