A huge new oil field in the Beaufort Sea? Still no verdict for a year or so
The Beaufort Sea cliffhanger -- the expensive examination of what could be a massive new oil field north of continental Canada -- continues at least for another year.
One problem is financial. The new federal budget includes requirements that oil experts believe pose a serious threat to the financial viability of the exploration program.
Another problem, less worrisome, is the technical difficulties of the search for oil in the far north. The fifth consecutive summer exploration program in Western Arctic waters was officially wound up late last month. Dome Petroleum admitted coming tantalizingly close to adding a string of new oil strikes to an already impressive list of credits.
Dome's president, William (Bill) Richards, said foul weather, including early icing, halted tests in four wells this year. The company, he said, was "on the brink" of some significant developments that under the circumstances will have to wait to be probed until 1981. Dome, acting on behalf of itself and its partners, expects to begin a winter drilling season using artificial islands now under construction in the 1981-82 season. The islands are dredged from the sea bottom.
Dome is on the trail of more promising oil finds such as Kopanoar, which rated at 14,000 barrels a day. It had hoped in the past months to evaluate previously scored oil discoveries more fully. These include such promising locations with Eskimo names as Tarsiut and Koakoak.
None of the 1980 wells reached total depth because of inclement weather.
The geological findings of the Kopanoar oil strike of 1978 became public property recently as a two-year federal discretionary period safeguarding the operator's interests expired. That geology has aroused great interest in the oil industry.
Dome's partners in the Beaufort Sea include Gulf, Mobil, Hunt International, and Engelhard Chemicals & Minerals Corporation. The latter got involved in Beaufort earlier this year as a creditor to the Hunt brothers in the aftermath of their silver speculation fiasco.
Dome, in a sneak preview last month of the offshore geology findings and recovery prospects, announced that Beaufort has the potential to rank as a major future source of oil. What's more, current and pending commitments, unless scuttled by federal fiscal and energy policies, could put it on tap by the mid-' 80s.
Dome experts disclosed that the natural gas finds in the MacKenzie River delta area turned out to be the southern flank of oil pools in the Beaufort Sea to the north.
Parallel industry experiences in the North Sea and in West Africa's Niger River delta led to prolific oil finds. Dome experts have noted. Prospects have now been reevaluated and upgraded to indicate up to 30 billion barrels in Alaska's Prudhoe Bay field.
Dome could bring one of two -- either Kopanoar or Tarsiut -- on production first.Tarsiut, though less prolific than the fabled Kopanoar (Canada's first commercial oil strike north of the Artic Circle), is in shallower waters. Thus it offers a significant cost advantage in the tricky and expensive development stage.
Mr. Richards, who has recently negotiated a $400 million development loan from Japan to be repaid from future production said, "Dome is not at this time seeking similar financial arrangements" from outside. But it does want federal incentives comparable to Alberta projects designed to encourage field activity as soon as possible.
Mr. Ricahrds had hoped for a tax break in the federal budget. Instead, the government announced it would take 25 percent ownership of such a pioneer field through government-owned Petro-Canada. It also increased the tax load on Dome's producing oil and gas properties in Alberta and elsewhere.
The Dome executive has maintained that exploration credits could eventually pay dividends to Ottawa. He pointed out that Alberta's incentives for drilling of wells, for example, repaid the province "far in excess" of the original investment of cash credits and other tax breaks.
However, the budget, indicated that Ottawa has so far turned a deaf ear to such oil company pleas. Dome earlier warned that unless it received appropriate incentives, the Beaufort Sea program might be curtailed or even abandoned. Mr. RIchards said an early start next summer on the follow-up program could put the Dome back on schedule for oil production by 1985-86. It hopes gas would begin to flow somewhat later.
Dome does not now plan a pipeline in the MacKenzie River Valley. Its oil would be tankered along the Alaska coast or east through the Northwest Passage, while gas is still planned to come south via the Dempster lateral of the planned