Alaska's exploding oil and gas activity: most by independents, new to the state.

• Author: Bradner, Mike
• Position: OIL & GAS

Alaskans are seeing almost an explosion of activity by independent oil and gas companies, most of them new to Alaska. These companies come in various sizes. They include very small, locally owned firms like UltraStar, managed by Jim Weeks, a former Arco Alaska senior manager, exploring on the North Slope; and Nordaq Energy, headed by Bob Warthen, another industry veteran, exploring on the Kenai Peninsula.

There are a range of larger firms, like Brooks Range Petroleum and Cook Inlet Energy, which are Alaska-based and working only in Alaska but owned mostly by out-of-state owners. There are the much larger independents like Apache Corp., an experienced company relatively newly arrived to Cook Inlet, to Anadarko Petroleum Corp., a large independent active in exploration and production for many years, mostly on the North Slope.

There is a long list of other independents, most small- to medium-sized and most newly arrived, who are trying out new ideas. Some of these have the potential to fundamentally change the oil business in Alaska.

By definition, independent oil and gas companies are those doing business in a segment of the petroleum industry, usually "upstream," in exploration or production, but sometimes "downstream," in refining and marketing. Independents focusing on upstream exploration and production are not "integrated" companies, such as the large oil companies, which have their own refining and marketing. The upstream independents find and produce oil or gas and sell to others, typically companies that own refineries, either major companies or independent refiners--downstream refiners and marketers that do not own oil and gas wells, but buy from firms that do. Owners of Alaska refineries such as Tesoro Petroleum Corp., owner of the refinery near Kenai, are examples of independent refining and marketing companies. Flint Hills Resources, which owns a refinery at North Pole, near Fairbanks, also fits this category although Flint Hills does not own its marketing outlets but has, among other customers, long-term contracts with the Holiday Express retail gasoline station chain in Alaska. Petro Star, which owns refineries at North Pole and Valdez, owns some retail outlets, but mainly sells its products through others.

To complete the loop there are independent companies that own pipelines that connect the upstream and downstream, the "mid-stream" so to speak. TransCanada Corp., for example, is working on the large Alaska gas pipeline as an independent pipeline company. TransCanada also owns and operates oil pipelines...