Doyon’s drilling in Nenana basin

Drilling is underway on Doyon’s latest well near Nenana, its fourth in the Basin, and is approaching the depths at which hydrocarbons might be encountered.  Fairbanks-based Doyon expects to have results of the drilling by late July. A partner in the well is Cook Inlet Region, Inc. of Anchorage, which also joined Doyon in drilling the last well in the Nenana Basun.

In another development, Doyon has signed a confidentiality agreement with a company to take a fresh look at oil and gas potential of the large Yukon Flats basin in Interior Alaska. The company is unidentified, and is only “kicking the tires” in the basin. Doyon and its village corporations are large landowners in Yukon Flats. However, this is the first time in decades that a major company has shown interest in the Interior. In the 1980s several companies including ExxonMobil, ARCO and Unocal were interested and even drilled, but activity halted after the 1986 oil price collapse and never resumed.  The Yukon Flats and the Nenana Basin west of Fairbanks were once considered to be mainly gas-prone but work by Doyon and the U.S. Geological Survey have demonstrated the presence of oil systems in the region. Doyon has put substantial resources into its exploration in the Interior over the years, spending about $130 million of its own funds of a total $150 million expended (balance by partners). Doyon’s drilling has focused on state lands.

 

New Badami well is a good one

Glacier Oil and Gas said its “Starfish” exploration/delineation well at its small Badami field was successful, flowing 2,500 barrels per day. The well tapped a new reservoir layer, the Killian, below the Badami Sandstone that are now being produced with a handful of wells. The new well needs to flow for a while to make sure the rate can be sustained before Glacier plans further drilling.  Company officials say they hope to drill a second well into the Killian next winter.

Badami has been a bit of a hard luck story, not performing to expectations after since BP first developed it. Glacier has patiently worked at it, however, and new wells in the Killian could help the field do better. Badami is currently producing about 900 barrels a day from eight wells.

 

 BP’s 2018 Prudhoe work plan

BP filed a 2018 Prudhoe Bay field development plan with the state Division of Oil and Gas projecting similar amounts of activity to 2017. Five new reservoir “penetrations” (for new producing wells) are planned but penetrations with coiled-tubing units will drop from 22 in 2017 to nine in 2018. BP expects about 400 “wellwork” jobs (mainly repairs) to enhance production along with about 900 “non-rate-adding” well jobs, according to the plan filed with the state. BP had two rigs working in Prudhoe in 2017.

BP also said commercial negotiations will begin over delivery of Point Thomson gas to Prudhoe Bay for reservoir pressure-maintenance. This will allow gas production to begin at Point Thomson before a large natural gas pipeline is developed and in operation, which is seen in the 2025 period. ExxonMobil, the Point Thomson operator, is proposing this project as a way of producing Point Thomson and essentially storing it in Prudhoe Bay, meanwhile benefiting from pressure maintenance in the Prudhoe reservoir. The companies will decide on the project in late 2019. It would involve major construction in reconfiguring Point Thomson facilities and building a new 60-mile pipeline to move gas to Prudhoe. There is already a liquids pipeline between the two fields.

 

Hilcorp to halt Inlet tanker shuttle

Cook Inlet Pipeline Co., a Hilcorp Energy subsidiary, plans to begin dismantling the Drift River oil terminal on Cook Inlet’s west side next year. The company will begin moving oil by pipeline this fall to the east side of the Inlet. Hilcorp has applied to the Regulatory Commission of Alaska for permission to shut down operations at the terminal in early 2019. There are seven crude oil storage tanks at Drift River, each with a capacity of 270,000 barrels, along with the Christy Lee Loading Platform. The deactivated platform will be kept in place, or “lighthoused,” until it is removed.

Hilcorp intends to have a $73 million pipeline reconfiguration project completed this fall to ship crude oil from producing fields on the west side of the Inlet to the Andeavor (formerly Tesoro) refinery on the east side, at Nikiski on the Kenai Peninsula. That will eliminate the current procedure of shipping crude by a shuttle tanker from Drift River to the refinery at Nikiski. The pipeline plan is to convert existing cross-Inlet pipelines used to carry natural gas to crude oil pipelines.  

 

Furie to resume Inlet drilling?

We hear Furie Operating Alaska now has funding to reactivate the jack-up rig in storage in Seward and move it to Cook Inlet to drill additional wells at Furie’s Kitchen Lights offshore gas field. That would bring additional gas supplies to Southcentral Alaska. We know the Interior Gas Utility is looking for gas for its Fairbanks gas distribution buildout. The company’s supply contract with Hilcorp Energy ends of 2020. There may be others looking for gas, too.