October 26, 2006 --- Vol. 12, No. 75October 2006

MMS issues proposal for next Beaufort Sea lease sale

The U.S. Minerals Management Service announced its proposal for its next oil and gas lease sale in the Beaufort Sea off Alaska’s North Slope, scheduled for March 2007.

The proposed notice outlines the terms of Beaufort Sea Sale 202, and describes the proposed sale area, economic incentives, and requirements for protecting the human, coastal and marine environment.

The sale area includes approximately 1,877 blocks encompassing about 9.7 million acres that extend from the Canadian border on the east to near Barrow on the west, but exclude offshore areas near Barrow and Kaktovik used by the Inupiat for bowhead whale subsistence hunts.

Throughout the sale area MMS said it will require offshore oil and gas activities be "coordinated with the Inupiat whalers during their subsistence hunt."

MMS developed six other lease stipulations to help minimize effects to the environment and to the Inupiat people from any development of the area’s oil and gas resources. The stipulations include site-specific bowhead whale monitoring, consultation with local subsistence communities, booming for fuel transfers, and lighting requirements for protection of spectacled and Steller’s eiders.

MMS estimates that the Beaufort Sea could contain about 7 billion barrels of oil and 32 trillion cubic feet of natural gas (mean estimate of conventionally recoverable resources).

The proposed notice also includes proposed royalty suspensions on the production of oil and condensate, subject to price thresholds.

The proposed notice of sale, environmental assessment and the Beaufort Sea multiple sale EIS are available online at

Note: Watch for the full story in the Nov. 5 issue of Petroleum News, available online Nov. 3 at

Rutter: Perf Drill test a bust, will use drill rig in spring

Rutter and Wilbanks Perf Drill test at its Ahtna No. 119 gas exploration well near Glennallen in the Copper River basin didn’t work.

“They got stuck again. … They couldn’t make the Perf Drill work; they couldn’t get more than 3 or 4 feet out into the formation,” Bill Rutter III told Petroleum News Oct. 26.

“It was an expensive experiment and it didn’t work. We’re coming back in the spring with a drill rig,” he said.

The Midland, Texas-based independent started drilling the 7,500 well – its first in Alaska in February 2005.

But drilling was hampered when the company encountered extremely high pressures in the well bore. To alleviate the pressure the drillers had to use heavy mud to complete drilling, which damaged the formation.

“We ended up drilling most of that well with 20 pound mud. Many would say that was impossible, but it wasn’t impossible, just expensive,” Rutter said.

This past fall the company went back in to test the well using a Cad Pressure Central snubbing unit, which allows the use of a coiled tubing unit in a high pressure well.

The company was hoping the Perf Drill could get through the casing to where they think the reservoir is, “some 10-12 feet past the reservoir damage,” Rutter said.

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