NEWS BULLETIN

December 06, 2007 --- Vol. 13, No. 96December 2007

Andex out, but Doyon plans to progress Nenana gas exploration

After a hiatus of more than a year, Doyon Ltd. is planning to move ahead with exploration for natural gas in the Nenana basin, Jim Mery, senior vice president of lands and natural resources for Doyon, told Petroleum News Dec. 6.

“Our goal is to get a drilling rig on the ground in the winter of 2009,” Mery said.

But Andex Resources, 50 percent partner and operator in the exploration program, is unwilling to invest any more capital in the project, Mery said. Andex had backed out of further investment when the new PPT tax in Alaska would have involved a tax rate of 22.5 percent on profits from any Nenana discovery.

Doyon’s other partners, Arctic Slope Regional Corp. and Usibelli Energy, remain in the project and Doyon is seeking a new partner and operator to replace Andex. A provision in the new production tax passed by the Alaska Legislature allows a special Cook Inlet tax rate to apply to any gas produced in Alaska for use as a fuel inside the state — that provision would have a major impact on the development of a gas field in the Nenana basin.

“We’re now in the process of trying to get the project going again,” Mery said, adding that Doyon already has engineers investigating rig options and costs for drilling in the basin.


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