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NEWS BULLETIN

October 05, 2006 --- Vol. 12, No. 66October 2006

State denies Holitna exploration license

After an August 2005 preliminary best interest finding determined that an application for a gas-only exploration license in the Holitna basin was in the state’s best interest, the Alaska Division of Oil and Gas has issued a final finding and decision denying the application.

The division said in its Oct. 2 final finding that while mitigation measures were included in the preliminary finding, it “received significant comments on the proposed mitigation measures.” After reviewing the comments, the division said it “has concluded that no mitigation measure is sufficient.”

The problem is that typical mitigation measures drafted to avoid sensitive areas “would be ineffective in this instance due to the fact that the small proposed license area entirely includes uniquely sensitive spawning and over-wintering habitat,” the division said.

The proposed license area was only 26,779 acres, making “it difficult to condition the license in a manner that allows exploration activities to occur harmoniously with the other uses in the area and without impact to sensitive fish and wildlife resources.”

The division also said the license had “very little local support and the project proponent has not proactively garnered such support.”

No word yet on Rutter’s Glennallen gas well

As of the morning of Oct. 5, there was still no word from the oilfield service contractors testing Rutter and Wilbanks’ 7,500-foot exploration well near Glennallen in Alaska’s undeveloped Copper River basin.

The Midland, Texas-based independent started drilling the well in February 2005 in search of commercial quantities of natural gas, but drilling was hampered when the company encountered extremely high pressures in the well bore. To mitigate the high pressure the company had to use heavy mud to complete drilling, which damaged the formation.

“We had … skin, formation damage,” Bill Rutter III told attendees of the South Central Energy Forum on Sept. 21. “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 the company was now trying to test the well using a Cad Pressure Central snubbing unit, which allows the use of a coiled tubing unit in a well with a lot of pressure. The tool being used to penetrate the casing is a Perf Drill, he said.

“They are actually drilling through the casing where they think the reservoir is, some 10-12 feet past the reservoir damage,” Rutter said.

But so far, Rutter said Oct. 5, “we’re still having lots of mechanical problems.”

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