Evergreen Resources uses Raton model for Alaska
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Company dewatering pilot holes in Matanuska-Susitna Borough north of Anchorage, completing core drilling; 7,000 feet already acquired
Kristen Nelson Petroleum News Editor-in-Chief
Evergreen Resources (Alaska) is dewatering pilot coalbed methane wells and completing a core drilling program in the Matanuska-Susitna Borough area north of Anchorage.
What the company would like to find in the area is a coalbed methane resource comparable to what it is developing in the Raton basin in Colorado, where it is drilling on more than 300,000 acres and expects to drill some 1,500 wells.
Corri Feige, the company’s manager of government affairs and public relations, told the Society of Petroleum Engineers in Anchorage April 12 that the company has drilled four of five core holes planned for this winter in the Mat-Su area and was getting ready to complete the fifth.
Denver, Colo.-based Evergreen Resources acquired the Pioneer unit, almost 74,000 acres in the Palmer-Wasilla area north of Anchorage, from Ocean Energy and Unocal in 2001, and in 2002 and 2003 the company drilled two four-hole coalbed methane pilots, Feige said. Only one of the wells pilot No. 2, the Cook No. 1 on Church Road, was completed, and that well was “shut in and put into production shutdown the first of October 2003.” She said there were porosity and permeability issues and calcium carbonate cement at the 3,300-foot depth the company was testing.
But, she said, there are shallower horizons in the pilot No. 2 wells, as well as in pilot No. 1, which is in production testing, and Evergreen may test those shallower horizons at a later date.
Pilot No. 1, along the Parks Highway between Wasilla and Houston, “will remain in production testing throughout 2004,” Feige said. Then Evergreen will “compile all of the new geophysical data and the new geologic core data coming out of the core program, then we’ll determine if we want to step up and test those shallower coal horizons.” New look at the Susitna basin Core from the five holes is estimated at 10,000 feet, she said, and the company has acquired a little more than 7,000 feet from the first four cores. Feige said the first four holes have given Evergreen “a much better understanding — and a new look at the Susitna basin.” There is “a great deal more complexity to the basement structure and the basement fabric in the Susitna” than publicly available data indicated, she said.
The company’s “highest priority” will be “to advance our in-the-ground program,” Feige said. That includes analyzing data from the core program, combining it with “some new geophysics” and updating the company’s “geologic assumptions for the Susitna basin.”
Then the company will target and drill its next pilot or pilots, she said, and “also advance our drill testing within the Pioneer unit with at least one core hole and possibly another pilot within the Pioneer unit…” Raton the working model In Evergreen’s major producing area, the Raton basin in Colorado, the company produces about 170 million cubic feet per day out of some 1,100 wells, with well costs in the range of $300,000 to $500,000 per well, and a 2004 budget of $82 million. Feige said the company anticipates another seven years of “full-blown, full-scale development” in the Raton, or five years if the development program is really accelerated.
Shane Gagliardi, the company’s Alaska petroleum engineer, said full development in the Raton is expected to be some 1,500 wells.
The coals in Alaska appear to be younger than those in the Raton basin, Gagliardi, said, so the gas content in Alaska might not be as high — but the coal in Alaska is thicker, he said, so it’s possible that “what we lose in gas content we can make up for in thickness.”
He said that with “virgin coals where no dewatering has happened, you wouldn’t expect to have much gas for the first year or first 18 months” until enough water has been produced to reduce bottom hole pressure. The pilot holes are making some 3,000 cubic feet per day of natural gas, with about 300 barrels a day of water from one well and roughly 20 barrels per day from the others. All of the water in Alaska is re-injected, and Gagliardi said tests on the produced water show it’s similar to Raton basin coalbed methane produced water used to water cattle.
Production in Alaska is with progressive cavity pumps, he said, compared to the Raton basin, where about 70 percent of the company’s wells are on progressive cavity pumps and about 30 percent on rod lift pumps. Educational program also continuing Evergreen’s work in Alaska has created a need to educate the public and public officials about coalbed methane development, Feige said, and she noted that the company is finding many of the same public relations issues in the Matanuska-Susitna basin that it dealt with when it began work in the Raton basin in 1993-94.
Property values are one concern and Evergreen did a survey of property resale values in the Raton from 1997 through 2001.
“Property values, resale values, in the gas development area, increased by 17 percent,” she said, compared to an increase of only 8 percent outside the development area.
One study by the Southern Colorado Economic Council showed a 22 percent decline in certain property values, Feige said, but “in fact, it was not a decline, there was property removed — actual acreage taken out of the equation, with those properties, which amounted to the decline of 22 percent.”
She said Evergreen attributes increased property values in its development areas to “improved quality of life and the higher tax base.” Evergreen’s Raton basin development is in Las Animas county, and in addition to a total investment of more than $500 million west of Trinidad, 220 full-time employees in Trinidad and a 2003 payroll of about $10.7 million, Evergreen is the county’s largest tax payer, paying $2.9 million last year.
On the development side, the two main issues in both Alaska and Colorado “are environmentally sensitive development and protection of the view shed,” she said, and in both areas Evergreen “has used the natural typography and used the vegetation to shroud the facilities.” Split estate, other basins, issues in Alaska Feige said split estate — separate surface and subsurface ownership — is a big issue in Alaska, and an issue where a lot of education is needed.
“Most people do not realize that there is over a hundred years of history in the United States with split estate,” she said, noting that most states west of the Mississippi have split estate, so oil and gas ownership can be different than surface ownership.
Surface-owner protections are mandated in Alaska’s regulations, she said, and Evergreen’s role has been to support the state in its effort to educate the public, since split estate “really is a state agency issue.”
An educational issue Evergreen faces is explaining what coalbed methane development looks like.
Alaskans, she said, have been told that Powder River and San Juan basin coalbed methane developments are typical, not what Evergreen has done in the Raton basin.
Feige said there are big differences.
The Powder River basin, she said, is “absolutely anomalous in terms of coalbed methane development basins” because the coal is very shallow with thick, highly fractured, highly permeable coals. Powder River coalbed methane also produces twice as much produced water as gas, “and that’s absolutely backwards, when you compare it to all of the other producing basins in the nation.”
And the Powder River basin is “flat, there’s no typography, there’s no vegetation,” so everything is visible.
The San Juan basin is also somewhat flat, she said, but the worst problem there is that coalbed methane development has sometimes been done from conventional oil and gas pads “in an effort to limit additional impacts within the basin.” Because the conventional pads are so much larger than modern coalbed methane pads, “there’s been a lot of bad press and spin,” Feige said.
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