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Stranded no more Rutter to drill this winter near Glennallen in undeveloped Alaska basin Kay Cashman Petroleum News Publisher & Managing Editor
Midland, Texas-based Rutter and Wilbanks Corp. plans to drill a single gas exploration well near Glennallen, Alaska, this winter. It will be the first well in Alaska’s undeveloped Copper River basin since Copper Valley Machine Works drilled the Alicia No. 1 well in 1983.
The independent has filed an application for an oil discharge prevention and contingency plan with the Alaska Department of Environmental Conservation for the well, which will be approximately 12 miles west of Glennallen and approximately 2,000 feet north of the highway on Ahtna Native land.
A rotary drilling rig from Kuukpik Drilling or Nabors Alaska Drilling will be used for the well, which the company plans to drill in February to a depth of 7,500 feet. It will be the deepest well ever drilled in the region, Rutter and Wilbanks executive Bill Rutter III told Petroleum News Dec. 21.
“We hope to take a look at some rocks no one’s ever drilled out there before. We’ll be drilling down into the Jurassic, which could offer new potential. … We hope find what we’re looking for and something more,” Rutter said.
The company, which has never operated in the state before, has hired long-time Alaska contractor The Fairweather Companies to handle its operations. Permitting is being handled by Bob Britch of Anchorage-based Northern Consulting. Forest Oil backs down In its April 11 edition Petroleum News reported that Rutter and Wilbanks and partner Delphi International were shopping for investors in the 398,445-acre Copper River block. The acreage, under a five-year exploration license agreement with the state of Alaska since 2000, was won by Anschutz Exploration. Kevin Corbett, new ventures manager for Anschutz, told Petroleum News that subsequent to winning the exploration license, Anschutz entered into an agreement with Forcenergy — now Forest Oil — to jointly explore the area.
The 50-50 partners signed an exploration agreement covering the 398,445 acres with Rutter and Wilbanks and Delphi earlier this year.
In April, Forest was going to be the operator, but the permit applications list applicant Rutter and Wilbanks as the operator.
Forest and Anschutz each have one-eighth of the project, Rutter said Oct. 21.
“They had satisfied $1 million of the $1.4 million work commitment and then decided they didn’t want to do the project. They’ve given up the lion’s share to us — 50 percent — which Rutter and Wilbanks shares with Delphi,” he said.
“We lined up a lot of our regular investors — they, Forest and Anschutz have 50 percent of the project. … There are a few more people looking at it, but if we don’t get anymore partners we’ll still go ahead and drill it.”
Rutter and Wilbanks and its investment partners have already satisfied the $400, 000 remaining work commitment with seismic shot by PGS Onshore.
“This is a risky deal, but we have a long history of taking risks. We have been wildcatters for three generations, and see no reason to stop now. We have a shot at some really big reserves on this deal,” Rutter told Petroleum News in April.
He said in the most recent interview that he is “impressed with competency of Fairweather, Britch and the people in the bureaucracies in Alaska. I really do believe Alaska wants to see more exploration.”
Rutter and Wilbanks is “looking for gas. … We’d love to find oil, but we’re expecting just gas.” Nonetheless, Rutter said the company has a contingency oil spill plan. “It’s better to err on the side of caution. We’re spending a lot of extra money on casing design. We do not want to take any chances on having a blow out.”
And what if the company does find commercial quantities of gas? Discovery might ‘spur’ North Slope spur line If natural gas is found, additional drilling may occur year-round, Rutter and Wilbanks’ DEC application said.
More important, Rutter hopes a major gas discovery will “stimulate the North Slope spur line concept” and convince the state to first build a section of the line from Glennallen to Palmer to get Copper River gas into the Enstar system for Southcentral Alaska. “That could eventually lead to a spur line north to tap into a North Slope gas pipeline.
“The governor and a lot of other people like the idea of having access to North Slope gas for the Anchorage market. Anchorage needs gas and in 10 years will need it a lot more,” he said. “The way I see this unfolding if we do make a big discovery, is the state will say ‘the Copper River discovery is half way (to) where we want to go with a spur line. Let’s pre-build the first half of it and take that gas and when a North Slope gas pipeline is built let’s finish the spur line up to it.’”
A pipeline from Glennallen to Anchorage via Palmer will cost $60-70 million, Rutter said, and “that’s just one option. Taking it to an LNG facility in Valdez is another or building a gas-to-liquids plant.”
The price tag on the pipeline seems like a lot of money, he said, “but if you find 200 bcf of gas and it’s the only way to get it out of there, than that’s what you do.” Heinze says line could be first step The top man at the Alaska Natural Gas Development Authority, Chief Executive Officer Harold Heinze, shares Rutter’s vision.
“We are interested in building a spur line to bring gas into Southcentral Alaska. Ballot 3 directed us to look at the economic viability of such a line. Basically we found it was not only highly desirable but, given the gas situation in Cook Inlet, a priority.”
Rutter, Heinze said, was surprised ANGDA would consider building a line north to Glennallen.
“Our plan is based on getting North Slope gas to Southcentral. The Palmer to Glennallen stretch gets you to the TAPS right of way and if you go northward you can intercept” the North Slope gas pipeline. “If they (Rutter and Wilbanks) found something of significance it is a fit with what might happen,” Heinze said.
Currently ANGDA is “aiming just slightly north of Glennallen. We’re preparing applications to the state for the right of way that links Glennallen to Enstar’s system in the Palmer area. … If a North Slope pipeline is built to Valdez that’s where we’d hook up but if the line (goes through Canada, which is the route preferred by North Slope gas owners), we’d have to go north another 140 miles with a spur line to Delta Junction,” he said.
Glennallen to Palmer is the “only piece of the puzzle where a right of way doesn’t exist. Our contractors are starting work on it right after first of the year. We should have our applications into the state of Alaska by April 1,” Heinze said.
Michael Baker Jr. has teamed with Enstar to do the engineering, he said. “Enstar is taking the lead on the … right of way and they have teamed with Michael Baker the other way around way around to do the land. Lynx is doing the environmental and public outreach process,” he said. “Even though we’re not required to, we’re going to get a lot of public input before we file the application with DNR.”
How will ANGDA fund the spur line?
“I expect at some point in the project … some companies would want to join us; some have already expressed interest,” Heinze said.
“ANGDA … as a state utility can debt finance the whole spur line for about $300 million,” he said. “As a gas transmission utility with a large customer base in this area utility type financing is relatively easy.
“Lord love them if they find gas. We’ll be in a scoring position by the time Rutter and Wilbanks know something. They’ll make my life more exciting and more interesting,” Heinze said. “But you can’t call them until you drill them. And see the test.”
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