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THE EXPLORERS 2006 - 2006 year of ‘perfect storm’ for Aurora Independent considering shifting focus to oil; might be done with gas exploration due to Enstar situation Petroleum News
Formed in 2000 to look for natural gas opportunities in Alaska, Aurora Gas had until 2004 mainly focused on known, relatively shallow gas, plays on land near on the west side of the body of water called Cook Inlet in the Cook Inlet basin.
In late 2004 Aurora drilled its first exploration well, the Three Mile Creek No. 1. It was a discovery.
The company’s strategy paid off handsomely. Aurora currently operates five fields on the west side of the Inlet: the Kaloa, Lone Creek, Moquawkie, Three Mile Creek and Nicolai Creek fields.
Aurora’s next exploration well was the Aspen well in 2005. Three miles inland from Tyonek on the west side of Cook Inlet, the 4,485-foot well tested multiple zones in the Tertiary but failed to find commercial quantities of gas.
Drills for oil in 2006 In 2005, Aurora also announced its intention to explore for oil in the Cook Inlet basin.
In April 2006, it formed an exploration joint venture with Swift Energy Co. and spud a wildcat well at the Endeavour prospect in the southwest Kenai Peninsula.
The 9,225-foot well proved to be a dry hole.
The prime target at the prospect had been oil in the Hemlock and lower Tyonek formations at depths between 8,000 and 9,000 feet, Aurora Vice President Andy Clifford told Petroleum News. He said the stratigraphy and structure of the prospect exactly mirrored the nearby, offshore Cosmopolitan prospect, which was known to contain oil.
“There’s just one syncline between Cosmopolitan offshore and Endeavour onshore,” Clifford said.
Aurora had also hoped to find gas in higher horizons in the well.
Long Lake 2 was No. 3 The company then moved to the west side of Cook Inlet to drill Long Lake 2, a natural gas exploration well, and to do a well workover program.
Long Lake 2 was drilled to a measured depth of 3,842 feet and subsequently plugged and abandoned as a dry hole.
Aurora spent much of the next few months of 2006 focused on recompletions and workovers with what it described as moderate success on recompletions of the Nicolai Creek 1B, Lone Creek 1, Mobil Moquawkie 1 and Nicolai Creek 9.
Results are being evaluated from an acid stimulation of the Three Mile Creek 2, the company said.
On Oct. 23, 2006, Aurora president G. Scott Pfoff announced the company had suspended drilling for the season and released Alaska Well Service rig 1.
Pfoff said Aurora had hoped to drill at least two additional development wells in 2006, but released the rig due to geologic risk and commercial uncertainties.
“This has been a tough year for Aurora Gas,” he said. “Geologic complexity, the high-cost environment in which Aurora operates and recent commercial uncertainty have all combined in a perfect storm effect to paralyze the company’s efforts to prove up additional reserves and deliverability in Cook Inlet. We understand and accept the geologic risks, and we are constantly striving to reduce costs, but when commercial uncertainty was thrown into the mix, we had no choice but to defer further activities in our core area of operations on the west side of Cook Inlet.”
Pfoff said Aurora Gas tried to exercise its contractual right to suspend deliveries of natural gas to Enstar Natural Gas Co. “at prices that are far below what is economic.” Enstar resisted and is litigating, he said.
“We see no incentive to continue the search for gas until this issue can be resolved; and if the issue is not resolved in Aurora’s favor, the result will be no further exploration and development by Aurora Gas in our core area of operations.”
Focus might shift to oil Pfoff said Aurora Gas will continue to explore in Cook Inlet.
“We have other opportunities and prospects that we can pursue.”
Pfoff said the company hopes to conduct additional three-dimensional seismic work this winter, “and we are optimistically planning a work program for 2007 including another wildcat exploration well for oil. My guess is that most of the work will either be oil-focused or focused on natural gas opportunities in new areas of Cook Inlet.
Earlier the company had said Aurora planned to drill deep for oil at Aspen.
Editor’s note: Aurora Gas Inc., later renamed Aurora Power Resources, was founded in 1994 to market gas in Southcentral Alaska. Becoming a Cook Inlet producer was always a company goal. In 1997, Aurora acquired its first leases and in 1998 it gained production, acquiring Chevron’s working interest in the Marathon-operated Kenai and Cannery Loop gas fields. In 2000, Aurora Gas LLC was formed by Aurora Power and Orion Resources. Ed Jones and Andy Clifford of Orion provided “the technical expertise that we didn’t have then in Aurora Power,” Pfoff said at the time.
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