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DNR pulls plug on Arctic Fortitude Says that company could have avoided work delays if the company had moved earlier in making arrangements for tundra travel Alan Bailey Petroleum News
The Alaska Department of Natural Resources has pulled the plug on Alaskan Crude’s request to extend the timeframe for the company’s work program in the Arctic Fortitude unit, on the south side of the Prudhoe Bay unit on Alaska’s North Slope. The company’s tardiness in arranging the transportation of equipment across the tundra has caused the requested work delays, Kevin Banks, acting director of Alaska’s Division of Oil and Gas, told Alaskan Crude President James White, in a letter dated June 28 declining Alaskan Crude’s request.
Alaskan Crude had been planning to re-enter the Burglin No. 33-1 well in the Arctic Fortitude unit during the summer of 2007, to test several intervals, including the West Sak-Ugnu, the middle Cretaceous Brookian and a portion of the Ivishak formation. The well is in an existing gravel pad.
According to the initial unit plan of exploration, approved on June 29, 2006, Alaskan Crude was going to complete the drilling at the Burglin well by 5:00 p.m. on Oct. 1, 2007. Completion of that work might then lead to the drilling of up to two additional wells and the possible acquisition of 3-D seismic data in the unit.
Winter transportation Alaskan Crude had planned to move a drilling rig and other equipment to the Burglin pad during the winter tundra travel season. On March 5, 2007, the company submitted a plan of operations to the division, saying that it was going to deliver the equipment to the pad over a snow road from the Dalton Highway.
But on May 25 the company told the division that it had been unable to transport the equipment as planned, because of adverse weather conditions. Transportation contractor Catco had judged the conditions to be unsuitable for tundra travel, the company told the division.
“Catco believes (there is) simply too little snow and too much wind and no more time to be environmentally safe for Catco to move the required equipment to the pad,” White said in a letter to Steve Schmitz of the division’s permitting section.
Instead, Alaskan Crude now plans to move the equipment to the well pad in the summer using “rolligons or other vehicles approved for summer travel,” White said.
And, according to the June 28 letter from Banks, Alaskan Crude requested that the work commitment deadlines for the Burglin drilling should be extended, as a consequence of the new plans for equipment transportation. Apparently, Alaskan Crude had said that it would not now be able to conduct any substantial operations at the well site in the summer of 2007.
But, in his letter declining Alaskan Crude’s timeline extension request, Banks told Alaskan Crude that approval of the Arctic Fortitude unit in 2006 had been “contingent on completion of an explicit development timeline because no drilling or workovers occurred during the seven-year primary term of the AFU (Arctic Fortitude) leases.”
DOG approved the formation of the Arctic Fortitude unit when the primary term of the leases that constituted the unit expired in June 2006.
Letter from DMLW On June 22 the Division of Oil and Gas received a copy of a letter to Alaskan Crude from Alaska’s Division of Mining, Land and Water. That letter responded to an enquiry from Alaskan Crude about summer tundra travel and said that tundra travel could not be approved without the resolution of issues relating to the need for a land use permit and the specification of access routes.
“While we have had many conversations with you over the years regarding access to the Burglin 33-1 well, you have never submitted a land use permit application for this project to this office,” said Gary Schultz, natural resource manager in DMLW. “Approvals can only be given to individuals or companies who have current land use permits.”
Schultz said that because transporting the equipment would require 60 individual trips across the tundra, many access routes would be needed to minimize multiple passes over a single route. And the state would need to determine that those routes were suitably dry for use.
Ample time The Division of Oil and Gas clearly thinks that Alaskan Crude has had ample time to obtain the necessary permits and transport its equipment to the well pad.
“Failure to timely submit the appropriate application or requests to DMLW (the Division of Mining, Land and Water) does not justify relief under the initial POE (Plan of Exploration) because the AFU was approved on June 29, 2006, which provided adequate time for scheduling winter equipment deliveries to the AFU location,” Banks said.
Under the terms of the approved plan of exploration, the Alaska Fortitude unit will terminate at 5:01 p.m. on July 1, 2007, unless Alaskan Crude pays $60,000 to the division and provides a written statement of its intentions to complete all of the work obligations in the plan of exploration.
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