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State denies Corsair unit expansion Two of Pacific Energy’s first three wells in Cook Inlet prospect were planned for leases state to offer in May 2009 lease sale Eric Lidji Petroleum News
On April 30, the state of Alaska denied a request to more than double the size of Corsair unit in the waters of Cook Inlet, arguing that expanding the Pacific Energy Resources-operated unit would be like “warehousing” undeveloped leases.
The decision presents a curious scenario around the upcoming drilling program at Corsair. While the state Division of Oil and Gas successfully pushed Pacific Energy to enter into a multi-million dollar deal to bring a jack-up rig to Cook Inlet, the division also refused to expand Corsair to include two leases Pacific Energy had previously mapped out as the drilling locations for two of its first three wells.
California-based Pacific Energy made the unit expansion request in March, hoping to keep three leases in the area from expiring at the end of April. The Corsair unit sits due south of the village of Tyonek.
The company wanted to add four surrounding leases to expand Corsair both to the north and the south. Those four leases would have added 16,546 acres to Corsair, bringing the total acreage of the unit to 26,731.
Trouble getting started Pacific Energy is the operator and sole working interest owner of Corsair, having acquired both the unit and the surrounding leases from Forest Oil in August 2007.
At the end of 2007, the state gave Pacific Energy 90 days to either secure a drilling rig for an exploration program or lose the unit. The company did enough to assure the state before that deadline, and on April 15 confirmed it had signed a three-year $156 million contract with Blake Offshore to bring a jack-up rig to Cook Inlet.
That rig, Blake 151, is currently in the Gulf of Mexico and could be part of a drilling program in the Bahamas this fall before finally heading up to Alaska. Pacific Energy hopes to start drilling in the spring of 2009.
The Corsair prospect is a long, thin structure running diagonally across the waters of the Cook Inlet from the northeast to the southwest. The primary targets are the Sterling and Beluga gas sands, but there is a secondary target in the deeper Tyonek oil sands.
The decision on whether to aim for the gas or oil first depends on when the jack-up rig arrives in the Cook Inlet, Pacific Energy Chairman and CEO Vladimir Katic told Petroleum News back in February.
If the company gets its rig in May or June it would have time to drill into the deeper oil reservoirs, but if the rig doesn’t arrive until September, Pacific Energy would only have enough time to drill for gas, Katic said.
Pacific Energy loses three leases Pacific Energy plans to drill three wells by the end of 2009 and possibly a fourth by the end of 2011. However, the company will likely need to make some adjustments to its drilling plans now that the state has denied the unit expansion.
In a plan of exploration filed with the state on March 18, Corsair proposed putting two wells of its initial three well program on leases outside the existing boundaries of the unit. But the first well, PAC No. 1, would have sat within the existing unit at the southwest corner of ADL 389196, about one mile south of the ARCO A-1 SRS Tern well and just east of the Shell SRS No. 1 well, both of which have been plugged and abandoned.
With the decision not to expand Corsair, three of the four leases outside the unit will expire and become part of the May 2009 state lease sale for Cook Inlet.
Pacific Energy planned to drill on two of those leases, ADL 389507 and ADL 389514, but did not yet submit plans for the third, ADL 389513. Pacific Energy still holds on to one lease outside the unit: ADL389923, which does not expire until the end of the year.
Pacific Energy has until May 20 to appeal the state’s decision. (The company chose not to comment for this story.)
Renaissance identified oil reservoirs nearby The state received a comment from Renaissance Alaska LLC in regards to the expansion request by Pacific Energy. Renaissance said it had “identified certain oil reservoirs and potential hydrocarbon accumulations that may extend onto the proposed area to be included in the Corsair unit.”
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