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Donkel evaluating North Slope acreage Fresh from sale of Cook Inlet holdings, Dan Donkel has high bids of almost $1 million in Beaufort Sea, North Slope lease sales Kay Cashman & Kristen Nelson Petroleum News
In July Samuel H. Cade and Daniel K. Donkel (in partnership with others on some leases), sold 196,524 acres of Alaska state Cook Inlet oil and gas leases to Apache Corp., 60 leases scattered across the Cook Inlet basin from the Wasilla area to Anchor Point, both onshore and offshore.
After the sale to Apache, Donkel held less than 30,000 acres in state oil and gas leases.
But that changed in October, when Donkel was the apparent high bidder on almost 100,000 acres in the state’s North Slope and Beaufort Sea areawide sales, with apparent high bids of almost $1 million.
Donkel had the second largest number of apparent high bids and the second highest bid total in the North Slope sale, taking 22 tracts for $608,000.
In the Beaufort Sea sale, Donkel was the big bidder, taking 13 tracts for $390,400.
A bidder since 1983 Donkel told Petroleum News in an e-mail that he was “very happy” with results of the lease sales.
“I have learned so much about Alaska’s oil business since my first lease sale in the Cook Inlet in September of 1983,” he said.
Donkel has been vocal through the years about how Alaska’s oil and gas laws and regulations make it hard for small companies to become producers in the state. He is optimistic that that may change.
“I see this year’s election as a game changer for the people of Alaska and the oil industry,” Donkel said, and he hopes for changes that will encourage more oil and gas development in the state.
“In this 2010 election Alaskans have sent the message to both Democrats and Republicans that more oil and gas jobs and investment in Alaska are needed. As a result, the candidates are talking about making changes to bring investment from oil and gas companies from the around the world back to Alaska.”
Donkel has frequently been a successful bidder in Alaska oil and gas lease sales, and has assembled acreage for development — but he has yet to be an operator in the state.
On his plans for this acreage, he told Petroleum News he might use Donkel Oil and Gas LLC to attract investment and drill the leases he acquired in the recent sales, or might “partner to bring … a new company into Alaska like I did with excellent oil companies like Forcenergy and others in the Cook Inlet over the last few decades.”
Donkel said he would like to see the new Legislature pass “lower taxes and less burdensome regulation,” which he said would cause Alaskans and those who choose to invest in Alaska’s oil and gas industries to prosper.
He said he can’t think of a better win-win than to match “Alaska oil and gas potential with the oil and gas investment dollars currently being spent in other jurisdictions worldwide.”
His goal with the North Slope and Beaufort Sea acreage was to “help Alaska and Alaskans by reinvigorating exploration on the North Slope,” Donkel said.
Cook Inlet work Dave Gross, a consulting geologist who began work on Donkel’s prospects after he left Chevron in 1992, told Petroleum News in an e-mail that chief among earlier successes were the Redoubt Shoal and Sterling gas fields.
He said Donkel’s company, then Danco Inc., later Donkel Oil & Gas LLC, “identified the opportunity at Sterling and with a joint venture partner, we were successful in bringing the Sterling Gas Field into production. Our attempts to do the same with the Redoubt Shoal project were not successful.”
Gross said that “after a long and expensive struggle it was deemed economically prudent to sell the entire project to an independent oil company and to retain an ORR (overriding royalty).”
Redoubt Shoal was sold to Forcenergy and after Forest Oil acquired Forcenergy’s Alaska properties in 2000, the Osprey platform was installed at Redoubt and production began.
“Though the field was not developed in a manner I would have recommended,” Gross said, “it still represents the first installed platform in the Cook Inlet in decades and I think will display its true potential under the care of its new owners.”
Gross said that Donkel’s “desire has always been to actively pursue and develop hydrocarbon prospects himself, but conditions being what they are in Alaska, he has been left with the business model of using the geologic and geophysical input from his consultants to acquire leasehold positions that contain good exploration prospects. Instead of going forward with these projects himself, Dan (Donkel) is forced to offer these opportunities to clients who have greater economic resources than he, but often lack the expertise and experience in the Alaskan oil industry to identify these prospects themselves.”
‘Moderate to high potential tracts’ Consulting geologist Don Brizzolara, who was with ARCO for 20 years, 1979-99, and with the Alaska Division of Oil and Gas from 2000-05, provided geologic information on tracts which Donkel acquired in the October sales. In an e-mail to Petroleum News he called the acreage “an impressive collection of moderate to high potential tracts.”
Brizzolara said Donkel’s strategy was “to stay close to the Barrow Arch and the known producing fields and to target a wide range of play concepts.”
The three leases Donkel acquired north of the Arctic National Wildlife Refuge “have expanded to the southeast Donkel/Cade holdings within the accumulation defined by the ARCO Stinson #1 well,” Brizzolara said, a well which “discovered flowable gas and oil in both the basement and in a shallower Tertiary horizon,” horizons which are believed to “expand and thicken to the southeast.”
Brizzolara said the other Beaufort Sea tracts (six off Badami and four off Liberty) “hold potential in multiple horizons,” along the Barrow Arch, “a regional structural feature along which many of the North Slopes oil fields are localized.” The specific interest is Kekiktuk and shallower deepwater Paleocene sands. “In other words, a continuation of the Liberty and Badami trends,” he said.
In the North Slope sale area, leases which Donkel acquired south of Point Thomson “remain focused on Paleocene stratigraphic traps akin to the accumulations at Yukon Gold and Sourdough. Brizzolara said that in this setting “if a deepwater Tertiary sand with good reservoir quality and stratigraphic trapping configuration is encountered it most likely will be oil and/or gas charged.”
Donkel took a block of 12 leases south of Prudhoe Bay where Brizzolara said the focus is on a multiplay concept, with the Ivishak formation a primary target.
“Although south of the main Prudhoe oil/water contact, numerous isolated fault blocks are apparent on seismic data. It is highly conceivable that some of these upthrown fault blocks have successfully trapped hydrocarbons,” Brizzolara said, while downthrown blocks may hold thin Kuparuk C-sand equivalents.
He also said the area has the potential for production from West Sak sands.
What’s next? Brizzolara said acquisition of high-quality seismic data will be essential to defining the potential of these trends.
“Mr. Donkel’s team of geoscientists is currently evaluating all available data in an effort to define specific high potential leads and prospects,” he said.
Gross said the best opportunities for the lease sale “lay in building upon Dan’s already extensive leasehold, which we have continued to study in light of new information regarding the geology of the areas. The advances in drilling and production technology have also created new hydrocarbon prospects that are now economic in these areas.”
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