Chevron planning Nikolaevsk wells

Company asks state for formal extension of Nikolaevsk deadlines, also looking to bring Stump Lake unit back into production

Eric Lidji

Petroleum News

Chevron, through its subsidiary Unocal, is asking the state to extend the timeline of the Nikolaevsk unit to match a new plan of development approved by the state last year.

In March 2008, the state approved a development plan for Unocal to drill two wells at Nikolaevsk, one at the Red prospect by March 31, 2009, and another well at the Blue prospect by March 31, 2010. Under the terms of the plan of development, the unit automatically contracts if the company fails to meet either or both of those deadlines.

Nikolaevsk is a 6,900-acre onshore unit in the southern Kenai Peninsula some 15 miles north of Homer and 10 miles east of Anchor Point. Unocal is the sole owner of the unit.

Unocal drilled two wells at Nikolaevsk in 2004, calling it a gas exploration program. The company owns significant acreage in the region, including the Deep Creek unit and Happy Valley gas field, and originally planned to connect its development of the region.

When the state formed the Nikolaevsk unit in January 2004, it gave Unocal a five-year timeline, carrying it through this month. The 2008 development plan, though, implicitly extended the unit through 2010. Unocal now wants that extension to be made explicit.

Nikolaevsk is one piece of a regional puzzle to development of the southern half of the Kenai Peninsula, an area with a history of previous drilling but very little infrastructure.

Last summer, Armstrong Cook Inlet drilled an exploration well in the nearby North Fork unit, finding enough natural gas to stir discussions about possibly running a pipeline south to Homer or north into the existing pipeline grid covering much of the Cook Inlet.

Unocal said the economics of the Nikolaevsk unit are “largely uncertain” because of the lack of pipeline infrastructure in the region, but said it will “continue to work with Enstar to encourage construction of a southerly extension to the Kenai Kachemak Pipeline.”

Unocal is also working to bring the Stump Lake unit on the west side of Cook Inlet back into production.

Stump Lake sits near the mouth of the Susitna River about 25 miles west of Anchorage.

Chevron discovered gas at what is now the Stump Lake unit in the summer of 1978 with the SLU 41-33 exploration well. The state formed a participating area at Stump Lake, but infrastructure and marketing problems kept Chevron from bringing the field online.

Unocal took over as the operator of Stump Lake in 1988, and brought the field online in 1990. But problems with the field forced Unocal to suspend production in November 2000. Attempts to restart the field failed to maintain production for more than a few days.

The Stump Lake unit has not produced any gas since 2003.

After studying seismic data picked up through its acquisition by Chevron in 2005, Unocal proposed to sidetrack SLU 41-33. The state approved a plan of development last year.

To support this program, Unocal in March 2008 asked the state to contract the Stump Lake Gas Pool No. 1 Participating Area from 4,880 acres to 1,280 acres, and to contract the boundaries of the entire Stump Lake unit to match the revised participating area.

The original participating area included the Sterling, Beluga and Tyonek formations.

The state agreed to contract the Stump Lake Gas Pool No. 1 PA around the Sterling and Beluga formations, renaming it the Stump Lake Sterling and Beluga Gas PA.

The state is holding off on contracting the Tyonek formation until it can evaluate the results of the sidetrack. The boundaries of the original Stump Lake Gas Pool No. 1 PA form the Stump Lake Tyonek Gas PA until the state issues a final ruling about the unit.