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Kitchen Lights outlook
Furie plans development well in 2019; exploration depends on tax credit payments
Alan Bailey Petroleum News
Furie Operating Alaska’s latest plan of development for its Cook Inlet Kitchen Lights gas field indicates that the company hopes to drill and evaluate an additional development well into the Sterling formation from the Julius R. production platform in 2019. According to the plan, which was filed with Alaska’s Department of Natural Resources in early October, the company plans to log and test the well, but will not complete the well until after the results of the logging and testing have been evaluated - the company anticipates presenting a completion plan for the well to DNR.
Exploration financially constrained Development of the Kitchen Lights field has taken place within the Corsair block of the Kitchen Lights unit. The plan of development says that Furie wants to continue exploration drilling within the unit, including the drilling of wells outside the Corsair block, but is currently limited by financial constraints.
“Exploration activities have been severely constrained by the state’s lack of any meaningful payment for outstanding production tax credits for the last several years - and the absence of any payment for this fiscal year,” the plan of development says.
However, Furie’s technical team is in the process of developing a suite of options for exploration drilling, with that work anticipated to continue well into 2019. The plan of development says that, if additional financing becomes available, Furie will mature two prospects for exploration wells outside the Corsair block and present plans to DNR, indicating that “commercially reasonable efforts are underway to drill these wells either in 2019 or 2020.”
Following fiscal problems resulting from the fall in the oil price in 2014, the state delayed payment of production tax credits that it owed to companies such as Furie. A bill introduced by Gov. Bill Walker and passed during the 2018 legislative session would have enabled the state to use bonding to pay money owed. However, this use of state bonding has been challenged in state court as unconstitutional - the court case has yet to be resolved.
This year’s drilling As previously reported in Petroleum News, during the 2018 drilling season Furie completed the KLU No. A-1 development well and drilled a new development well, the KLU No. A-4 well, in the Kitchen Lights field. The plan of development confirms that the A-4 well reached the Tyonek formation, below the Sterling and Beluga formations that currently produce gas from the field. Furie has characterized drilling into the Tyonek as an “exploration tail,” designed to evaluate amplitude anomalies identified from seismic data. The drilling below the Sterling and Beluga went beyond Furie’s drilling commitments for 2018 - the company is still evaluating the findings in the Tyonek, the plan of development says.
Furie is conducting its development drilling using the Spartan 151 jack-up rig, cantilevered over the Julius R. platform’s drilling deck. The rig, which had been laid up in Seward for an extended period, underwent a commissioning process, including inspections by the American Bureau of Shipping and the U.S. Coast Guard, prior to this year’s drilling operations. Furie can also install a workover rig on the platform, for well workovers.
Current production The A-1 well, now completed, initially produced gas from the lower Sterling and subsequently produced gas from the upper Sterling. The well also penetrates down into the Beluga formation, but Furie does not anticipate completing the well in the Beluga until a later date.
The gas field produces from the Beluga formation in the KLU No. 3 and the KLU No. A-2A wells. Furie’s plan of operations says that, as producing zones deplete, the company will re-complete or re-drill these wells to capture additional gas reserves in the Beluga and the Sterling. Well work conducted this year included adding new perforations in the Beluga in the No. 3 well and closing sleeves on some other perforations in that well, the plan of development says,
The plan of development says that reservoir sands in the Sterling and Beluga consist of braided fluvial sands, with varying levels of amalgamation and connectivity. Currently production is supported by the natural reservoir pressure. However, as each reservoir sand reaches its minimum pressure for gas depletion, Furie anticipates the implementation of compression, as appropriate, to increase gas recovery.
Focus on production wells Furie’s gas supply agreement with Enstar Natural Gas Co., the main gas utility in Southcentral Alaska, requires the operation of four production wells in the Kitchen Lights unit. Furie’s plan says that the company is focusing on ongoing production from the No. 3, No. A-2A, No. A-1 and No. A-4 wells. Currently gas market conditions constrain the need for additional wells through 2019. However, in addition to the possibility of drilling one additional development well in 2019, the company does anticipate other development operations, including the addition of further perforations, in the No. A-2A and No. 3 wells, to boost production.
The Julius R. Platform has a total of six well slots, four of which are being used by the existing wells. Furie does not anticipate development drilling from surface locations beyond the platform, the plan of development says.
In addition to its drilling and well completion operations in 2018, Furie conducted maintenance operations on the Julius R. platform, carrying out work associated with generator replacement, adding sand monitors to well flowlines, replacing air compressors and upgrading crane alarm systems. The company also conducted a cathodic survey of the subsea pipeline that carries produced gas to onshore processing facilities, the plan of development says.
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