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Buccaneer applies for 2 Cook Inlet units Company which first acquired acreage earlier this year is now working two projects, both adjacent to existing inlet production Kristen Nelson Petroleum News
Buccaneer Alaska LLC has applied to form two units in Cook Inlet, the Southern Cross unit and the Northwest Cook Inlet unit.
The company said in a July 27 release that it is working on permitting and aims to accelerate time to first production from its Cook Inlet acreage, possibly through access to an existing platform at the Southern Cross acreage and access to nearby infrastructure at North Cook Inlet.
Buccaneer, a subsidiary of Sydney, Australia-based Buccaneer Energy, began acquiring leases in Cook Inlet early this year with a purchase of Stellar Oil and Gas acreage; it has since acquired acreage from other companies and at the state’s Cook Inlet areawide oil and gas lease sale in May.
Southern Cross, which Buccaneer initially called North Middle Ground Shoal, includes five leases in Cook Inlet west of the producing South Granite Point unit, operated by Chevron subsidiary Union Oil Company of California, and the Kitchen Lights unit where exploration drilling is proposed by operator Escopeta.
Northwest Cook Inlet includes six leases in an arc north and northeast of the ConocoPhillips Alaska-operated North Cook Inlet unit, which produces gas from the Tyonek platform.
Southern Cross In its unit application, Buccaneer said it has some 180 miles of 2-D seismic data and 51 square miles of 3-D data at Southern Cross, and “has identified a potentially commercial accumulation of hydrocarbons on the northern end of the Middle Ground Shoal structure” some two to five miles north of the Baker platform in the Middle Ground Shoal field. Buccaneer described the Southern Cross prospect as “a northward continuation of the Middle Ground Shoal field, a tight fold with dips up to and perhaps beyond 90 degrees on the west flank.”
The 3-D seismic over the area was recorded in 1998 by Force Energy and Buccaneer said it recently licensed the data through the current owner, Cook Inlet Energy.
Southern Cross targets gas in the Tyonek formation and oil in the Hemlock formation.
Buccaneer said it plans to drill the first well to the pre-Tertiary formation, which — if the well is one of the first three drilled to the pre-Tertiary from a jack-up rig — would qualify the company for a credit of $25 million, $22.5 million or $20 million, depending on whether the well is the first, second or third drilled and eligible for credits established by the Alaska Legislature earlier this year in Senate Bill 309.
Buccaneer has 100 percent working interest in five leases in the proposed Southern Cross unit, a total of some 10,109 acres.
Without the unit, two of the leases expire at the end of September.
Southern Cross plans Buccaneer proposes to drill an initial well in the unit area before Sept. 30, 2012. By Sept. 30, 2011, the company would complete permitting necessary for drilling, reprocess the 3-D data and provide evidence of a rig/drilling commitment that would enable it to drill a well at Southern Cross not later than Sept. 30, 2012.
The well to be completed by Sept. 30, 2012, would be to the pre-Tertiary interval.
If Buccaneer does not provide evidence of its commitment to drill the well by Sept. 30, 2011, the unit would automatically terminate and the two leases with expiration dates of Sept. 30, 2010, ADL 390379 and ADL 390370, would expire.
If the September 2011 commitments are met but the well is not drilled by Sept. 30, 2012, in addition to unit termination and expiration of the two named leases, the working interest owners would pay the state $10 per acre for the leases at Southern Cross which would have expired without unit formation.
In the third year, by Sept. 30, 2013, Buccaneer would determine through well test data that the Tyonek-Hemlock-pre-Tertiary interval is commercial and seek approval for a participating area within the unit.
In the fourth year of the plan, before Sept. 30, 2014, Buccaneer said it would drill a second well or would shoot a new 3-D seismic survey. A revised initial unit plan would be submitted, including a plan of development for lands within the participating area and an exploration plan for lands outside the participating area.
In the fifth year of the initial plan, by Sept. 30, 2015, Buccaneer would submit necessary applications and a plan of operations for construction of pipelines and infrastructure to support commercial production from the Southern Cross participating area.
Northwest Cook Inlet In its Northwest Cook Init unit application, Buccaneer said it has some 1,000 miles of 2-D seismic and based on interpretation of that data and analysis of existing wells on the North Cook Inlet structure, it has “identified a potentially commercial accumulation of hydrocarbons on the north and north west end of the North Cook Inlet structure” some three to six miles north of the Tyonek platform in ConocoPhillips’ North Cook Inlet unit.
The company said the Norwest Cook Inlet unit area is “a northward continuation of the North Cook Inlet field in the Sterling-Beluga formations and the Tyonek Deep field in the Tyonek-Hemlock formations.”
Buccaneer’s first well will target a potential gas source in the Beluga formation.
The company has between 87.5 percent and 100 percent working interest in the six leases in the proposed Northwest Cook Inlet unit, a total of some 10,008 acres.
First well by Sept. 30, 2012 As with the Southern Cross unit, Buccaneer commits to drilling the first well at the Northwest Cook Inlet unit by Sept. 30, 2012, and commits to obtain all necessary permits by Sept. 30, 2011, including “evidence of a rig/drilling commitment” by the unit operator.
The unit would terminate and ADL 390384 would expire if the Sept. 30, 2011, commitments are not made, and if the initial well is not drilled by Sept. 30, 2012, the same termination and expiration would occur, and in addition the working interest owners would pay the state $10 an acre for the expired state lease acreage within the unit.
During the third year, before Sept. 30, 2013, the operator would test production formations in the initial well and apply for a participating area within the unit. The fourth year plan calls for a second well or a 3-D seismic survey and in the fifth year, before Sept. 30, 2015, the unit operator would apply for construction of pipelines and infrastructure for commercial production.
Low-risk project Buccaneer said the Northwest Cook Inlet unit “is a low risk project given that the Beluga gas sands in the North Cook Inlet Field extend to the northwest into the unit area, are within structural closure, and should be at virgin pressure.”
The company also noted in its unit application that the area is between the Beluga River gas field and the North Cook Inlet gas field.
“The Beluga sands consist of fluvial channels oriented in a northeast-southwest direction,” Buccaneer said. “Such channels in the Beluga formation are productive in the prolific North Cook Inlet gas field.”
The company said the Beluga formation thickens to the northwest toward the Beluga River gas field, and it expects the Beluga in the Northwest Cook Inlet unit “to contain more sands than on the crest of the NCI structure to the southeast.”
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