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THE EXPLORERS 2005: Andex progresses its Nenana exploration Company and partners completed 2-D seismic in winter of 2004-2005, evaluating drilling options Alan Bailey Petroleum News
Andex Resources LLC is moving steadily ahead with its exploration program in the Nenana basin, southwest of Fairbanks. As part of the program, PGS Onshore completed an initial 2-D seismic survey in an area west of the town of Nenana in the spring of 2005. Andex has also purchased some old Shell and ARCO seismic from the basin.
The winter 2005 seismic work followed the formation of a Nenana exploration partnership between Andex, Usibelli Energy, Arctic Slope Regional Corp. and Doyon Ltd. Usibelli Energy is an affiliate of Usibelli Coal Mine of Healy, Alaska; Arctic Slope Regional Corp. is an Alaska Native regional corporation based in Barrow, Alaska; and Doyon is a Fairbanks-based Native regional corporation. Andex remains operator of the Nenana project.
“We are very pleased to have our new Alaskan partners on board,” Andex President Tom Dodds said in December 2004. “This project has the potential to provide significant benefits to Alaska, especially the Interior region, and Andex is fortunate to have local partners who can help us develop the resource in a manner that all Alaskans can be proud of.”
In August 2005, at a joint meeting of the Alaska Legislature’s House and Senate Resource committees and the House Special Committee on Oil and Gas, Mitch Usibelli of Usibelli Energy told lawmakers about the completion of the winter 2004-05 seismic survey.
“We are currently processing and evaluating seismic data, trying to determine whether we have a viable well site to drill,” Usibelli said.
Usibelli said that the project had been shooting 2-D seismic rather than 3-D seismic because of the size of the exploration area and the lack of previous data. Three-D seismic would be more appropriate to a more focused area, perhaps after some initial drilling, he said.
Started on the North Slope Andex originally came to Alaska to participate in BP Exploration (Alaska)’s West Gwydyr exploration project on the North Slope. But the company remained in the state after the Gwydyr No. 1 well was plugged and abandoned in the winter of 2000. And in recent years the company’s Alaska activities have totally focused on Nenana exploration.
The Nenana basin southwest of Fairbanks is thought to contain more than 16,000 feet of Tertiary and Quaternary strata. The exploration area lies just west of the Parks Highway — the proximity of both the highway and potential gas markets in Fairbanks particularly attracted Andex to explore the basin.
“The lynchpin that made Andex decide to go forward on this project was the presence of transportation infrastructure that comes up right along the east side of this basin,” Bob Mason, Andex vice president of exploration for the northern region, told Petroleum News in March 2005.
The company has access to about 530,000 acres in the Nenana basin for exploration. Ninety-five hundred acres are leased from the Alaska Mental Health Trust Land Office, about 483,000 acres comes under a state exploration license and the remainder consists of Native land under lease from Doyon Ltd.
The Department of Natural Resources issued the Nenana exploration license in August 2002. The license involves a work commitment of $2,525,000 over a period of seven years.
Similarities with Cook Inlet The geology of the Nenana basin bears strong similarities to that of the Cook Inlet basin: each basin contains many thousands of feet of non-marine sediments in an elongated area of the Earth’s crust that has subsided since early Tertiary times, about 60 million years ago. However, very little is known about the subsurface geology of the Nenana basin — past exploration of the basin has only resulted in 350 miles of seismic and two relatively shallow wells.
The known similarities between the Nenana basin and the productive Cook Inlet basin point to the existence of gas in the Nenana basin. Andex’s estimates for thermogenic gas in the basin suggest likely recoverable reserves of 3 trillion cubic feet, but with the possibility of as much as 10 tcf.
“That number was based on some very, very conservative inputs,” Mason said.
And then there’s the possibility of biogenic gas — the biogenic component could be a significant add-on to the thermogenic reserves, Mason said.
Decision to drill? So, when might Andex drill a well in the basin?
“Over the next year or two we will be hopefully conducting some wildcat well drilling once we determine where the site is and/or conduct any additional seismic work, as needed,” Usibelli said at the August 2005 legislative joint committee meeting. And given the high cost of drilling compared with the cost of shooting seismic, drilling the first wildcat well will be a crucial step.
“That’s the really big decision,” Usibelli said.
Usibelli also said that a current shortage of suitable drillings rigs might constrain the timing of the drilling.
“Drill rigs right now … are very tight, not only in Alaska but throughout North America and world,” he said. “… For drilling to the depths that we’re looking at they’re very difficult to locate in this area.”
The project anticipates drilling to depths of 10,000 to 12,000 feet, regardless of what is discovered on the way down, to better understand sediment depths in the basin.
“I want to take a look at structures that preserve a very thick layer for my initial well,” Mason said. “We are evaluating structures deeper in the basin where we don’t have to worry about flushing, we don’t have to worry about section missing — that sort of thing.”
Marketing the gas If Andex finds gas in the Nenana basin there’s a ready market for natural gas in the Fairbanks area. Currently LNG is trucked from Cook Inlet to supply gas consumers in Fairbanks. As a minimum, gas from the Nenana basin would cut the cost and time involved in trucking the LNG. And Enstar Natural Gas Co. is investigating the possibility of building a gas line connecting Fairbanks to Southcentral Alaska via the Nenana basin.
It’s all a question of how much gas the Nenana basin contains.
“This is a very, very large reserve potential project, it’s a gas-prone basin,” Mason said. “It will have a lot of gas and could possibly have associated liquids; it’s very strategically located in the state; it could serve not only the energy needs of the Alaska Interior where the project is located, but could also become a very important new source of gas reserves for the greater Anchorage area.” Mason even sees the possibility of supplying gas to markets outside Alaska, if Andex’s estimates of potential gas reserves pan out.
“If it’s of sufficient reserve size, we could also be selling gas to the pipeline coming down from the North Slope,” he said. “As a matter of fact, the reserve size potential we’ve got here could possibly impact and help in the decision to build that pipeline.”
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