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Forest Service approves plan of operations for Katalla, drilling could begin in late March, says Chuck Frey
Kay Cashman, PNA publisher
The Chugach National Forest said Dec. 12 it has approved Cassandra Energy Corp.’s plan of operations for oil and gas drilling near Katalla, 56 miles southeast of Cordova and the site of Alaska’s first commercial oil production in 1902.
Chuck Frey, planning staff officer for the Chugach National Forest, said work could begin as soon as the end of March if the agency’s decision is not appealed and, if appealed, the decision is upheld on all points.
After a 45 day appeal period, which began Dec. 12, the Forest Service will have 45 days to respond to all appeals. Fifteen days from the end of the response period, work can begin at Katalla.
ACMP process nears completion The project is nearing what appears to be successful completion of the Alaska Coastal Management Program review, a Division of Governmental Coordination official told PNA. The agency expects to issue a proposed consistency determination Dec. 18, as this issue of PNA goes to press.
The final determination will be issued five days later. The five-day period gives participants the opportunity to elevate the decision — i.e. appeal it to the next level of authority. Participants include the applicant, the Alaska Department of Fish and Game, the Alaska Department of Natural Resources and the Alaska Department of Environmental Conservation.
The Forest Service permits will not be issued until that review is final and the project was found to be consistent with the ACMP.
Two parts to plan There are two major components of the plan of operations: (1) exploratory oil and gas drilling operations, and (2) access to the drill site and crew camp site which consists of barging equipment and supplies up the Katalla River from the Gulf of Alaska. It also involves construction of 550 feet of new temporary access road, establishment of a temporary staging area, and use and maintenance of an existing temporary access road on National Forest System lands.
Anchorage-based Cassandra plans to drill two or three exploratory wells directionally from private land acquired through a lease-purchase agreement from Del and Ginger Welch, who own the site of the old 465-acre Katalla oil field, into mineral estates owned by Chugach Alaska Corp., a regional Native corporation.
Under a 1982 agreement with the federal government, Chugach Alaska has to locate commercial quantities of hydrocarbons on the acreage by Dec. 31, 2004, or the subsurface rights revert to the government.
Cassandra has a lease-option for oil and gas rights on 10,134 acres from Chugach Alaska. The surface rights are controlled by the 5.9 million-acre Chugach National Forest, the country’s second-largest national forest, after southeast Alaska’s Tongass.
Welch told PNA in earlier interviews that 44 wells were drilled at Katalla between 1901 and 1930, of which approximately 18 wells produced oil from fractured sandstone and siltstone of the Katalla formation at depths ranging from 360 to 1,750 feet. He said production per well varied from 15 to 240 barrels per month. Recorded production at Katalla over a 30-year period totaled 153,922 barrels of oil. Production ceased in 1933 when the Katalla refinery was destroyed by fire.
New wells will be deeper The wells drilled from 1901 to 1930 had depths of up to 2,300 feet. Cassandra President Bill Stevens, who is the safety and health program coordinator for Inlet Drilling Alaska Inc. in Kenai, told officials he expects to find oil at deeper levels than previously drilled. He estimates the field could hold 200 million to 600 million barrels of recoverable oil.
Stevens said he plans to use Inlet Rig CC1 for an exploration drilling program that would start with two or three wells and, if they had commercial oil shows, could result in “as many as 12 wells on privately owned acreage, for a total cost of approximately $20 million.”
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