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The Explorers 2008: Glennallen well still on hold Texas firm Rutter & Wilbanks still needs a rig to test its gas find in the Copper River basin Alan Bailey Petroleum News
When in 2004 Midland, Texas-based Rutter and Wilbanks took a farmout option with Anschutz Exploration and Forest Oil to explore in Alaska’s Copper River basin, the small family-run independent oil company little knew the magnitude of the task that it was undertaking.
In 2005 the company drilled what should have been a straightforward exploration well, the Ahtna 1-19 wildcat well about 12 miles west of Glennallen and 180 miles north and east of Anchorage. But, thanks to some exceptionally high pressures at shallow depths, the drilling so far has cost way more than the company had originally expected.
And, more than three years after spudding the initial well, the company is still trying to obtain a drilling rig to re-enter the well, to prove out a natural gas resource that it thinks it has found.
“We expected to drill this well for something like $2 million and it’s cost $20 million,” Bill Rutter Jr., vice president of Rutter and Wilbanks, told Petroleum News Sept. 3. “But I think we’ve got a discovery to make it all worthwhile.”
Risk taker And the family run business is used to risk taking.
Back in 1936 the first generation of the Rutter and Wilbanks families got into the oil industry by drilling a wildcat well in the McCamey field in west Texas.
“A 100-acre lease produced a million barrels by 1949,” Rutter said. “… The field is still producing and that lease is still producing. We get a little royalty from it.”
By the late 1950s the Rutter and Wilbanks partnership was producing 1 million barrels of oil and 7 billion cubic feet of natural gas per year from its properties, Rutter said. And in 1958 the families incorporated the company as Rutter and Wilbanks Corp.
Following a downturn in the oil industry in 1959 the new corporation sold 60 to 70 percent of its production and diversified into other business ventures. But the company also continued to invest in the oil and gas business and today owns interests in oil fields in Texas, Colorado and New Mexico.
After 1959 the company stopped operating wells until, that is, the company became intrigued with the possibility of drilling in Alaska’s Copper River basin, Rutter said.
Anschutz had obtained a State of Alaska exploration license for some acreage near Glennallen in the Copper River Valley and had entered into an agreement with Forest Oil to explore the area. But although Anschutz and Forest did some initial spadework in assessing prospects near Glennallen, they lost interest in drilling.
Opportunity Rutter and Wilbanks, however, saw an opportunity to find some significant new gas reserves.
“Anschutz really was the one that got us interested,” Rutter said. “We had been dealing with them on some other properties and they sold us this deal.”
In the winter of 2004-05 Rutter and Wilbanks shot some seismic over a structure near an Amoco well drilled about 25 years earlier and in 2005 drilled the Ahtna 1-19 well to a target at a depth of 7,500 feet without apparently finding any gas. But because of a high pressure zone at a depth of 1,200 feet, the company had to use heavy drilling mud that damaged a potential gas reservoir partway down the well.
“We got 1,000 pound pressure at 1,100 feet,” Rutter said. “In the annals of the oil business this is a very rare occurrence, almost impossible to comprehend.”
The reason for the high pressure seems to be recent uplift of deeply buried rocks along a fault — the rocks had been subjected to high pressure at depth and the pressure is still slowly bleeding off, Rutter said.
Gas find After an unsuccessful attempt in October 2006 to penetrate the well casing to reach the potential gas reservoir below the high pressure zone, Rutter and Wilbanks returned in 2007 to drill the Ahtna 1-19A sidetrack well into the reservoir using a Schlumberger coiled tubing unit. Finally, in June 2007, the company announced a gas find in upper Nelchina sands.
But the well was producing excessive amounts of water along with the gas, although much of that water could have entered the well bore from somewhere above the reservoir. The resistivity logs suggested that the reservoir does not contain substantive amounts of water, Rutter said.
And it was also unclear how much gas the reservoir contained.
So, to test for a viable gas find Rutter and Wilbanks wants to drill a second sidetrack well to a depth of about 1,500 feet, using well casing to isolate the high pressure zone.
“If I can get a rig that can re-complete the well I think we’ll have a gas discovery,” Rutter said. “We know how big the structure is. What we don’t know is how much of the structure has gas in it. Is it filled to the brim, or is it just up there in the very peak, because we drilled right on the top of the structure?”
Seeking a rig But finding a rig to drill that second sidetrack has turned out to be a significant hurdle. Rutter said that his company has been considering several rig options, including the possibility of using a rig that Pacific Energy wants to transport to Cook Inlet for exploration drilling there — Pacific Energy would move that rig by road along the Glenn Highway close to the Ahtna well.
Another possibility might be the Aurora Well Service No. 1 rig that Aurora Gas uses for its Cook Inlet drilling, although that rig does not have a big enough pump capacity and would require the support of a pump truck, Rutter said.
If Rutter and Wilbanks does establish that there is a significant gas pool at Glennallen, the most likely market for the gas is the Glennallen electricity power station, located just eight miles from the well. At the moment the power station runs on diesel fuel, Rutter said.
The Alaska Natural Gas Development Authority has been planning the construction of a gas spur line that would follow the Glenn Highway from Glennallen to connect a future North Slope gas line to Southcentral Alaska. It is possible that a gas well at Glennallen could feed gas into the spur line, but Rutter and Wilbanks anticipates having its well in production before construction of the spur line is completed, Rutter said.
“I hope I’m in Glennallen before the spur line,” Rutter said. “I feel sure I will be.”
Other Alaska interest For a while Rutter and Wilbanks took a significant interest in some other Alaska oil and gas exploration possibilities — in 2005 and 2006 the company purchased a substantial acreage of Cook Inlet leases but subsequently sold those leases to Renaissance Alaska.
And in 2006 the company partnered with Renaissance Alaska LLC to buy a lease in the Umiat oil field, on the northern edge of the Brooks Range Foothill, on the eastern edge of the National Petroleum Reserve-Alaska. The partners later formed a company called Renaissance Umiat, with the intension of drilling at Umiat in the winter of 2007-08. However, toward the end of 2007 Rutter and Wilbanks elected out of the Umiat venture, turning over all of its Umiat lease interests to Renaissance Alaska.
So what is Rutter’s view of exploring for oil and gas in Alaska, based on his experience since entering the state in 2004?
There is plenty of exploration potential in Alaska, Rutter thinks.
“I think it’s an exciting place to be,” he said.
On the other hand he thinks that the regulations for oil companies exploring in Alaska are stricter than they need to be.
“There are much more stringent rules than in any of the other states,” he said.
And that all adds to the cost and time involved in exploration drilling. For example, Rutter and Wilbanks had to spend $100,000 on preparing an oil spill contingency plan for the Glennallen well, despite the fact that the company was drilling for gas, Rutter said. And the need to wait for a state official to witness some drilling activities caused delays in the work, he said.
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