|
Licensees seek more time for Nenana Joint holders Doyon, ASRC and Usibelli ask state to extend basin exploration license to full 10-year term to continue work program Alan Bailey Petroleum News
Faced with the prospect of their state license to explore the Nenana basin terminating in September 2009, joint licensees Doyon Ltd, Arctic Slope Regional Corp. and Usibelli Energy have applied to the Alaska Department of Natural Resources for an extension from the current seven years to the maximum permissible term of 10 years. The license would not then expire until September 2012.
The license extension application is out for public review, with comments required by 5 p.m. Oct. 15.
The geographical area covered by the license includes some state land that was selected for transfer to the University of Alaska, as part of a 2005 university trust settlement.
“The university has concurred with this proposed action in accordance with the 2005 legislation and settlement agreement,” DNR said in a public notice for the proposed license extension.
Work commitment met DNR also said the work commitment for the license has been met to date.
In fact, the original licensee, Andex Resources, contracted PGS Onshore to conduct a two-dimensional seismic survey in the Nenana basin in the spring of 2005. But uncertainty regarding changes in Alaska gas production taxes as the production profits tax and Alaska Clear and Equitable Share production tax legislation moved through the state Legislature put the dampers on further work.
The companies that now hold the license lost three seasons of field work because of changes in tax policy, Jim Mery, senior vice president of lands and natural resources for Doyon, told Petroleum News Sept. 16. But with the tax situation settled, the licensees now want time to continue the exploration program in the basin.
“Our intention is to have a bit more time so we can explore some more,” Mery said.
Gas prospective basin The 8,500-square-mile Nenana basin lies in a long, narrow, northeast trending zone just a few miles northwest of the town of Nenana, on the Parks Highway about 45 miles from Fairbanks in Interior Alaska. The basin, which may attain a maximum depth of as much as 16,000 feet, exhibits somewhat similar geology to the prolific Cook Inlet basin and is generally considered prospective for natural gas.
Only two relatively shallow wells have ever been drilled in the basin and both of them were located toward the basin’s edge.
Increasingly tight gas supplies in the Cook Inlet region and soaring energy prices in Fairbanks have heightened interest in finding gas at Nenana.
Andex originally purchased the Nenana basin exploration license in 2002, with a work commitment of $2.5 million. The license included about 500,000 acres of state land. Andex also negotiated oil and gas leases on about 41,000 acres of Native land owned by Doyon and on about 9,500 acres owned by the Alaska Mental Health Lands Trust in the basin.
Partnership survives Andex exit In 2004 Andex formed a Nenana basin exploration partnership with Doyon, ASRC and Usibelli Energy, leading to the spring 2005 seismic program. Following seismic acquisition Andex proceeded with the analysis of the new seismic data, to determine a site for a 10,000 to 12,000-foot wildcat well.
“Our intention is to have that data processed and interpreted such that we’ll be able to define drill sites so that we can be drilling our first wildcats next drilling season, in early 2006,” said Bob Mason, Andex vice president of exploration for the northern region, at the time. “With success, we could be moving into the development phase based on our initial wells, as early as late 2006, or 2007, and depending on the results we see from this drilling, we could be in the process of negotiating, and then finally building a pipeline into Fairbanks, such that we could have first gas sales in 2008.”
But the spring of 2006 brought the long PPT debate in the Alaska Legislature. Tom Dodds, president of Andex, told the Alaska House Finance Committee on April 3, 2006, that Andex and its partners had put on hold planning for a Nenana basin gas exploration well, pending resolution of the proposed PPT.
In late 2007 Andex finally pulled out of the Nenana project; Doyon, ASRC and Usibelli Energy took over the exploration license.
In December 2007 Mery told Petroleum News that Doyon wanted to move ahead with the Nenana exploration and hoped to find a new partner for the work.
“Now we’re in a process of trying to get the project moving again. We’ve lost, in effect, a 50 percent partner,” Mery said. “… Our goal is to get a drilling rig on the ground in the winter of 2009.”
| 