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State grants Armstrong extension for North Fork Company has until late June to drill well in southern Kenai unit Eric Lidji Petroleum News
The state has extended the deadline for Armstrong Cook Inlet LLC to drill a second well in the North Fork unit.
The extension allows Armstrong to avoid getting trapped on the southern Kenai Peninsula by seasonal weight restrictions on the Sterling Highway and other smaller roads between March and May.
Armstrong plans to drill the well using either the Aurora AWS-1 or the Nabors No. 129 rig, either of which, when situated on top of a truck and trailer, would far exceed the weight limits placed on the Sterling Highway when ground temperatures rise.
The Alaska Department of Transportation and Public Facilities places seasonal weight limits on roads across the state during spring breakup when roads have limited tensile strength and bend or break under extreme weight.
The restrictions go into effect based on ground conditions and could therefore come at any time in the season.
Armstrong CI could have risked finishing the well before the restrictions set in, but if they lost the bet, they’d be stuck paying additional day charges on a rig through April or May, when the state lifts the weight limits.
Armstrong CI now has until June 30 to drill a 9,000-foot delineation well into the Tyonek formation in the 640-acre North Fork unit, located 10 miles north of the city of Homer.
Armstrong CI also has until March 31 to file a 43rd plan of development for North Fork and to secure all necessary permits for the delineation well.
Well could justify pipelines The southern Kenai Peninsula has been the center of a chicken and egg debate for several years.
Producers have been reluctant to develop fields in the southern Kenai Peninsula without a pipeline network in place, but Enstar Natural Gas Co., the company proposing to build those pipelines, wants more assurances about the availability and sufficiency of the natural gas resources in the area.
In addition to North Fork, two other possible gas plays have been in the running to justify infrastructure extensions past the current terminus of the Kenai Kachemak Pipeline, or KKPL, in the Happy Valley gas field.
Enstar could connect to Chevron’s Red well in the Nikolaevsk unit several miles northwest of North Fork or to Pioneer Natural Resources’ Cosmopolitan unit, located offshore from Anchor Point. While Cosmopolitan is an oil field, Pioneer has indicated the presence of gas.
For the past six months, since Armstrong returned to Alaska in September 2007, Enstar has considered North Fork the best bet for moving forward.
Enstar spokesman Curtis Thayer said ongoing talks with Armstrong have involved discussions about “third-party marketing,” where Armstrong could sell gas to a large commercial customer through an Enstar line.
Standard Oil of California drilled the NFU 41-35 well at North Fork in 1965.
Over the past decade, several companies (some sister companies) have traded the unit and tried to develop the prospect.
Gas-Pro Alaska LLC bought the unit in 1996, but sold it to NorthStar Energy in 2000.
NorthStar tested the well in 2001 and reported a flow rate of 4 million cubic feet per day of natural gas. NorthStar and Enstar worked out a deal to supply North Fork gas to Homer, but both Enstar and the Regulatory Commission of Alaska made pipeline construction contingent on a second well.
Gas-Pro returned in early 2007 with a plan to truck the gas from North Fork to the KKPL, but the plan fell apart. Armstrong took over as operator of the unit in September 2007.
Editor’s note: As Petroleum News was being wrapped up for press, Pioneer told Petroleum News that the gas-to-oil ratio was high enough at its latest Cosmopolitan well to warrant building a pipeline to KKPL. See the Feb. 24 issue of Petroleum News or the Feb. 14 Petroleum News Bulletin for more information.
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