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January 2016

Vol. 21, No. 4 Week of January 24, 2016

Houston Willow exploration license comments sought

Oil and gas exploration license proposal from 2007 again out for public comment; this part of best interest finding procedure

KRISTEN NELSON

Petroleum News

A 2007 exploration license proposal for the Houston Willow area is out for public comment for the third time. The Alaska Department of Natural Resources Division of Oil and Gas said Jan. 19 that the division solicited competing bids and gave public notice of its intent to evaluate the Houston Willow exploration license proposal in late 2007 and solicited public comments again in 2008.

The current request for comments closes Feb. 26.

The 2007 proposal came from Samuel H. Cade of Dallas, Texas, Daniel K. Donkel of Daytona Beach, Florida, and LAPP Resources Inc. of Anchorage.

David Lappi, president of LAPP Resources, died in 2011. He had been working to develop natural gas in the Matanuska-Susitna area since the 1990s. The application has recently been shown as pending on the division’s website under the names of Cade and Donkel.

Exploration licenses are issued for areas where the state does not hold areawide oil and gas lease sales. Instead of bidding money upfront for acreage, applicants for exploration licenses commit to spend an amount of money working on the acreage. Once work commitments are met, a license holder has the option to convert acreage to regular oil and gas leases.

Before the state accepts an application for an exploration license it provides an opportunity for other bidders on the acreage and prepares a finding that the exploration license is in the state’s best interest.

In the April 2007 application, from LAPP Resources, the applicants requested a 10-year exploration license “covering approximately 21,240 acres near the town of Houston, Alaska” and said the area is “prospective for natural gas as demonstrated by gas shows in various wells drilled in the area by prior operators.”

A map accompanying the division’s new request for comments shows the acreage to be a block largely east of the George Parks Highway beginning just north of Houston.

In a supplement to the 2007 application Lappi told the division, “The applicants plan to explore for conventional natural gas, although if shallow natural gas is discovered it will be evaluated.”

When the 2007 application was filed Lappi had been trying to develop coalbed methane and shallow gas in the state for a number of years, working initially to produce coalbed methane near Houston where he acquired state leases in the early 1990s and then drilled exploration wells between 1998 and 2000.

He said initial work under the exploration license would include community relations work “since local landowners are in one sense involuntary participants in whatever we do”; satellite and airborne remote sensing; geological studies including a literature review and new fieldwork on outcropping bedrock; geochemical studies “seeking evidence of new hydrocarbon accumulations”; geophysical studies - literature review and new data acquisition; drilling, “including exploration drilling (and if successful), appraisal and production drilling” and, also with the “if successful” caveat, facilities engineering and construction.

Cade and Donkel do not hold any exploration licenses, but do hold convention state oil and gas leases. Cade holds more than 38,000 acres according to the division’s latest reports; Donkel holds more than 53,000 acres. In both cases the bulk of the acreage is North Slope and Beaufort Sea.






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