HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

Providing coverage of Alaska and northern Canada's oil and gas industry
January 2008

Vol. 13, No. 3 Week of January 20, 2008

Escopeta gets more time to drill Kitchen

State of Alaska gives Davis one-year reprieve; Pacific Energy committed to bringing jack-up into Cook Inlet for Corsair, Redoubt

Kay Cashman

Petroleum News

On Dec. 31 Escopeta Oil received a one-year reprieve from the State of Alaska for drilling an exploration well in its Kitchen unit in Cook Inlet, the body of water in Southcentral Alaska that overlies part of the Cook Inlet oil and gas basin.

The state Division of Oil and Gas put the upper Cook Inlet unit in default, but instead of terminating the unit and taking back its leases, the agency gave the Texas independent until the end of 2008 to cure the default by drilling an exploration well at Kitchen.

The division’s decision put Escopeta on almost an equal footing with another company that has to drill an upper Cook Inlet well in 2008 or face a default that could result in the termination of its unit and leases. California-based Pacific Energy Resources is under obligation to the state to drill an exploration well in its Corsair unit by the end of the year.

A third company, Renaissance Alaska, which has its roots in Texas, also has an upper Cook Inlet prospect where it wants to drill an exploration well in the near future. Its prospect, Northern Lights, has leases that begin expiring in December.

Kitchen, Corsair and Northern Lights all have to be drilled while there is no ice in Cook Inlet, and all three prospects, which are separated by faults, are on the same anticlinal structure that hosts the producing North Cook Inlet gas field, Escopeta President Danny Davis told Petroleum News.

Letter of intent with Rowan

Renaissance and Escopeta have been working with Pacific Energy, which is trying to get a jack-up rig to Cook Inlet in time for this year’s open water season, which generally begins in April.

A deal between Pacific Energy and Rowan to first lease, then later purchase, a jack-up was expected to close in December, but has not yet been finalized, a Petroleum News source said Jan. 11.

The information was confirmed by Davis Jan. 15 and by Pacific Energy executive Vladimir Katic on Jan. 17.

“We have a letter of intent with Rowan that expires at the end of January, and which can be renewed,” Katic said. But the problem, he said, is the short window for drilling Corsair.

“We are going to try to get a lease extension from DNR,” he said.

When asked if Pacific Energy’s deal to lease or purchase a jack-up rig from Rowan was contingent on Escopeta and Renaissance’s participation, Katic said no.

“We still plan to take the rig, with or without Escopeta or Renaissance … although we’d like to work with them if we can,” he said.

Besides Corsair, Pacific Energy has several other wells that it can drill on its other Cook Inlet properties with a jack-up, including wells at the offshore Redoubt Shoal unit, Katic said.

Renaissance would unitize before drilling

Renaissance executive Mark Landt said Jan. 17 that his company had “requested a drilling slot for Northern Lights” from Pacific Energy.

Landt said Renaissance was “moving forward with the air quality permitting for the drilling of four Cook Inlet basin wells,” two at Northern Lights, one at North Middle Ground Shoal and one at NW Cook Inlet. Northern Lights, he noted, was not unitized and therefore “does not have the same obligations as Corsair and Kitchen.”

But Landt confirmed that the first leases at Northern Lights expire in December.

“We would anticipate unitizing prior to drilling,” he said.

Unitization can hold leases past their expiration date, which was what Escopeta and Forest Oil did for their Kitchen and Corsair prospects in early 2007, when faced with lease expirations. (Pacific Energy purchased all of Forest’s Southcentral Alaska assets in mid 2007.)

Kitchen to test Sterling, Beluga, Tyonek, Hemlock

As part of its deal with the state, Escopeta’s 2008 exploration well has to be drilled to a total vertical depth of 16,000 to 20,000 feet to test the Sterling, Beluga, Tyonek and Hemlock formations.

Davis thinks the Kitchen unit, which contains the Kitchen and East Kitchen prospects, could contain one of the inlet’s missing giants, per a 2004 U.S. Department of Energy report on the Cook Inlet basin.

“We think we have a possible total resource of 1.2 billion barrels of oil and 7 trillion cubic feet of gas,” Davis told Petroleum News last year, which would put Kitchen’s oil reserves in the same class as the top five North Slope oil fields.

In May, Pacific Energy President Darren Katic put Corsair’s potential at 200 million barrels of oil. In 2003 Forest Oil said the prospect could also contain as much as 480 billion cubic feet of natural gas.

The Northern Lights prospect is thought to contain about 240 million barrels of oil.

Total Cook Inlet oil production is about 15,000 barrels per day.






Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.