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THE INDEPENDENTS 2003: Cassandra ready to explore Katalla Independent will drill 2-3 wells in winter of 2003-2004 at Alaska’s first oil field Kay Cashman Petroleum News
Cassandra Energy is getting ready to mobilize equipment to drill two or three exploratory wells near the former town of Katalla, 56 miles southeast of Cordova and the site of Alaska’s first commercial oil production in 1902.
In what would have to be considered a significant victory, the Alaska-based independent oil and gas company has managed to withstand permitting delays which resulted in delaying drilling from August 2001 to the winter of 2003-2004.
Ready to go “Right now we’re pretty much ready to go. We’ve had some agency people out at the drill site … we’ve had some inspections done that were part of what was required by the permitting agencies, but now we’re close to being ready to mobilize equipment,” Cassandra President Bill Stevens said Oct. 20.
Cassandra’s story began in July 2000 when the company entered into a lease-option for oil and gas rights on 10,134 acres from Chugach Alaska, an Alaska Native regional corporation. The surface rights were controlled by the Chugach National Forest. The acreage was 56 miles southeast of Cordova and adjacent to the Katalla oil field.
A Sept. 17, 1982, settlement agreement between the U.S. Department of the Interior and Chugach Natives Inc. (predecessor to Chugach Alaska) gave the Native corporation exclusive rights to drill for, mine, extract, remove and dispose of all oil and gas deposits in a liquid or gaseous state from the date of signing until midnight Dec. 31, 2004, “and so long thereafter as oil and gas are produced in paying quantities,” U.S. Forest Service officials said.
No well, reverts back to U.S. If a well capable of producing in paying quantities within the 10,134 acre Katalla area was not completed during that time period, all rights, title and interest of CNI would revert back to the United States.
Stevens, who was the safety and health program coordinator for Inlet Drilling Alaska in Kenai, told officials in his plan of operation he planned to use Inlet Rig CC1 for an exploration drilling program that would start with two or three wells and, if they had commercial oil shows, could result in as many as 12 wells on privately owned acreage, for a total cost of approximately $20 million.
On April 18, 2001, Stevens said he had signed a lease-purchase agreement with Del and Ginger Welch for the 465-acre Katalla oil field adjoining the Chugach Alaska acreage and 2.5 miles from the former Katalla town site.
Natives resent actions by environmental groups Environmental groups have protested the Katalla project from the beginning.
Having failed at convincing the agencies, including the U.S. Forest Service, that the project should be stopped, environmental groups, represented by Trustees for Alaska and the National Wildlife Federation, sued the Forest Service in federal court in Anchorage, Alaska, asking the court to disallow a permit the Forest Service has issued to Cassandra Energy for exploratory oil and gas drilling at Katalla.
Plaintiffs challenge the finding of no significant impact and special use permit issued by the Forest Service under the National Environmental Policy Act.
Rick Rogers, vice president for land and resources for Chugach Alaska, told Petroleum News in August: “We think it’s the latest chapter in efforts by national environmental groups to deprive Chugach of the benefits from the lands that it has received through ANCSA (Alaska Native Claims Settlement Act). And it’s not the first time.”
Rogers said the Katalla project (drilling an exploration well from private lands to Chugach Alaska subsurface) has gone through an “exhaustive” review process, including “an ACMP review, two environmental assessments by the Forest Service. It was a very exhaustive public process.”
Rogers said he questioned the sincerity of the environmental groups that are part of the court action: “The kind of access they are trying to prevent is what you need to clean up the site.”
Two wells, maybe three Cassandra will drill two wells from private land (Oil Claim No. 1). One well will be vertically drilled to a bottomhole location on Oil Claim No. 1; the other will be drilled directionally “3,000 feet due east” to a bottomhole location in the subsurface that is controlled by Chugach Alaska, Stevens said March 13.
The company’s exploration plan said a third well into the subsurface controlled by Chugach Alaska was also a possibility.
Cassandra proposes to use an ocean-going barge to off-load equipment at a site on the west side of the Katalla River at the former town site of Katalla on state land.
Up to three acres will be used to store equipment and supplies temporarily and to support transfer operations to smaller barges or boats.
The company will clear new growth spruce trees, leaving a 50-foot buffer between the storage area and an airstrip north of the site. A 100-foot buffer will be maintained at the southern margin of the storage area along Irish Creek.
Drilling equipment, materials, supplies and personnel will be transported from the storage area by landing craft or shallow draft small barge upstream at high tide and off-loaded at a gravel landing area approximately 550 feet south of the existing access road on National Forest System lands.
Cassandra will construct a staging area of up to two acres adjacent to the Katalla River, at or near the landing area. The company expects to make 50 to 60 off loadings from barges over a two to three week period when it sets up the drill rig and crew camp.
An existing 2.5 mile access road will be used to transport equipment, supplies and materials to private land known as Claim No.1, where the crew camp and drill site will be located. Cassandra plans to place temporary prefabricated steel bridges over six stream crossings.
Ready for 5,500 barrel spill Onsite operations will be conducted on three pads: one for the camp, one for drilling and one for storage. The camp will be capable of housing 66 people.
Drilling muds and cuttings will be collected and stored on an adjacent pad and disposed of either by grinding and injection in a well (if the field is commercial) or solidified and disposed of on site.
Under this option, freshwater drilling muds and cuttings from the exploration well will be mixed with cement to create an inert waste monofill. Prior to solidification, drilling wastes will be stored in a lined pit inside an on-pad structure.
State officials said operations will be conducted under a state-approved Oil Discharge Prevention and Contingency Plan. The plan outlines specific response planning and response options for a crude spill of 5,500 barrels per day.
The equipment storage area at the Katalla town site will be on state lands. The Katalla River barge landing, staging area and the access road will be on National Forest System lands. The drill site and crew camp will be on private lands secured by Cassandra from the Welch family.
If there is oil If Cassandra finds commercial quantities of oil on its Chugach Alaska leases, Rogers said his company is entitled to surface access under its 1982 agreement with the feds.
Surface access would include pipelines, roads and other facilities for the transportation of oil and gas from the Katalla area to market, he said.
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