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GeoPetro planning Point MacKenzie well San Francisco independent to drill for gas first at Midnight Sun prospect; confident about rig, location, looking for partners
By Eric Lidji Petroleum News
San Francisco independent plans to look for natural gas later this year around Point MacKenzie in the upper Cook Inlet.
The GeoPetro Resources Co. plans to spend as much as $5 million on an exploration venture near Point MacKenzie on the west bank of the Knik Arm, according to recent filings with the U.S. Securities and Exchange Commission.
Currently, the company has a rig and a location identified for developing the potential resource, known as the Midnight Sun prospect. Now, GeoPetro is looking for industry partners on the project, according to Eric Doshi with investor relations for the company.
“We’ve got all our ducks in a row... It is pretty attractive acreage for us,” Doshi said.
GeoPetro describes Midnight Sun as an 11,500-acre structure. The company plans to drill an 8,000-foot well to test both the Tyonek and Hemlock formations in the area.
The company also plans to spend as much as $2 million acquiring more land in Alaska and conducting geologic and geophysical work, according to the filings.
Bought Pioneer Oil leases GeoPetro arrived in Alaska in April 2005 when it bought out the Cook Inlet acreage of the Illinois-based independent Pioneer Oil Co. for $20 an acre, or around $2.3 million.
Through the deal, GeoPetro assumed a complete working interest and an 81 percent net revenue interest in nearly 117,000 acres spread across Trading Bay and Point MacKenzie.
GeoPetro later increased its land position in the Cook Inlet by acquiring around 5,000 additional acres at Point MacKenzie from the Alaska Mental Health Trust Authority, bringing its total acreage in the state to more than 122,000.
The lease tract runs approximately from Big Lake to Point MacKenzie, bordered to the west by a block of leases owned by Pacific Energy Resources Ltd.
Through the deal with Pioneer Oil, GeoPetro has until Nov. 1, 2008 to kick-off a $2.5 million work program over three years, evaluate the well results and pay the second installment or give the leases back to Pioneer without any further liability.
GeoPetro paid the first installment of nearly $1.1 million in August 2005.
The Mental Health Trust leases expire on March 1, 2011 and the state leases expire on May 31, 2012.
CBM to conventional gas Throughout the 1960s, several companies explored the area north of Point MacKenzie.
The Union Oil Co. of California drilled two exploration wells just south of Big Lake during the fall of 1960 and another the following year 1961, finding coal seams, but no oil or significant amounts of gas.
Moving farther south and closer to the coast, Unocal and a group of other oil companies proposed forming the Knik Arm unit a few year later, but pulled the application after drilling a well in the fall of 1963 that also failed to find commercial amounts of oil or gas.
The Atlantic-Richfield CO, the Pan American Petroleum Corp. and Gulf Oil also drilled wells in the area through the rest of the decade.
Pioneer Oil picked up the Point MacKenzie acreage during a May 2004 state lease sale in the Cook Inlet, intrigued by the possibility of developing coal bed methane. Originally GeoPetro saw a similar opportunity, enticed by coal seams between 20 and 70 feet thick.
But then the company bought and evaluated 3-D seismic data of the area.
“We saw this Midnight Sun prospect, and that overshadowed the coal bed methane,” Doshi said.
GeoPetro now plans to go after the conventional gas resources in the area first and possibly return to explore the coal bed methane opportunities in the future, Doshi said. Cook Inlet: second priority GeoPetro has done little work on its Alaska leases to date, choosing instead to focus company resources on projects in Texas and Indonesia, and look for partners.
However, Doshi called Alaska GeoPetro’s “second priority,” after the company’s four producing gas wells at the Madisonville Field north of Houston.
“In terms of exploration, Alaska’s the one we’re most excited about,” Doshi said.
GeoPetro is also pursuing projects in California, Alberta and Indonesia. The company plans to spend as much as $26.2 million on exploration companywide this year, according to the filings.
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