Union Energy going for gas

Independent bids on Kurupa accumulation south of National Petroleum Reserve-Alaska in Feb. 27 state areawide lease sale

Alan Bailey

Petroleum News

With all eyes on emerging plans for a North Slope gas line, there’s definitely a whiff of gas in the bidding in lease sales for northern Alaska these days. And the hunt for gas undoubtedly motivated Union Energy (Alaska) to bid on nine tracts near the Killik River, south of the National Petroleum Reserve-Alaska in the State of Alaska’s Foothills areawide lease sale on Feb. 27 (See related story on page 1 of this issue and map on page 24).

The tracts that Union Energy bid on form a block around the East Kurupa Unit 1 well, drilled by Texaco in 1976 into a structure called the Kurupa anticline. The anticline lies in what geologists term the overthrust belt, a region where the rock strata have become folded and faulted by the emerging Brooks Range mountains immediately to the south.

Although Texaco, presumably searching for oil, abandoned the East Kurupa well as a dry hole, the well did encounter a significant gas accumulation — according to the U.S. Geological Survey, the well tested gas from three horizons at depths between 7,050 feet and 9,410 feet with flow rates ranging from 1,300 mcf per day to 3,800 mcf per day.

And a USGS report on NPR-A petroleum geology published in 2002 said that sandstones of the Cretaceous Torok formation form the reservoir at East Kurupa. The Torok is part of the Brookian sequence, the youngest of the major petroleum-bearing rock sequences of northern Alaska (see illustration page 24 of this issue).

There are no estimated reserves figures for the Kurupa accumulation, although the USGS report published estimates for the closure size of the Kurupa structure.

“Kumar and others (2002) estimated the area of closure on the East Kurupa gas accumulation to be 7,500 acres, based on examination of the local structural closure,” the report said. “Our examination of regional seismic lines yields similar values for typical anticlines affecting the lower Torok near the East Kurupa well (although the overall area represented by the Kurupa anticline, which envelopes these smaller structures, might be as large as 100,000 acres).”

USGS has been studying the potential for unconventional overpressured, continuous gas deposits in the Colville basin that contains the Kurupa accumulation and is now interpreting “the East Kurupa well to have encountered a thick section of overpressured gas in Brookian strata — probably in low permeability rocks, perhaps with fracture porosity,” USGS geologist Dave Houseknecht told Petroleum News Feb. 27.

So how much gas is down there and what kind of reservoir is the gas trapped in?

Finding the answer will depend on someone again turning a drill bit to the right in this intriguing location.

Union Energy not new to Alaska

At the North Slope sale back in October 2007, the company spent $449,971.20 on three leases covering 14,807 acres east of the Haul Road and west of the Arctic National Wildlife Refuge in the former Kavik unit.

Those leases have not yet been issued.

The company listed James Fitzsimmons as its general manager. Fitzsimons has a background and contact information in Switzerland and experience in the Oklahoma oil industry.

That foreign status had led the state to reject high bids from Union Energy in a 2006 Cook Inlet sale because the company submitted a check drawn from a foreign bank account, a violation of state regulations.

In September 2007, Fitzsimons entered into several oil and gas farm out agreements with GD Conference Center, Inc. for acreage in Oklahoma. As part of the agreement, Fitzsimons became a director and majority owner of GD Conference Center, and the company agreed to drill test wells by the end of 2008.

GD Conference Center began as a development company created to provide telephone conferencing services, but changed its name to Petrocorp Inc. in October 2007 and became an oil and gas company.

In December 2007, Union Energy turned over its working interest in these leases, as well as the responsibility for the remainder owed to the state, to Petrocorp. As of the end of 2007, Fitzsimons was listed as the president and chief executive officer of Petrocorp.

—Eric Lidji