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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2013

Vol. 18, No. 20 Week of May 19, 2013

What’s going on in the southern Kenai?

Companies build lease positions in an area of obscure geology but intriguing potential near the edge of the Cook Inlet basin

Alan Bailey

Petroleum News

The State of Alaska’s Cook Inlet areawide lease sale on May 8 saw companies picking up a series of leases along a fairway of land in the southern Kenai Peninsula, north of Kachemak Bay, near the eastern margin of the Cook Inlet basin. Hilcorp Alaska in particular filled in a lease position that it had started to establish with leases it purchased in the state’s May 2012 sale.

Buccaneer Energy has also established a lease position in the same area, where it plans to drill an exploration well in its West Eagle unit this summer.

So, what is driving the interest in this area? And does Hilcorp, in particular, have its eye on an exploration play? The company has said in the past that its main interest in the Cook Inlet basin is developing oil and gas resources from existing fields.

These southern Kenai Peninsula leases are not associated with any known oil or gas field. And only two exploration wells have been drilled in the area: the Anchor River No. 1, drilled in 1961, and the South Caribou Hills Unit No. 1, drilled in 1970. These wells apparently encountered gas shows but no oil.

Asked about Hilcorp’s lease purchases on the Kenai Peninsula, company spokeswoman Lori Nelson said that the company had been pleased with the outcome of the sale.

“We believe there is still a lot of life left in Cook Inlet and the new leases simply allow us to strengthen our position in an area of interest,” Nelson told Petroleum News in a May 14 email.

The producing oil and gas fields of the Cook Inlet basin lie along a couple of major north-northeast trending geologic structures known as anticlines, structures in which the rock strata have been folded upwards, forming elongated dome-like folds that can trap pools of oil and gas. With the more easterly of these known structures running up the western side of the Kenai Peninsula, could there be other untested structures to the east, towards the edge of the basin where the new leasing interest has emerged?

Geologist David Hite told Petroleum News that, whereas there are good rock exposures along the shore of Kachemak Bay, immediately south of the recently leased area, relatively little is known about the subsurface geology inland, near the eastern edge of the basin. A Southcentral Alaska natural gas study published by the Department of Energy in 2004 and co-authored by Hite comments that a geologic map of the Kenai Peninsula published in 1976 points to the possibility of anticlinal structures in the east.

“The magnitude and character of these structures is yet to be fully appreciated,” the report says. “They are mapped with a high degree of certainty in the Kachemak Bay and in the vicinity of Chickaloon Bay (on the northern Kenai Peninsula), but the area between is poorly understood.”






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