State extends Nenana exploration license

On Oct.21 the Alaska Division of Oil and Gas approved a three-year extension to the Nenana state exploration license. The license had been due to expire at the end of September 2009 but will now run until the end of September 2012.

The state originally issued the license to Andex Resources in October 2002, with a seven-year term. In 2004 Andex joined up with Doyon Ltd., Arctic Slope Regional Corp. and Usibelli Energy to form a partnership for exploration of the Nenana basin. Although Andex proceeded to commission a seismic survey in the basin in 2005, the company dropped out of the partnership in 2006 because of uncertainties associated with pending changes to Alaska state gas production tax. The remaining partners took over the exploration license.

The partners have been seeking another company, to fulfill plans for drilling in the basin, and have now announced a new partnership with Babcock & Brown Energy.

As a result of the 2005 seismic work, the subsequent seismic processing and some airborne geophysical surveying, the work commitments associated with the exploration license have been met, Jim Mery, senior vice president of lands and natural resources for Doyon, has told Petroleum News.

But, because the Nenana exploration partnership lost three seasons of field work as a result of changes in tax policy, the licensees now want time to continue the exploration program in the basin, Mery said.

“Our intention is to have a bit more time so we can explore some more,” he said.

In a letter approving the license extension, Kevin Banks, acting director of the division, confirmed that the original license work commitments had been met but that “due to unforeseen circumstances, the licensees were not able to accomplish additional exploration as planned.”

The licensee must provide the division with all data obtained as a result of work associated with the exploration license, both to date and in the future, Banks said. Mery said that the partnership had already given the division the results of its seismic analysis, “as additional consideration for the (license) extension.”

—Alan Bailey