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THE EXPLORERS 2004: Cassandra seeks investors for Katalla well Local independent has permits to drill test well at Alaska’s first oil field southeast of Cordova Kay Cashman Petroleum News
Cassandra Energy has decided to cut back its Katalla drilling program from two or three wells to one well, company President Bill Stevens told Petroleum News Oct. 28, 2004.
Stevens is in the process of amending his operating plan to reflect the downsizing of the project which will be on private land near the former town of Katalla, the site of Alaska’s first commercial oil production in 1902. The field, 56 miles southeast of Cordova, was shut in following a refinery fire in 1933.
Cassandra, which is owned by a group of private investors, is looking for partners or investors for the Katalla project and is hoping to mobilize equipment in the spring or fall of 2005.
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.
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.
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.
Native corporation opts out But Chugach Alaska canceled the agreement with Cassandra in August 2004.
Rick Rogers, Chugach Alaska’s vice president for land and resources, told Petroleum News Oct. 28, 2004, “Cassandra’s been unable to find capital for the project. The terms of our conveyance from the federal government are very clear. We don’t have any oil and gas rights unless we can prove there are commercial quantities of oil and gas by Dec. 31, 2004, and we didn’t see it happening by that date.”
But the 465-acre Katalla oil field, of most interest to Stevens, was still in Cassandra’s hands per a 2001 lease-purchase agreement with the Welch family of Cordova.
And Stevens, safety and health program coordinator for Inlet Drilling Alaska in Kenai, Alaska, doesn’t give up easily, as evidenced by the 30 months it took him to get federal approval for the Katalla project which is surrounded on three sides by the Chugach National Forest. Cassandra was the first company to permit a well in the area in more than 16 years.
In a 2003 interview, Rogers said the Katalla project had gone through an extensive review process, including “an ACMP review, two environmental assessments by the Forest Service. It was a very exhaustive public process.”
Stevens said Cassandra lost the interest of several potential investors during the drawn out permitting period, but as soon as his new plan of operations is amended, he’ll be ready to go – and with only one test well, he’ll need less money.
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