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New independent files for Kenai Peninsula unit New unit north of North Fork would be developed by Alliance Energy Kristen Nelson Petroleum News Editor-in-Chief
Alliance Energy of Tulsa, Okla., a company with ties to NorthStar Energy and Gas-Pro, is proposing a new oil and gas unit on the Kenai Peninsula north of the existing North Fork unit.
Alliance filed an application with the Alaska Division of Oil and Gas for formation of the Nikolaevsk unit on the Kenai Peninsula between the North Fork and Deep Creek units, near the unincorporated community of Nikolaevsk.
Larry Snead of Alliance said in the application that the company “is a small, independent oil and gas producer with substantial holdings on the southern Kenai Peninsula.” State records show the company has some 30,650 acres of state oil and gas leases.
The division said Oct. 30 that the proposed unit covers approximately 17,327 acres in 10 oil and gas leases. Eight are state of Alaska oil and gas leases, five of which expire in January or February, and would be extended by formation of a unit. One Cook Inlet Region Inc. lease and one federal lease are included in the proposed unit. Working interest owners in the proposed unit include: CPB Alaska Oil & Gas of Tampa, Fla.; Chevron U.S.A.; ConocoPhillips Alaska; James W. White of San Antonio, Texas; Marathon Oil; Cook Inlet Region Inc.; Unocal; and Gas-Pro Alaska. There are a number of overriding royalty interest owners, including former Alaska Gov. Walter J. Hickel.
The Nikolaevsk unit is “just northeast of the federally managed North Fork unit,” Alliance told the state. It said Gas-Pro and its corporate parent NorthStar Energy (which acquired Gas-Pro assets) “share management with Alliance” and own other interests in the area. Barry Foote, executive vice president of NorthStar, told Petroleum News that Alliance is an affiliated company with some of the same people in both companies. Joint development opportunities Alliance said it acquired its interests in the Nikolaevsk and Ninilchik dome areas in 1996, and Gas-Pro acquired its interests in the area of the North Fork field in 1999.
The companies told the state they believe the natural gas horizon encountered in the 41-35 well at North Fork “represent only part of one or more potentially productive accumulations of oil and gas that extend well beyond the boundary of the present NFU #41-35 participating area into adjacent areas.”
It is prospects in adjacent areas which are the basis of the proposed Nikolaevsk unit.
Alliance said it has used “third party evaluations, well data, seismic data and data collected from its own tests and studies to support its interpretation of a potentially productive area that extends along an anticlinal trend of which the proposed Nikolaevsk unit is part.”
After the North Fork unit No. 41-35 well was completed, the original North Fork unit contracted because drilling operations ceased. “Drilling operations were suspended in these areas more than 30 years ago because it was not cost effect to exploit the resources at that time due to the lack of access to gas markets and the considerable distance between the field and the terminus of existing gathering facilities, coupled with excessive drilling costs and low gas prices,” Alliance told the state.
The company said it is proposing the new unit now because natural gas prices are higher, there is increased demand for natural gas and oil, and “the reliability and efficiency of modern drilling and testing techniques and the prospect of developing transportation facilities suggest that these obstacles can be overcome.”
“NorthStar Energy Group Inc., a corporation with the same management as Alliance, recently reached an agreement with Enstar to provide all of the natural gas needs of the southern Kenai Peninsula,” Alliance told the state, and that agreement includes an Enstar-built pipeline from Homer to Anchor Point, “within a few miles of the North Fork unit” and the proposed Nikolaevsk unit, and a commitment by NorthStar to build a pipeline from the North Fork field to Anchor Point. Exploration drilling proposed Some of the leases in the proposed unit expire at the end of January or early in February, and the formation of the unit will extend those leases. In exchange for formation of the unit, Alliance is proposing to drill exploration wells and acquire seismic.
Alliance said its primary objective is the Tyonek sandstones. “The dominant geological feature in the area of the Nikolaevsk unit is the North Fork anticline,” the company said, a structure approximately three miles wide and 12 miles long, “including that portion of the structural feature that underlies the North Fork unit.” There are numerous high-angle cross faults dividing the North Fork anticline into a series of horsts and grabens, and the North Fork unit No. 41-35 well is in one such horst on the southwest end of the anticline.
“A similar sized horst on the northeast end of the anticline is one of the two principal prospective structures of the Nikolaevsk unit,” Alliance told the state.
The other chief structure in the proposed unit is an anticline approximately four miles to the east northeast of the Nikolaevsk horst prospect, known as the Ninilchik dome prospect. Both the Nikolaevsk and Ninilchik prospects will be tested as part of the plan of exploration for the proposed unit, Alliance said.
The North Fork unit No. 11-4 well was drilled in 1970 in the center of the southern half of the proposed Nikolaevsk unit and encountered Beluga and Tyonek sands with gas shows; sidewall cores from Tyonek sands had oil shows. Alliance said sands encountered in the No. 11-4 well “correlate to the productive sands, and many other potentially productive sands, encountered” in the North Fork unit No. 41-35 well in the adjacent unit, “supporting Alliance’s interpretation that the sands encountered in the two wells are present and potentially productive across the entire structure, a portion of which underlies the proposed Nikolaevsk unit.” Exploration plan covers five years Alliance’s exploration plan extends over five years and includes: acquisition of additional seismic data, possibly including close-grid two-dimensional, or 3-D seismic, over the Nikolaevsk horst prospect, and a minimum of two wells.
The company said Alliance associate Gas-Pro will begin drilling an additional well on the North Fork structure before Dec. 31, 2004, “to test gas-bearing sands encountered in the NFU #41-35 well.” Geological data from this well will be shared with Alliance to facilitate Nikolaevsk unit exploration.
Before Dec. 31, 2004, Alliance will acquire additional geophysical data to aid in defining drilling locations on the Nikolaevsk horst prospect and the Ninilchik dome prospect.
Alliance said the state’s preferred drilling schedule is a well on the Nikolaevsk horst prospect by Dec. 31, 2004, and a well on the Ninilchik dome prospect by Dec. 31, 2005.
Alliance said that if it pushes back drilling to Dec. 31, 2005, it will comply with the state’s guidelines for additional geophysical data in any area where drilling is delayed. “Such additional geophysical data will be close-grid 2D or 3D seismic data” in the Nikolaevsk horst prospect area, and “the exact parameters of such data” will be agreed to with the state.
Alliance said it is committing to drill a well on the Ninilchik dome prospect by Dec. 31, 2005, as requested by the state, and will therefore be free to choose the type and extent of additional geophysical data to be acquired in the Ninilchik dome area.
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