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Marathon sees some light at Sunrise Lone exploration well for the active Cook Inlet company hits ‘zone of interest’; previous well found gas shows below 11,000 feet Eric Lidji For Petroleum News
In a vague but optimistic statement, Marathon Oil said it “encountered a zone of interest” at the lone exploration well the company has drilled in the Cook Inlet basin so far this year.
Marathon recently completed drilling the Sunrise prospect on Cook Inlet Region Inc. leases on the northern Kenai Peninsula inside the Kenai National Wildlife Refuge.
Marathon said it is “continuing to evaluate the results to determine commerciality.”
Toward the end of 2009, Marathon permitted two well locations at the prospect, also known as East Swanson because it sits a few miles east of the Swanson River unit.
The wells, Sunrise LK2 and Sunrise LK 2RD, had the same top hole location about one mile west of the Sunrise Lake Unit No. 1 well Forest Oil drilled in early 1970 to a total depth of 14,500, encountering gas shows in the Tyonek formation below 11,000 feet.
In its well logs for Sunrise Lake Unit No. 1, Forest Oil reported a “small amount of gas” between 11,698 feet and 11,758 feet and some gas between 11,220 feet and 11,260 feet.
The Marathon wells did not have the same proposed bottom hole locations, though.
Marathon proposed to drill Sunrise LK2 relatively straight, angled slightly toward the northeast, but proposed Sunrise LK 2RD reaching its final depth a mile farther east. That proposed bottom hole location is just north of the Sunrise Lake Unit No. 1 well site.
Calling the well “tight,” Marathon is not offering details about Sunrise. However, speaking to lawmakers recently about a surprising dry hole Marathon drilled at the coastal Ninilchik unit in 2008, Carri Lockhart, production manager for Marathon in Alaska, noted that many producing sands in the Cook Inlet are discontinuous.
“That was a huge surprise, but that’s just the nature of the beast in some of these reservoirs. They’re very complex and challenging,” Lockhart recently said in Anchorage.
Well comes amid declines Sunrise has been of interest to exploration companies over the past decade. Union Oil Company of California circled the prospect in the early 2000s. Marathon came on as a partner in the middle of the decade, but chose data acquisition over drilling until now.
The prospect is interesting because it is onshore in a basin where significant money goes into offshore drilling prospects, and also because of its proximity to the Swanson River field, the 1957 discovery that launched the modern oil and natural gas industry in Alaska.
The location of the prospect in the Kenai National Wildlife Refuge, though, could make permitting more difficult. A Unocal proposal in 2004 to develop Swanson River satellites led to challenges from environmental groups, the Associated Press reported at the time.
That said, Marathon drilled the Sunrise well this year amid public concerns about whether the aging Cook Inlet basin will continue to be able to meet peak winter demand.
Lockhart told the Anchorage Energy Task Force on March 16 that she believes there is further potential in the refuge, but said access remains an obstacle. She also acknowledged that Marathon hasn’t shot any seismic outside of the Sunrise prospect.
Sunrise is one of only three wells Marathon plans to drill in the Cook Inlet basin this year and the only exploration well, Lockhart told the task force, convened by Mayor Dan Sullivan.
Marathon sold 87 million cubic feet of gas per day in 2009 on average, Lockhart told members of the House Resources Committee on March 15. The House is considering a bill — HB 229 — that would expand drilling incentives for companies in Cook Inlet.
In the mid-2000s, Marathon regularly drilled 10 wells or more in Cook Inlet each year, but the company cut back in 2009 because of the weak economy. In a November 2009 presentation to analysts, Marathon said it drilled six Cook Inlet wells in 2009. (Lockhart told the Energy Task Force that Marathon drilled five Cook Inlet wells last year.)
Those reduced drilling levels will most likely continue until at least 2012.
“Of the current players that are working in the Cook Inlet, Marathon represents, I think, without a doubt, the most active developer and they are in the process of actually pursuing opportunities that we can clearly define as exploration developments,” Kevin Banks, director of the state Division of Oil and Gas, told House Resources March 15.
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