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October 2007

Vol. 12, No. 40 Week of October 07, 2007

Fowler Oil and Gas gets green light from Mat-Su borough to drill coalbed methane well

On Oct. 1 the Matanuska-Susitna Borough Planning Commission unanimously approved a conditional use permit for Fowler Oil and Gas (Alaska) to drill a coalbed methane well between Palmer and Wasilla in the 794-acre Kircher block. It was the first coalbed methane well approved under a tough ordinance passed by the borough in 2004 after Evergreen Resources’ unsuccessful attempt from 2001 to early 2003 to get coalbed methane production established in the Southcentral Alaska valleys. At the time Evergreen was a major Lower 48 coalbed methane producer and came up against strong local opposition in the in the Matanuska and Susitna valleys.

Pioneer Natural Resources purchased Evergreen in 2004, and subsequently relinquished all of the smaller company’s unconventional leases and farmouts in the Mat-Su, and abandoned all plans to explore for and produce coalbed methane in the area. (See full story in the April 25, 2004, issue of Petroleum News titled “Pioneer Natural Resources drops Mat-Su.”)

Ehm ‘really did his homework’

Fowler has indicated it’s determined NOT to follow in Evergreen’s footsteps, keeping communications open between it and local citizens. So far, the company has been successful.

The acting chief planner for the Mat-Su Borough, Eileen Probasco, says Fowler’s success with the borough is due to Fowler CEO and Chairman of the Board Bob Fowler’s preparation before filing for the company’s first conditional use permit for a well in the Kircher block at the corner of Bogard Road and Trunk Road.

Bob Fowler “really did his homework. … He took the time to figure out what was needed to be in compliance with the new ordinance,” Probasco told Petroleum News Oct. 2.

Sixteen people testified at the planning commission meeting in Wasilla Oct. 1, she said. “Twelve in favor and four opposed. There were four commissioners acting on the request, all voted in favor” of the permit, which she said was issued in the form of a resolution with 18 findings to develop a coalbed methane operation using “underground horizontal drilling” from a well located in the southwest corner of Section 26, Township 17 North, Range 1 East.

Fowler President Arlen Ehm and Bob Fowler were both pleased at the commission’s decision.

Bob Fowler, a graduate of Palmer High School and a longtime Alaskan, told Petroleum News in May that he fully understands the concerns of the residents of the Mat-Su area regarding coalbed methane development.

“Our family has been in the valley for over 50 years and so I’m very familiar with the issues up in the valley and how people would like to see economic development but also coupled with environmental protection,” he said.

Nine conditions include $50,000 bond

Nine conditions were attached to the resolution, none of which were a surprise to Fowler, including the following that must be provided to the borough:

• $50,000 bond to cover abandonment, site reclamation and capping;

• As-built survey of the site after completion of the well site and equipment facility (10 by 20 by 10 foot building), drawn under the seal of a registered surveyor in the State of Alaska; and

• Records of monthly water monitoring reports conducted by an independent ground water testing professional.

Other conditions include allowing the borough to “inspect the site and related records” at reasonable times and with reasonable notice; any project changes will require an amendment to the permit; “failure to initiate the project” within five years results in immediate termination of the permit; and if Fowler decides to sell or transfer its development then the existing lease agreements with the private property owners have to be renegotiated with the new owner “prior to commencing production.”

The Kircher block is on homestead land where the landowner owns both the surface and subsurface rights. Fowler already has lease agreements with those owners, which was mentioned in the planning commission’s findings.

“We’re drilling only on acreage owned by the people that own the surface,” Ehm said in a May interview.

The findings also noted that agricultural use of the property would continue side by side with coalbed methane development, and that the access road Fowler needs will actually be part of an existing farm road and the production equipment and security building would be in an “active farm field.”

The “fortified steel” 10 by 20 by 10 foot building has to be built to look like a “Colony barn,” painted to blend in with the landscape, and can have no exterior lighting.

An underground pipeline will transport the methane gas to an existing Enstar gas line about a half-mile away.

Horizontal drilling key to plans

One well, Ehm said, will not be sufficient to produce the entire Kircher block, but Mat-Su regulations allow for two wells per 640 acres to be located on the surface and have no restrictions on subsurface spacing.

One key element in Fowler’s approach to coalbed methane development is the use of horizontal drilling technology. M-W Drilling, the drilling contractor for the project, will drill a single vertical well to a depth of about 3,500 feet. Perforated horizontal wells sidetracked from that central well will then thread out through each coal seam penetrated by the vertical well.

The horizontal drilling technique will enable access to thousands of horizontal feet of coal seam from a single surface wellhead, thus eliminating the need for the profusion of surface wellheads that has blighted some coalbed methane developments, while enabling adequate production rates from a single well, Ehm said.

Patented technology will eliminate the water disposal problems that have often plagued coalbed methane production in the past, Bob Fowler told Petroleum News in May. A downhole electric submersible pump will draw water drained from the coal into the bottom part of the vertical well, to dispose of the water into relatively deep sandstone formations, below the level of the coal. Thus, no produced water will reach the surface or enter the water table.

During drilling operations Fowler plans to use hospital mufflers to reduce noise from the drill rig, Ehm said. Gas production will not require the use of compressors, so that there will be no compressor noise.

Ehm said the well will be drilled in the spring, and that Fowler is moving forward to obtain other state and federal permits and approvals that it will need to drill.

“I didn’t want to go out there and rig up, spud in the coldest and darkest months of the year,” Ehm said. “You pay at least 150 percent when you try to push something through in the middle of the winter.”

But the company does plan to move equipment into a barn at the site during the coming winter. That will avoid having to try to truck in heavy equipment during spring breakup, when road load limits are reduced, Ehm said.

—Kay Cashman






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