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Vol. 23, No. 4 Week of January 28, 2018
Providing coverage of Alaska and northern Canada's oil and gas industry

Hope for Nenana basin

Doyon’s Mery sees potential for oil development if discovery made this summer

Alan Bailey

Petroleum News

Especially given the proximity of the Nenana basin to the road and rail corridor between Southcentral Alaska and Fairbanks, Doyon Ltd. sees the potential for a viable oil development in the basin, Jim Mery, Doyon vice president for lands and natural resources, told a meeting of the Resource Development Council on Jan. 18. If the Totchaket No. 1 exploration well that the corporation plans to drill in the coming summer finds a significant oil pool, a development would be viable at a $50 per barrel oil price, even with a relatively small discovery, say around 40 million to 60 million barrels, Mery said. If Doyon discovers a viable oil resource this summer, production could begin by around 2023 to 2025, but potentially earlier if oil were to be shipped initially by truck or rail to the oil refinery at Fairbanks North Pole, or to a trans-Alaska oil pipeline pump station.

Natural gas from the basin could potentially be brought on line earlier than oil - the Nenana basin is prospective for gas as well as for oil. However, Doyon does not currently see any market for gas, especially given current plans to ramp up deliveries of liquefied natural gas to Fairbanks under the Alaska Industrial Development and Export Authority’s Interior Energy Project. Gas from the Nenana basin, if a significant resource is found, could be delivered to Fairbanks at a city-gate price significantly lower than the price anticipated by the IEP, Mery said.

Moreover, it appears unlikely that Doyon would be able to sell gas at a viable price through a future gas export line from the North Slope, if that pipeline comes to fruition, Mery suggested.

Cook Inlet Region Inc. is partnering with Doyon for the drilling of the Totchaket well. State tax credits also support Doyon’s exploration program.

Petroleum system

While the planned well will be located in the relatively deep northerly part of the Nenana basin, Doyon has previously drilled three wells in the basin’s shallower, more central saddle. Those earlier wells provided tantalizing evidence for an active petroleum system, with the discovery of oil shows and so-called wet gas that must have been generated thermally at considerable depth. Two of the wells provided evidence of breached hydrocarbon reservoirs - geologists have suggested that the breaching resulted from uplift of the rock strata in the basin’s central section. The wells did not encounter any commercially viable oil or gas pools.

Oil and gas in the basin is understood to be sourced from coal and coaly shales in the relatively hot, deeper sections of the basin. There are abundant potential hydrocarbon reservoirs formed from porous sand units, and there are also impervious horizons that can act as reservoir seals. But Doyon’s drilling endeavors to date have clearly revealed issues with the trapping of hydrocarbons in some sections of the basin.

Mery characterized the strategy behind drilling the Totchaket well as, in part, the mitigation of risk associated with the hydrocarbon traps. Seismic data indicate that there has been relatively little movement of the strata in the northern section of the basin where the drilling is planned, he said. Moreover, the seismic data, in particular 3-D data gathered in 2017, exhibit amplitude anomalies, suggesting the presence of natural gas or light oil at multiple horizons.

Drill to around 13,000 feet

Doyon plans to use the Nabors 105 rig to drill the new well to a depth of around 13,000 feet, depending on what the well encounters. There are hydrocarbon indicators between depths of around 4,500 feet and 9,500 feet, Mery said.

The Totchaket East prospect, where the well will be drilled, is one of five prospects identified from the 3-D seismic data, with all of the prospects showing hydrocarbon indicators. So success in the drilling, in particular an oil find, could lead to a multiyear drilling program, Mery said.

Currently Doyon is building a winter road out to the drill site, to enable the winter construction of both the drill pad and an access road to the pad from the Tanana River. The idea is to move the drilling rig to the pad in March, to enable mobilization of the drilling operation in late May, after breakup. A fleet of barges and crew boats on the Tanana will service the operation, with the main personnel camp being located in the nearby town of Nenana. By allowing plenty of time for the drilling over the course of the summer, Doyon is preparing for the possibility of well testing, should a discovery be made, and for the possibility of drilling a sidetrack or a second well, should that be appropriate, Mery said.



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