Cook Inlet Energy LLC is taking the lead on a new effort at the West Eagle prospect.
The local subsidiary of Tennessee-based independent Glacier Oil and Gas Corp. wants to begin drilling at the onshore prospect in the southern Kenai Peninsula as soon as October, according to documents recently presented in bankruptcy court by Aurora Gas LLC.
In late August, Aurora asked the U.S. Bankruptcy Court for the District of Alaska for permission to sell its Oil Discharge Prevention and Contingency Plan, or “C-plan,” for the West Eagle project to Cook Inlet Energy for $20,460.36. The court agreed to consider the request, and also to shorten the timetable for accepting objections to the request. That would expedite the process and give Cook Inlet Energy time to proceed with any required state review of the transfer in time to begin drilling activities early this coming fall.
As of the Sept. 12 deadline, no objections had been added to the online court docket.
In May 2015, Aurora Gas LLC applied for a C-plan covering proposed exploration activities at six prospects located across the Cook Inlet basin, including the West Eagle prospect. The application was released for public review in July and approved in December. Several months later, several creditors pushed Aurora into bankruptcy court.
In its C-plan application, Aurora said it intended to use Cook Inlet Energy’s Rig No. 37 - formerly known as Glacier Rig No. 1 - for the proposed West Eagle program.
Buccaneer’s attempt
An exploration program at West Eagle would follow a recent unsuccessful program by the former Buccaneer Energy Ltd. The Australian independent drilled the West Eagle No. 1 in early 2014. The well was a dry hole and the company plugged and abandoned it.
West Eagle No. 1 reached its primary target and provided enough information for preliminary analysis, according to a statement from the company at the time, but “while the analysis confirmed that the sands encountered exhibited excellent reservoir qualities, there were no indications of the presence of hydrocarbons in the target zones.”
Although Buccaneer had originally intended to drill a much deeper well, the company suspended operations at 3,700 feet, claiming that the disappointing results from shallower depths had “significantly increased the risks associated with the deeper objectives.”
The dry hole was one of final factors in a string of decisions that pushed Buccaneer to eventually seek bankruptcy protection. The company hired a restructuring firm a month after announcing the well results and filed for bankruptcy protection a few months later.
Several West Eagle leases expired in September 2015. Buccaneer surrendered several more leases in February 2015 and asked to terminate the West Eagle unit soon after.
In a May 2015 lease sale, Woodstone Resources LLC and Hilcorp Alaska LLC separately acquired portions of the acreage with the three previous wells, include West Eagle No. 1.
As of Sept. 12, state lease records continued to list Woodstone Resources as the sole owner of ADL 393038 - the lease with the West Eagle drilling pad and wellbore.
Buccaneer acquired the prospect in 2010, through its initial acquisition of 57,600 gross onshore and offshore acres across the Cook Inlet basin from Stellar Oil and Gas LLC.
At the time, the prospect was somewhat stranded. With the terminus of the regional transportation grid lying far to the north, the communities surrounding the city of Homer were continuing to rely on heating oil while the rest of Southcentral burned natural gas.
Even so, through the years, Buccaneer occasionally advanced plans for a West Eagle exploration program while pursuing other ventures with greater speed or enthusiasm.
After deciding against commissioning a new seismic survey over West Eagle, Buccaneer reprocessed some 233 square miles of existing 2-D seismic over the region in 2011. The company suggested the potential for a 12-well development program at West Eagle.
The reprocessed seismic mapped a “large north-south trending gas prospective anomaly” in the northeast of the prospect, as well as potential oil and shallow gas leads, according to the company. The Border Range Fault passed through the prospect, creating two distinct geologic profiles. West Eagle No. 1 would be the first well on the “East Side Play” since the 1960s, when Gulf Oil drilled the Caribou Hills well in search of oil in the Hemlock and Socal drilled the Anchor River No. 1 in search of gas in the Upper Tyonek.
By October 2012, Buccaneer claimed to be “poised to drill” but wanted the state to form a unit over the West Eagle leases to prevent them from expiring. At the time, the company estimated that the prospect held more than 100 billion cubic feet of natural gas.
While Buccaneer originally requested a 46,395-acre unit over nine leases, the state approved an 8,843-acre unit over three leases, allowing the others to expire. The state imposed a series of deadlines backstopped by two $600,000 bonds. Buccaneer ultimately missed both of its deadlines before drilling the West Eagle No. 1 well in early 2014.
North Fork opportunities
As Buccaneer was drilling West Eagle No. 1, Cook Inlet Energy was acquiring the nearby North Fork unit from a group of companies led by Armstrong Oil and Gas Inc.
The small natural gas field was the first in the southern Kenai Peninsula and justified extending the transmission grid south and finally bringing gas to the Homer area.
If Buccaneer had been successful at West Eagle, the company would have found a considerably improved transportation scenario than it had when it arrived in Alaska.
Perhaps inspired by similar efficiencies, former Cook Inlet Energy parent company Miller Energy Resources Ltd. tried to acquire the Buccaneer portfolio through an October 2014 bankruptcy auction but ultimately lost to a credit bid from AIX Energy LLC.
The decline in global oil prices in late 2014 made the existing gas production at the North Fork unit - sold on a fixed contract - increasingly attractive to Cook Inlet Energy. The company moved quickly, but later expressed regret and slowed its activities somewhat.
Over the course of 2015, Cook Inlet Energy added perforations to four North Fork wells - NFU No. 24-26, NFU No. 41-35, NFU No. 32-35 and NFU No. 34-26 - and remapped individual Tyonek sandstones. This led the company to apply to the Alaska Oil and Gas Conservation Commission for new Tyonek Gas Pool rules. The company also drilled the NFU No. 24-26 well in late 2014 and the NFU No. 42-35 well in early 2015.
Although the company permitted two more North Fork wells in 2015 - NFU No. 22-26 and NFU No. 14-26 - neither appeared to have been drilled through September 2016.
In its current plan of development for North Fork, approved in March 2016 and running through March 2017, Cook Inlet Energy proposed sidetracking NFU No. 42-35, drilling NFU No. 14-26 in the northwest of the participating area and evaluating whether it should build a pad in the northeast of the participating area or in other parts of the unit.
