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Vol. 15, No. 33 Week of August 15, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Armstrong to look for North Fork oil

Company tells DNR if plans to drill an oil well to determine whether the resource is viable, natural gas operations continue

Eric Lidji

For Petroleum News

As Armstrong Cook Inlet gears up to bring its first natural gas operation into commercial production, the company is also planning to look for oil at its North Fork unit.

In July operational filings with the Alaska Department of Natural Resources, the local subsidiary of Denver-based Armstrong Oil and Gas said it planned to drill an oil exploration well at the southern Kenai Peninsula unit, possibly as soon as this year.

The company said the well would help determine if oil production is viable at the unit.

To date, Armstrong has focused on natural gas at North Fork, drilling a well in the summer of 2008 and signing a natural gas supply contract with Enstar Natural Gas.

The company recently suggested it plans to drill additional natural gas wells into the Tyonek sands originally proven productive 45 years ago by Standard Oil of California.

An oil exploration well would test the deeper Hemlock formation. If the initial well proved oil production to be a viable option at North Fork, Armstrong said it would likely drill additional wells at some point in the future, possibly in the second half of 2011.

Armstrong would use the Marathon Glacier Rig 1 or an “equivalent” rig for those wells.

Armstrong first indicated its interest in North Fork oil in June, when it filed an oil discharge prevention and contingency plan for approval by the Alaska Department of Environmental Conservation. That plan is required for drilling that might encounter oil.

That plan has not yet been approved.

Armstrong also has not recently received any permits for gas or oil wells from the Alaska Oil and Gas Conservation Commission, one of the final permits needed before drilling.

Gas development continues

The potential oil exploration is part of the maturing of North Fork from a long-overlooked prospect, located a bit off the beaten path, to a working oil and gas field.

Armstrong is working on several projects to bring the field into production, including upgrading the North Fork unit drilling pad, working over and recompleting the original NFU No. 41-35 well that SoCal drilled in 1965 and drilling additional natural gas wells.

The company is getting started on a 7.4-mile dual pipeline to connect North Fork to the regional natural gas transmission grid. Armstrong expects to finish that project by March.

The company is also proposing several activities for later in the year, including natural gas production facilities slated for construction this fall and an 1,800-foot in-field gas pipeline to connect the old and new drilling pads at the unit scheduled for this winter.

The production facilities would include offices, support and maintenance buildings, line heaters, separators and a dehydrator unit, and produced water tanks. Armstrong estimated a compressor wouldn’t be needed for “about a year,” until natural field pressure declines.

The 4-inch in-field gathering line would connect the NFU No. 41-35 well located inside the North Fork unit boundaries to the newer NFU Pad located just outside the unit.



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