Several years ago, when rising energy prices were driving people from the Copper River region, Ahtna Inc. launched a search for a nearby and affordable supply of natural gas.
As The Explorers was going to press, the Alaska Native corporation was about to begin that effort by drilling the Tolsona No. 1 exploration well near the city of Glennallen. The company had already begun building a short gravel road that would connect a new 4-acre drilling pad to the Glenn Highway, some 11 miles west of the city of Glennallen.
“We are anxious to begin drilling on this project which began nearly six years ago with the application process,” Ahtna President Michelle Anderson said in a March statement. “We are optimistic of a resource discovery that will help address the rural energy crisis in the Ahtna region. A substantial discovery would benefit not only the Ahtna region, but the state at large. It would provide a boost to the economy by putting Alaskans to work and help to alleviate the high energy costs that many residents experience.”
With the well, Ahtna would become the third Alaska Native corporation to operate an oil or gas exploration program, after Arctic Slope Regional Corp. and Doyon Ltd.
As with most exploration activity occurring away from the North Slope or Cook Inlet, the Ahtna program began with an exploration license. The Alaska Department of Natural Resources issued a license for the Tolsona basin in December 2013. The five-year license covered 43,492 acres near Glennallen and required Ahtna to spend at least $415,000.
The first year of the program focused on seismic activity. Ahtna reprocessed some 80 miles of existing 2-D seismic data and commissioned Global Geophysical Services to conduct a 2-D seismic survey covering some 40 miles. The seismic program revealed portions of a geologic structure some 14 miles west of Glennallen and gave the company a 60-to-70 percent chance in finding natural gas with a new well, Ahtna Vice President of Land and Resources Joe Bovee told the House Energy Committee in February 2015.
Where others have trod
The Copper River basin has 11 previous exploration wells, all of which encountered natural gas. Despite that prospectivity, technical difficulties have prevented development.
The Texas-based independent Rutter & Wilbanks Corp. drilled the most recent well in the region, the Ahtna 1-19 well in 2005 through 2007. The well discovered a gas reservoir but problems associated with excessive downhole pressures and water incursion forced the company to plug and abandon the well without developing the resource.
To prevent those problems, Ahtna secured more powerful drilling equipment and planned to run casing through the entire length of the approximately 5,000-foot well, which is targeting the upper Nelchina and the lower Nelchina sandstones. Those upgrades will greatly increase the cost of the well, although the increases are partially offset by a convenient location that is close to the existing road system and accessible year-round.
Ahtna hired HXR Drilling Services to drill the well, possibly using the Saxon 147 drilling rig. The schedule expects drilling, testing and de-mobilization to be finished by late June.
Ahtna planned to use the existing Ahtna 1-19 well pad for staging and construct the new 3.8-acre Tolsona pad for drilling activities. The corporation was eager to complete the well in early 2016, before the expected expiration of certain tax credits for exploration.
Economic development
Ahtna launched the program to stem population loss.
The population of the Copper River valley fell by 10 to 15 percent between 2010 and 2014 and various businesses and schools in the region closed, according to Bovee.
Although the corporation has said it would export excess supplies of a sufficiently large discovery, the primary goal of the program is to supply local communities. Before drilling, Ahtna applied to the Regulatory Commission of Alaska for permission to create a distribution utility that could deliver natural gas to homes and businesses throughout the region, figuring it would import liquefied natural gas if exploration were unsuccessful.
Even with the recent drop of oil prices, Ahtna believes gas would be an economically viable alternative to oil. When diesel prices declined to approximately $3 per gallon in early 2015, the corporation still estimated cost savings between 40 and 50 percent.
The size of a discovery will determine the scope of the development.
With production rates in the thousands of cubic feet, the project would flop. With rates in the millions of cubic feet, the project could likely support power generation throughout the region. With rates in the billions of cubic feet, Ahtna could probably export supplies.
The specifics will determine whether the project requires a pipeline or an LNG plant.
By February 2015, Ahtna had already spent $3 million on the program and expected to have spent between $10 million and $15 million by the time the well was finished.
