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Vol. 13, No. 28 Week of July 13, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Armstrong spuds Kenai well

Alaska subsidiary of Denver independent drilling for gas on southern peninsula

Kay Cashman

Petroleum News

The Alaska subsidiary of Denver-based independent Armstrong Oil and Gas Co. is drilling its first exploration well in Southcentral Alaska’s Cook Inlet basin. According to Ed Teng, the Armstrong vice president in charge of the project, drilling will likely be finished around Aug. 9.

Armstrong Cook Inlet LLC spud North Fork 34-26 June 27 on a new pad it built within a lease held by the North Fork participating area, Division of Oil and Gas official Temple Davidson told Petroleum News July 10.

The well site is about six miles east of Anchor Point, just off North Fork Road in the southern Kenai Peninsula.

If Armstrong finds commercial quantities of natural gas at North Fork, the company told area landowners in February it expects the gas to be moved through Enstar Natural Gas Co. pipeline extensions from either Anchor Point or Happy Valley, the current end of the Kenai Kachemak Pipeline, which is about 10 miles from the North Fork 34-26 well. Enstar is considering building a spur line to take North Fork gas south to the community of Homer.

Armstrong is using Aurora Well Services AWS-1 workover rig, which was modified to handle the 9,100-foot target depth of the well and to make the rig run quieter, Teng told Petroleum News July 10.

“Quite a bit of engineering went into this rig. … It’s the quietest drilling location I’ve ever worked at,” he said.

In addition to modifying the rig, Armstrong did “a lot of berming” around the pad it built “to shield light and noise from residential dwellings in the area.”

A good relationship with its neighbors is important to the company, Teng said.

“Our neighbors wanted as little disturbance as possible … so we went out of our way to make sure we didn’t” disturb them, he said, noting that Armstrong is using local contractors.

“Drilling is going very smoothly,” he said when asked how long it would take to complete drilling. “The crew is very proud of what they’re doing. … I’d say it will take, plus or minus, another 30 days or so.”

He was not willing to speculate how long it will take to test the well, which is being drilled into the Tyonek Sands that were proven productive more than 40 years ago by Standard Oil of California at the nearby North Fork Unit No. 41-35 well.

Testing will follow drilling, and how long it takes will depend on “a lot of factors, some unknowns,” Teng said. “We won’t be testing just one pay zone. We’ll be testing a whole lot of pay zones so it will take longer.”

What about oil?

According to a Petroleum News source, Armstrong has secured funding from its owners and investors to drill two wells at North Fork, taking both down past the 9,100-foot level into deeper zones with oil targets.

In documents filed with the State of Alaska the company did say drilling for oil might be part of its plans for the future.

Teng would not comment on whether Armstrong was looking at drilling a second well or whether the company would eventually drill deeper for oil.

“Right now our plans are to drill this one well to 9,100 feet. Depending on the results we’ll decide what to do next. Tyonek is a gas target, we’re not going down to where the oil might be at this point. But depending on how everything looks … anything’s possible,” he said.

Teng said the company has not submitted an oil spill contingency plan for approval with the Alaska Department of Environmental Conservation, which it would need to do to drill for oil.

“We need to see what we have first,” he said.

Previously, the company was a successful explorer and developer on Alaska’s North Slope, until it sold its assets to Eni Petroleum, (Armstrong bought leases in Cook Inlet in 2007, taking over as operator of the North Fork gas unit and nearby leases.)

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