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Vol. 22, No. 22 Week of May 28, 2017
Providing coverage of Alaska and northern Canada's oil and gas industry

The Explorers 2017: Ahtna completes Tolsona exploration well

Successful program could yield a local supply of gas for the Copper River region

Eric Lidji

For Petroleum News

In the first week of this year, Ahtna Inc. announced that its subsidiary had completed operations at its Tolsona No. 1 exploration well, but wouldn’t have results for months.

By the time The Explorers went to print, those results had not yet been released.

The results will determine whether the Alaska Native corporation for the Copper River area is able to progress its long-standing goal of reducing energy costs in the region by replacing oil-based and other energy sources with a local supply of natural gas.

Early news from the drilling site contained both encouraging and challenging news. The well encountered natural gas and provided several leads for the company to pursue during flow testing. But the complex geology of the region continued to beguile drillers.

In the latter half of 2016, Ahtna drilled and flow-tested the 5,500-foot Tolsona No. 1 well in thick Nelchina sandstone intervals of a natural gas-prone region near Glennallen.

The 11 previous exploration wells drilled in the Copper River basin all encountered natural gas. But all encountered complex geology, too, which thwarted development. The most recent was the Ahtna 1-19 well that Texas-based independent Rutter & Wilbanks Corp. drilled about two miles east of the current Tolsona well between 2005 and 2007.

Like previous wells, the Ahtna 1-19 encountered natural gas. But high subsurface pressures and water encroachment forced the company to plug and abandon the well.

Ahtna and its contractors considered those problems when they designed the Tolsona well, and they successfully isolated the potential natural gas zone from the high-pressure water zone above it. To accommodate the complex geology, Ahtna had to drill the well approximately 700 feet deeper than it had original planned, leading to some delays.

“We had to drill the well deeper than we had proposed because the formations were coming in deeper in the fault block that we were in,” drilling manager Marty Lemon said in December 2016. Even though the company had 2-D seismic over the area, the details of the geology were complex. And although the company had a previous well in the vicinity for guidance, the Ahtna 1-19 well was in a different fault block with different geology.

To manage the high pressures, drillers used especially large diameter casing strings to accommodate additional casing when the well encountered water. The drillers also used “managed pressure drilling” to respond to high pressures encountered in the well. And the drillers started with a small 1,100-foot pilot hole before setting the first casings.

The Tolsona well encountered five distinct intervals of interest for the company to consider during flow testing operations, according to Lemon. In December, the company said that testing would involve a section of the well between 5,000 and 5,220 feet.

Licensing and tax credits

As with all oil and gas exploration outside of the North Slope and Cook Inlet basins, the Tolsona program was conducted through the state exploration license program.

The state issued a five-year license for the Tolsona basin in December 2013. The license covered 43,492 acres and required Ahtna to spend at least $415,000 on exploration.

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.

As the project progressed, Ahtna also made use of the “Middle Earth” provisions in the tax code that provide credits for Interior exploration. “Ahtna would not be doing this exploration if the tax credits were not in place. A substantial discovery would benefit not only the Copper River region but the state at large, helping to address high-energy costs in the region and beyond,” Ahtna President Michelle Anderson said in August 2016.

The exploration program began in late 2014, when Ahtna commissioned Global Geophysical Services to conduct a 2-D seismic survey covering some 40 miles. Ahtna also reprocessed some 80 miles of existing 2-D seismic data. The seismic effort 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.

Although the primary goal of the program is to improve the local economy by reducing energy costs, Ahtna has said it might export any excess supplies. Before drilling, the company 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.



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