Aurora is returning to exploration. The small Alaska-based company has been operating in Cook Inlet longer than any other independent and has revived many small natural gas fields ignored by larger players.
Those projects involved resuscitating fields by conducting maintenance activities on existing wells, by drilling sidetracks and by drilling grassroots wells in old fields. While the company also conducted exploration, particularly at the Three Mile Creek field, those activities have generally been less prominent than its developments at existing fields.
Now, Aurora is taking a larger interest in exploration than at any time in its history. The company is currently considering as many as seven prospects: Chickalusion, Three Mile Creek Deep, Congahbuna Lake, Nicolai Footwall, Forest Lake, West Eagle and Hanna.
Aurora Power Resources Inc. created Aurora Gas in 2000 as an exploration and production arm. The independent operates five gas fields on the west side of Cook Inlet - Nicolai Creek, Lone Creek, Moquawkie, Albert Kaloa and Three Mile Creek. Today, the Kaiser-Francis Oil Co. affiliate Aurora-KF LLC owns a 95 percent interest in Aurora Gas. Aurora Power Resources owns 4 percent and Orion Resources Inc. owns 1 percent, according to the state corporations databases. Aurora Power Resources Inc. formed the wholly owned subsidiary Aurora Exploration LLC in 2005 as an exploration entity.
Persistence at Hanna
Aurora is pursuing Hanna first, although it is using other names for the effort.
The prospect is surrounded by the Lewis River, Stump Lake, Ivan River, Pretty Creek and Otter units and is one of the “white whales” of the Cook Inlet region. Aurora acquired the four-lease prospect on the west side of Cook Inlet from independent investor Paul L. Craig, who had been pursuing the opportunity for more than two decades.
As described in permitting documents, Aurora would drill the Theodore River No. 2 well on ADL 391618 using a temporary drilling pad accessed from the existing Beluga highway and would use a one-mile snow trail and a second temporary pad to drill the Chedatna Lakes No. 1 on ADL 391878. The state approved the program in late 2015.
Early on, Aurora planned to drill one well in the fall and a second well in the winter, although as of March 2016 the company had yet to receive final permits for either well.
Union Oil Company of California abandoned an exploration program at Hanna in the 1980s in light of falling commodity process. Craig first acquired the leases in 1993 through the independent Trading Bay Energy Corp. but found it difficult to raise money for Alaska exploration after Stewart Petroleum Co. filed for bankruptcy protection in 1996. Forcenergy Inc. acquired the leases in 1997 but filed for bankruptcy in 1999.
Craig acquired the leases a second time through a 2001 lease sale but once again found it difficult to organize an exploration program. A proposed deal with U.S. Petroleum Corp. fell apart in 2002 and a farm-out with Pelican Hill Oil and Gas Inc. fell apart in 2005.
Aurora acquired the prospect later that year but suspended all drilling operations in late 2006 while it resolved ongoing litigation with Enstar Natural Gas Co. In early 2009, Aurora arranged a partnership and even received an Alaska Oil and Gas Conservation Commission drilling permit for a Hanna No. 1 exploration well. This time, the delays were regulatory. The Alaska Department of Fish and Game refused to allow the company to build a drilling pad through a marshy section of the Susitna Flats Game Refuge.
After the leases expired again, Craig acquired the prospect for the third time in a 2010 lease sale. Escopeta Oil & Gas Co. expressed an interest in exploring the prospect, believing it could sidestep the regulatory problems by drilling in winter. This time, Craig attached performance requirements to the leases. After two years, Escopeta had missed its deadline. In March 2013, Escopeta transferred the leases to an affiliated independent called Galena Energy Corp., which also missed the deadline. In May 2013, Galena Energy transferred the prospect to Craig. The leases currently expire on Feb. 28, 2018.
The other prospects
Aurora announced the other six prospects in one permitting document.
Aurora included Chickalusion, Three Mile Creek Deep, Congahbuna Lake, Nicolai Footwall, Forest Lake and West Eagle in an application for an oil discharge prevention and contingency plan with the Alaska Department of Environmental Conservation.
Chickalusion, Three Mile Creek Deep, Congahbuna Lake and Nicolai Footwall are all located on the west side of Cook Inlet, where Aurora has the most experience to date.
Chickalusion includes as many as two wells at a proposed site near the Aurora-operated Moquawkie and Lone Creek units, approximately four miles due west of Tyonek. The region includes lands managed by the Tyonek Native Corp. and Cook Inlet Region Inc.
Three Mile Creek Deep includes as many as two wells at a proposed site to the north of Chickalusion, some eight miles north of Tyonek and west of the Beluga River unit.
Congahbuna Lake includes one well each at two proposed sites approximately 10 miles west-northwest of Tyonek and west of the Moquawkie and Lone Creek units.
Nicolai Footwall includes one well each at two proposed sites 10 miles southwest of Tyonek, in an area with State of Alaska, Alaska Mental Health Trust and federal lands.
Forest Lake and West Eagle are on the east side of Cook Inlet.
Forest Lake includes one well each at two proposed sites some 12 miles northeast of Kenai, in an area managed by the state, U.S. Fish and Wildlife Service and CIRI.
The West Eagle program would follow an unsuccessful exploration program by Buccaneer Energy Ltd. in the southern Kenai Peninsula, some 20 miles north of Homer.
Aurora said it would use the Aurora Well Service No. 1 rig or similar rig for every program except West Eagle, which would use Cook Inlet Energy’s Rig No. 37.
