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Vol. 19, No. 24 Week of June 15, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Gas from a Kitchen

Furie’s Cook Inlet development may begin to realize a long-held vision

Alan Bailey

Petroleum News

With Furie Operating Alaska’s new offshore gas production platform on its way from Texas to Cook Inlet, speculation over just how much undeveloped hydrocarbon resource may lie beneath the waters of the inlet continues unabated.

Back in 2001 Escopeta Oil and Gas and its president, Danny Davis, caused something of a stir and a good deal of skepticism when they announced that a new analysis of some old seismic data had revealed the possibility of major undiscovered oil and gas resources in the company’s offshore Kitchen and East Kitchen prospects, east of the South Middle Ground Shoal unit.

Although seismic data for the prospects indicates the existence of geologic structures that could host oil or gas fields, there have been significant question marks over the interpretation of that data. And because of uncertainties regarding the geology, Alaska’s Division of Oil and Gas has characterized the East Kitchen prospect, for example, as “highly speculative.”

But convinced that the offshore prospects might contain large oil and gas fields that some geologists had thought remained undiscovered in the Cook Inlet basin, Davis named the prospects in reference to the supposed hydrocarbon “kitchen,” the region of hot oil and gas source rock, that he thought lay under the prospects.

Kitchen Lights

Roll forward to the present day, and the quantity of oil and gas resources in the prospects remains unknown, at least in public. Following a series of lease deals in 2009, the Kitchen prospects were combined with two other prospects along the same structural trend, the Corsair and Northern Lights prospects, to form the Kitchen Lights unit. In 2011 Escopeta brought a jack-up drilling rig, the Spartan 151, to the inlet to drill in the unit. And, following a program of exploration and appraisal drilling, Furie Operating Alaska, as Escopeta is now known, is developing what appears to be a significant sized gas field in the unit.

The Kitchen Lights unit is divided into four exploration blocks, with each block encompassing one of the original prospects that were combined into the unit. In the southern part of the unit, immediately north of the East Foreland region of the Kenai Peninsula, lie the southwest and central blocks over the original Kitchen prospects. In the middle lies the Corsair block, with the fourth block, the Northern block, in the unit’s northeastern sector.

How big?

In September 2011 Escopeta used the Spartan rig to drill the company’s first exploration well, the Kitchen Lights unit No. 1 well to a depth of 8,805 feet in the Corsair block. And on Nov. 4 of that year the company announced a 3.5 trillion-cubic-feet gas find, an announcement that was met with considerable skepticism and which one commissioner from the Alaska Oil and Gas Conservation Commission characterized as “irresponsible,” given “so little firm data.” Escopeta concurred that the statement had been “bold,” but commented that detractors had not seen the data that the statement was based on.

Later in 2011 Escopeta was renamed Furie Operating Alaska, a subsidiary of Texas-based Furie Petroleum Co., a business owned by German investors. Danny Davis retained ownership of Escopeta’s interests outside of Kitchen Lights. And, given the active exploration program in the Kitchen Lights unit, in January 2012 Alaska’s Division of Oil and Gas granted a four year extension to the unit’s term, to Jan. 31, 2016. That unit extension was subject to Furie re-entering the Kitchen Lights unit No. 1 well and then drilling four or five additional wells in the unit.

After a couple of management changes at the top of Furie Operating Alaska, Damon Kade, the company’s current president, took over the company’s helm. And in March 2012 Kade told the Alaska Senate Resources Committee that the gas resource encountered in 2011 by the No. 1 well amounted to a probable gas reserve of 750 billion cubic feet, with a possible gas production rate of up to 30 million cubic feet per day. Kade told Petroleum News that the gas estimate announced in September 2011 was based on a much larger reservoir drainage area than the company was now using for its reserves estimates.

Continued drilling

In the summer of 2012 the Spartan rig re-entered the Kitchen Lights unit No. 1 well, continuing drilling to the base of the Tertiary rock sequence at a depth of 15,298 feet. Later that year the company drilled the KLU No. 2 well to a depth of 9,106 feet, with a later sidetrack drilled from that well for testing purposes. The KLU No. 3, drilled to a depth of 10,391 feet, followed in June 2013. Later in the 2013 drilling season, Furie started drilling the KLU No. 4 well, but the company had to suspend the drilling of that well for the winter, before the well was completed.

In July 2013 Furie filed a statement of discovery with the Alaska Department of Natural Resources, saying that the Kitchen Lights unit No. 3 well had encountered multiple productive gas pools in the Sterling and Beluga formations at depths ranging from 3,618 feet to 6,228 feet.

Since March 2012 Furie has remained tight-lipped about the scale of its Kitchen Lights gas discovery. But a plan that began to emerge in the summer of 2013 to develop the discovery through the installation of an offshore gas production platform seemed to imply the existence of a significant find.

Plan of operations

In March 2014 Furie formally filed a plan of operations with the Alaska Department of Natural Resources for the Kitchen Lights unit. That plan said that the company wanted to install an offshore platform of monopod design in the unit, about 10 miles north of Boulder Point, near Nikiski on the Kenai Peninsula. The platform, designated Kitchen Lights unit Platform A, would be supported on a single 18-foot-diameter caisson, with twin gas gathering pipelines delivering production from the platform to an onshore gas processing facility near East Forelands, for delivering natural gas into the Kenai Peninsula gas pipeline infrastructure.

The plan said that each of the twin pipelines would be able to transport up to 100 million cubic feet per day of gas, with initial production coming from the KLU No. 3 well, but with the possibility up to six wells eventually being drilled. The Spartan rig, cantilevered over the platform, would conduct the development drilling. Platform installation, the laying of the pipelines and the construction of onshore facilities would take place between April and October of 2014.

One pipeline initially

The Department of Natural Resources approved Furie’s plan at the beginning of May. However, Furie plans to lay just one of the two gathering lines in 2014, with the laying of the line scheduled for completion by the end of September. Kade told Petroleum News in a June 10 email that the idea is to add the second pipeline later, based on field reservoir performance after further wells come on line.

The approved plan says that production from the field should start in late 2014, with development of the Kitchen Lights unit likely to result in the production of up to 30 billion cubic feet per year of gas. The development is targeting gas production in the Corsair block of the unit, with multiple wells from the single platform in the block all potentially producing gas, the plan says. Exploration is continuing in the other blocks, with any development in those other blocks requiring additional infrastructure, the plan says. The KLU No. 4 well, which Furie started drilling in 2014, is located in the Northern block.

Platform en-route

Meantime, the development associated with the A platform in the Corsair block is moving ahead. Kade has told Petroleum News that the components of the platform are en-route for Cook Inlet, anticipated to arrive in late July, having departed Ingleside, Texas, on June 4. The pipeline components are being shipped from Mexico, for delivery in June. And work clearing the site for the onshore facility started in May.

Exactly how much new Cook Inlet gas will come online as a result of the development remains a mystery. And Furie has not indicated who will purchase the gas when it comes on line. But at least some component of that original optimism over the offshore prospects appears set to bear fruit.

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