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Vol. 12, No. 29 Week of July 22, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Rutter plans to drill again

Independent: Glennallen well has gas, but viability depends on how much water

Alan Bailey

Petroleum News

It may not have succeeded the first time, but Rutter and Wilbanks is certainly trying again in its long-running drilling endeavor near Glennallen in Alaska’s undeveloped Copper River basin. The company now plans to drill a second sidetrack to its Ahtna No. 1-19 well, to test the viability of a gas find that it made in June in its first sidetrack from the original well, Bill Rutter Jr. told Petroleum News on July 16.

Rutter said that his company hopes to sign a contract with Nabors for the drilling of the second sidetrack in August. The Ahtna well is about 12 miles west of Glennallen and 180 miles north and east of Anchorage.

“It looks like we have a gas discovery in the upper Nelchina, which was our main objective. We’re getting some real good gas flows,” Bill Rutter III told Petroleum News June 28 after the first sidetrack well hit gas at a depth of about 4,350 feet.

Excessive water

But excessive amounts of water flowing from the well have raised question marks over the viability of the find, Rutter Jr. said — although the sidetrack was producing gas, the well was also producing water at the rate of about a barrel per minute. That rate of water production would render the well uneconomic to develop.

However, it’s impossible to say how much of the water is coming from the reservoir formation and how much is coming from higher up in the well.

“We know water was coming before we hit the gas,” Rutter Jr. said. “After we hit the gas we’re not sure whether there was any additional water or not.”

The company plans to resolve this problem by casing the second sidetrack down to the Nelchina reservoir. That will determine how much water is flowing from the reservoir and enable a decision on whether to continue drilling.

There are several potential reservoir sands in the Nelchina and the second sidetrack will initially target sands low down in the upper Nelchina, Rutter Jr. said. Since water tends to sink below gas, excessive water in that part of the formation would indicate that excessive water also exists in the lower Nelchina, he said.

“If it’s making an uneconomic amount of water we’ll probably just plug it,” Rutter Jr. said.

If, on the other hand, the water production isn’t excessive, drilling will continue down into the lower Nelchina, to test the sands there.

But the upper Nelchina definitely contains high-pressure gas — gas which reached the surface in the June discovery had to overcome 4,000 pounds of pressure applied by well fluids and the back pressure required to circulate water, Rutter Jr. said.

Started in 2005

Rutter and Wilbanks originally started drilling the Ahtna 1-19 well in February 2005 but high geologic pressures at a depth of 1,200 feet caused delays and cost increases in the drilling program. And when the well finally hit its planned depth of 7,500 feet the results proved disappointing.

“We never got enough gas to light a cigarette,” Rutter Jr. said at the time.

Rutter Jr. speculated that the well might have proved to be one of the most expensive onshore gas wells ever drilled in Alaska.

“We ended up drilling most of that well with 20 pound mud. Many would say that was impossible, but it wasn’t impossible, just expensive,” Bill Rutter III told attendees at the South Central Energy Forum on Sept. 21, 2006.

But the heavy drilling mud had damaged a potential gas reservoir formation part way down the well, effectively sealing that formation from possible gas production and thus leaving uncertainty about whether the well might in fact have encountered gas.

In the fall of 2006 the company made an unsuccessful attempt to penetrate the damaged section of the reservoir rock adjacent to the well bore, using a Cad Pressure Central snubbing unit.

“They got stuck again. … They couldn’t make the Perf Drill work; they couldn’t get more than 3 or 4 feet out into the formation,” Bill Rutter III told Petroleum News in October 2006. “It was an expensive experiment and it didn’t work. We’re coming back in the spring with a drill rig.”

And the company did duly return in the spring to drill a sidetrack well and make the June gas discovery, using a coiled tubing unit.

First since 1983

The Rutter and Wilbanks Ahtna 1-19 well was the first well in the Copper River basin since Copper Valley Machine Works drilled the Alicia No. 1 well in 1983. The Rutters have said that they want a major gas discovery that would “stimulate the North Slope spur line concept” and convince the state to first build a section of the line from Glennallen to Palmer, just north of Anchorage, to get Copper River gas into the Anchorage-based Enstar system for Southcentral Alaska.

But gas from the Ahtna well would likely first be sold for local use, including for the area’s electric cooperative, which currently burns diesel. The well is located on Native land in the Ahtna region. A group of local Native corporations, including Ahtna Inc., are leaseholders with a three-sixteenth overriding royalty interest.

And what about the risks and costs entailed in Rutter and Wilbanks’ Glennallen drilling marathon?

“This is a risky deal, but we have a long history of taking risks. We have been wildcatters for three generations and see no reason to stop now. We have a shot at some really big reserves on this deal,” Rutter Jr. told Petroleum News in 2005.



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