As Furie Operating Alaska LLC works to complete construction of a natural gas producing platform at its Kitchen Lights unit, the company is also planning its near-term development and exploration strategy for the offshore unit in the upper Cook Inlet.
This year, the Alaska subsidiary of German Deutsche Oil and Gas AG plans to drill two more development wells and continue exploration in other parts of the massive unit, according to information in a plan of exploration filed with the state in early March 2015.
Under its development plan, Furie will complete the existing KLU No. 3 well as a development well and will drill two more development wells into the Corsair block by the end of November but will postpone completion activities on those wells until 2016.
In a previous plan, Furie intended to complete all three wells this year. The delay will allow the company to accommodate changes in its schedule for installing the production platform. The delay will result in “significant cost savings by focusing on drilling operations” and will improve the effectiveness of completion activities by giving the company a chance to analyze the results of its 2015 drilling plans, according to Furie.
Completion is the mechanical processes for making a wellbore usable for production or injection. It can include installing tubing or down-hole tools and stimulating a reservoir.
The plan requires Furie to bring the unit into production by the end of 2015.
The plan of exploration explicitly gives the state the ability to respond to “delays caused by drilling complications on a case-by-case basis,” which acknowledges the fits and starts that have been common to the exploration and development program. In recent years, Furie has slowed or suspended activities for the sake of safety or because of weather.
Exploration to come
The exploration program calls for either drilling another exploration well in one of an unexplored block at the unit or for acquiring 3-D seismic information over the entire unit.
The Kitchen Lights unit includes four exploration blocks: North, Corsair, Central and Southwest. To date, the company has drilled five wells and a sidetrack at the unit. KLU No. 1, KLU No. 2 and 2A and KLU No. 3 were in the Corsair block, where Furie is currently in the final stages of development work to bring the unit into production. The company drilled KLU No. 4 in the North block and KLU No. 5 in the Central Block.
In previous plans, the company had proposed drilling a KLU No. 6 well in the North Block. Given that the Southwest Block is the only unexplored block remaining at the unit, it would make sense for Furie to drill the KLU No. 6 well in the Southwest Block.
The exploration work planned for this year - either drilling or seismic - will guide future activities at the unit, according to Furie. The working interest owners will either commit to drilling “one or more delineation or exploration wells in one or more exploration blocks outside the Corsair block” or will sanction a development for “one or more” blocks outside the Corsair block. Those activities would occur in future years.
That said, the results of the exploration activities planned for this year “may be the basis for redefining or contracting portions of exploration blocks” before the end of the year, according to Furie. If the company fails to meet any of the work commitments described in the plan of exploration, the company will contract one exploration block from the unit.
The Alaska Division of Oil and Gas formed the Kitchen Lights unit in 2009 by merging the Kitchen unit, the Corsair unit and the Northern Lights unit into a single administrative entity. The merger was a way to improve the odds that exploration activities would occur on all three prospects. But the resulting unit - at 83,394 acres - is by far the largest unit in the Cook Inlet region. A contraction might be justified by statute or by economics.
What’s down the road?
The coming year could determine the future of the unit for years to come.
The exploration activities to date have been focused on the Corsair block, which is where the majority of the previous exploration activities in the region had been conducted.
After drilling the KLU No. 1 well halfway to target depth in 2011, Furie estimated that the unit contained some 3.5 trillion cubic feet of natural gas in place, which would rank among the largest discoveries in the basin. The company subsequently provided more realistic figures by concentrating its estimates on a smaller region around the well.
Even so, Furie is not using KLU No. 1 as the basis of its development. The company is using KLU No. 3, which it drilled in mid-2013 and completed with “mini-frac packs” in two Sterling zones and two Beluga zones to delineate the initial KLU No. 1 discovery.
At the time, the company was tight-lipped about the results, calling it “a good test.” In a November 2014 plan of development, though, Furie said the well had produced 15.83 million cubic feet during a four-point test, which confirmed a commercial discovery. The samples collected during the test were 99 percent methane, according to the company.
The two more recent wells targeted other areas of the unit.
Soon after testing KLU No. 3, Furie began drilling KLU No. 4. The company suspended the well when the drilling season ended and completed the well in mid-2014. Those results remain unknown. In mid-2014, Furie also drilled the 11,800-foot KLU No. 5 well, which proved to be a dry hole, according to the November 2014 plan of development.
