Storm Cat Energy Corp., less than two years after drilling an exploration well in the coalbed-methane-rich Matanuska-Susitna Borough, has dropped its pursuit of natural gas reserves in Alaska.
Instead, the Denver-based independent is pouring $40 million this year into development of coalbed methane fields in the Powder River basin of Wyoming and the Elk Valley of British Columbia and a conventional gas discovery in the Fayetteville Shale region of Arkansas.
“We still hold the acreage we had when we last spoke about Alaska,” Storm Cat spokesman William Kent told Petroleum News Oct. 8. “But Alaska is not in our core areas, and we had pipeline and service access issues there. We certainly believe our prospect is very good. However, given limited capital, our decision was economically based in terms of risk-reward. We have no plans for development in Alaska in the near future.”
Company entered Alaska in ‘05In 2005, Storm Cat roared into Alaska, picking up about a dozen State of Alaska and Mental Health Lands Trust leases in oil and gas lease sales. The company still holds half a dozen leases, covering about 24,500 net acres, according to Kent.
In January 2006, Storm Cat drilled an exploratory well, Northern Dancer No. 1, near the Pioneer Unit in Mat-Su, and reported positive results from initial well tests. Though the company spent $3 million on the project in 2006, all has been quiet on the Alaska front since.
Fourteen months later, Storm Cat told the Securities and Exchange Commission that it was “in the process of evaluating potential and costs based on equipment availability” of the well.
Shortly afterward, Storm Cat’s outspoken President and CEO J. Scott Zimmerman resigned after taking a leave of absence to pursue other opportunities. Zimmerman is no longer connected with the company, despite earlier reports that he would keep his seat on Storm Cat’s board of directors.
Since April, Storm Cat has appointed a new CEO, former consultant Joe Brooker, and apparently shifted its focus away from Alaska.
In August, the company ceased to list Alaska among its assets in official statements though it continued to include development acreage it holds in Alberta.
Kent said the changes reflect the limited resources of Storm Cat rather than a lack of promise in Alaska.
“We believe the potential is there, but we’re a small company with limited capital. We have to spend it on projects that will bring us cash flow in a timely order,” he added.