Glacier Oil & Gas Corp. is taking a cautious approach at the North Fork unit this year.
As it approaches its first year since emerging from bankruptcy, the independent is planning what it is calling “small ball” projects to increase production from existing wells at the onshore Cook Inlet unit in the southern Kenai Peninsula north of Homer. Those include additional compression and separation facilities, reprocessing seismic over the area and conducting workover operations to improve production at existing wells.
But drilling activities seem unlikely this year without economic changes. In a recently submitted 52nd plan of development for the unit, the company attributed its cautiousness to the persistence of low oil prices and the constrained Cook Inlet natural gas market.
If approved, the new plan would run for a year, beginning March 31.
Over the past year, Glacier has been analyzing the results of previous North Fork drilling and reprocessing approximately 20 square miles of 3-D seismic with particular attention to “specific zones of interest” between 6,000 feet and 9,000 feet. The company expects to complete the seismic reprocessing before the end of March and will use the results to determine future development activities at the unit, according to the 52nd plan of development. The company also said it is also in the process of perforating zones of interest in the NFU No. 14-25 and NFU No. 41-35 wells to increase production rates.
The company is planning a similar range of small projects for the coming year, including plugging and perforation work. Additional development drilling would be resumed, “as appropriate based on data review and market conditions.” Those drilling projects could include a NFU No. 42-35A sidetrack and a NFU No. 22-26 or a NFU No. 14-26 well.
Longer term, the company is looking at expanding the existing drilling pad to accommodate new compression and dehydration equipment, or possibly building a new drilling pad to better develop the reservoir. The company is also considering development wells outside the North Fork Gas Pool No. 1 participating area, according to the plan.
As the North Fork unit approaches the sixth anniversary of its start-up in early 2011, Glacier is reporting that its wells are beginning to produce small amounts of water. The company has set downhole plugs to control water intrusion and said it plans to convert a depleted well into a Class II disposal well, but has yet to select a final candidate. The plan is the first since Miller Energy Resources Ltd. entered bankruptcy protection in October 2015 and emerged with new ownership in March 2016 as Glacier Oil & Gas.
Miller Energy subsidiary Cook Inlet Energy submitted the 51st plan of development to state officials in the middle of that process. The plan called for using Rig 37 to drill or sidetrack as many as three wells. The company planned to start by drilling the NFU No. 42-35A sidetrack followed by the new NFU No. 14-26 well. Depending on the results of those wells, the company would consider whether to drill another delineation well.
Although it emerged from bankruptcy just as the 51st plan year was beginning, Glacier “has exercised a cautious drilling program due, in part, to continuing low oil prices,” the company wrote in its new plan, explaining its decision not to drill. “In addition, the local Cook Inlet gas market has become increasingly constrained as gas production is consolidated amongst fewer players, and production is increased. Simultaneously, demand for gas has lessened due to recent warmer winters and the exit of key gas users.”
North Fork produced 251.5 million cubic feet of natural gas in December 2015, down to 121.7 million cubic feet in August 2016 and back up to 168.6 million cubic feet in November 2016, according to the company. The unit produced 2.18 billion cubic feet during the course of that year. The unit has six producing wells and two suspended wells.
