After a decade-long path through regulatory and legal delays, Usibelli Coal Mine Inc. launched a coalbed methane exploration program in the Healy region in 2014.
What comes next is uncertain.
The coal-mining firm drilled the 1,265-foot well HC No. 1 in mid-2014 in search of a nearby source of natural gas to power its industrial operations. With a large enough discovery, the company suggested it might also sell supplies into the Alaska market.
The company has been quiet since completing the well, providing neither drilling results from the initial well nor any forecast about whether or not it would continue the program.
In a plan of operations from September 2014, the state approved a one-well program in the Healy region. If the initial well was successful, the plan called for Usibelli to permit as many as three additional wells for 2015 to increase its understanding of the region.
To date, it appears Usibelli suspended the program after drilling the HC No. 1 well.
Usibelli pursued the project through the state exploration license program, which allows companies to nominate areas of the state for exploration activity outside of the traditional leasing program available only in certain regions on the North Slope and in Southcentral.
The Healy basin exploration license covers 204,883 acres and runs for a 10-year term beginning Jan. 1, 2011. The license requires Usibelli to spend at least $500,000 on explorations activities. The one-well program almost certainly hit that spending target.
A legal matter
The coalbed methane exploration program was a new venture for Usibelli.
The company has been engaged in coal mining operations since Emil Usibelli and his partner T.E. Sanford began operating in the region in 1943 to supply Ladd Army Air Field, now known as Fort Wainwright. Over the decades, the company has expanded beyond the Alaska market to include exports to Chile, South Korea and other countries.
The current search for gas started more than a decade ago.
The early days of the program went slowly but generally followed the timeline for exploration licenses, which are less streamlined than the traditional leasing program.
Usibelli applied for the Healy exploration license in April 2004. In an August 2005 preliminary best interest finding, the Alaska Department of Natural Resources determined the potential benefits of exploration outweighed the possible adverse impacts.
That determination came as concerns over the potential environmental threat of coalbed methane exploration and development were increasing in Alaska. A different program by a different company in the Matanuska Valley was abandoned in the face of opposition.
In 2006, the Denali Borough Assembly banned natural gas exploration over approximately 40 percent of the proposed license area. Even though the state considered the action illegal, the ordinance delayed the program. Additionally, the Denali Citizens Council asked the state to exclude all lands west of the Nenana River from the license.
When the Department of Natural Resources approved the program under its original specifications - and even easing some mitigation measures - in June 2010, the Denali Citizens Council appealed the ruling to the Alaska Superior Court. The appeal challenged the efficacy of the mitigation measures in the license and argued that the state had failed to show how shrinking the license area would hamper the economics of the project.
The court rejected the appeal in February 2014, which allowed Usibelli to proceed.
Usibelli conducted the program on lands mined in the 1950s and 1970s and utilized existing roads to reach the Healy Creek Site No. 1 pad, according to permitting documents. The 150-foot by 150-foot pad was built on an area previously used as an airstrip for mining operations. The pad was smaller than most gas exploration pads because shallower coalbed methane wells require smaller rigs, according to the company.
