Over the past year, NordAq Energy Inc. has handed over control over its two most advanced exploration ventures to other companies in the region. The Alaska-based independent sold a 75 percent interest in the Smith Bay program to Caelus Energy Alaska Inc., while Cook Inlet Region Inc. took over operations at the Shadura project.
Earlier this year, the state Division of Oil and Gas issued a permit for SAExploration Inc. to conduct a 2-D and 3-D seismic survey on state land in the Shadura region of the northern Kenai Peninsula on behalf of CIRI.
The permit marks a transition for the project. NordAq announced “a significant natural gas discovery” after drilling an exploration well in the Shadura region in 2011 and permitted an appraisal well over the next three years. But the company never drilled the second well, according to Alaska Oil and Gas Conservation Commission records.
According to CIRI spokesman Jason Moore, the Alaska Native corporation revoked the Shadura leases because NordAq missed work commitments associated with the leases.
NordAq spud the Shadura No. 1 exploration well in February 2011 using the Glacier No. 1 drilling rig. The prospect was within the Kenai National Wildlife Refuge, west of the Swanson River field. A provision in the Alaska National Interest Lands Conservation Act allowed for CIRI to allow access to lands within the refuge for resource development. The well primarily targeted natural gas objectives in the upper and middle Tyonek formation between 11,000 and 14,500 feet, and included a secondary target in the shallower Beluga formation between 6,000 and 11,000 feet, according to state filings.
After completing the well, NordAq suggested the prospect could produce up to 50 million cubic feet per day over 30 years. A subsequent announcement clarified that the figure measured the “facility design volume,” rather than the actual production volume.
In early 2012, NordAq proposed a flow test and an appraisal well to assess the discovery, which would be followed by a potential six-well development program if successful.
The company expected the appraisal program to take as long as two years to prepare, in part because of the need to secure a rig powerful enough to drill a 16,000-foot directional well and partially because the federal environmental program was time consuming.
The process of conducting an environmental impact statement for the program proved to be tricky. The company and federal agencies disagreed over the best development plan.
NordAq proposed a two-phased development. The company would build a short gravel access road and a “minimal” pad to support a single appraisal well in June 2013. If successful, the company would expand the pad for full development, with the goal of bringing the field into production by June 2014 and selling the gas supply into the pipeline connecting the Tyonek A platform to the Kenai liquefied natural gas plant.
The final EIS proposed five alternative development schemes, including plans for accessing the prospect from the south or the east out of the Hilcorp-operated Swanson River unit. NordAq believed that those two options were economically or logistically unfeasible, which would have violated the ANILCA provision allowing development. But the U.S. Fish and Wildlife Service believed both alternatives were “feasible.”
The agency finally approved the NordAq plan in July 2013. The company said it intended to start building the gravel road in mid-July and spud the appraisal well in mid-September. The AOGCC issued a permit for the Shadura No. 2 (23-19) in late September 2014. As of early 2016, the well had yet to appear as “completed” in AOGCC reports.
The CIRI program includes 16 square miles of 3-D seismic and about 42 linear miles of 2-D seismic located predominately within the Kenai National Wildlife Refuge. CIRI is looking for gas, although the company said it would decide whether to operate an exploration and development program or find a partner after processing the seismic.
