August 22, 2002 --- Vol. 8, No. 84August 2002

Andex to get seven year license to explore 482,942 acres in Nenana basin

The Department of Natural Resources gave notice Aug. 22 that it will issue an oil and gas exploration license for the Nenana basin to Andex Resources LLC of Denver and Houston. The basin is thought to hold 250 billion cubic feet to 1 trillion cubic feet of recoverable natural gas to feed the energy needs of Fairbanks and other rail belt locations, said Jim Dodson, Andex executive vice president. Dodson is responsible for Andex's Alaska operations.

“Needless to say, we are very happy with this,” Dodson told PNA shortly after the notice of the oil and gas exploration license was released by DNR, and he added that his company was delighted that the department was able to deliver the license in 138 days, right on schedule.

“As far as E&P, Nenana is our whole focus going forward,” he said.

Time is of the essence because the company has seismic work scheduled the winter of 2002-2003.

“It’s tight, but we still think we can do it.” Dodson said. He said things would have to go almost exactly as planned for the schedule to work out, adding that the margin of error is a couple of days.

“We’ll lay out the grid in September and shoot through the winter,” he said. “Shooting in January or February is the target.”

The Division of Oil and Gas could issue the license as early as Oct.1.

The license contains 482,942 acres located west of the Parks Highway, extending from Anderson to approximately eight miles south of Minto. Only lands with state owned mineral estate are included.

The license will have a primary term of seven years, at a licensing fee of $1 per acre. Upon completion of required work all or a portion of the license area can be converted into oil and gas leases with a primary term of seven years. Upon conversion to oil and gas leases, annual rental is $3 per acre, plus a fixed royalty of 12.5 percent.

Dodson told the House Special Committee on Oil and Gas in January that the company expects to spend $24 million on the project before the pipeline is built including $500,000 for the exploration license and $6 million each for three wells.

Seismic for the project is anticipated to be predominately two-dimensional, although some 3-D would also be shot, putting total seismic costs at about $6 million.

See the cover story of next week’s Petroleum News Alaska for the full story.

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