Babcock & Brown will operate the well and will also operate any gas production resulting from a gas find, Doyon said. This will be the first deep well in the Nenana basin, the corporation said.
“We’ve (now) got four partners (for Nenana exploration) — that’s Doyon, Arctic Slope Regional Corp., Usibelli Energy … and Babcock & Brown Energy Inc.,” Jim Mery, senior vice president of lands and natural resources for Doyon, told Petroleum News.
Doyon, ASRC and Usibelli Energy originally formed a Nenana partnership with Andex Resources and that led to the completion of a seismic survey in the basin in the spring of 2005, under the terms of a state exploration license. But uncertainty about state production taxes put the dampers on the planned drilling of a well as a follow up to the seismic work. And Andex eventually pulled out of the project.
Changes to the state tax legislation have given tax breaks for gas production for internal state use and that has proved crucial to moving the Nenana project forward, Mery said. The recent three-year extension of the state exploration license, which had been scheduled to expire in September 2009, was also critical to continuing the project, he said.
If commercial quantities of gas are found at Nenana the gas could be used to fuel power generation — the drilling site lies close to the route of the electrical intertie between Fairbanks and Southcentral Alaska. Other possibilities are piping the gas to Fairbanks for use there or piping the gas to Anchorage, Doyon said.