Vol. 19, No. 40 Week of October 05, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Cook Inlet Energy to drill gas prospect

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Kahiltna No. 2 exploratory well planned on licensed state acreage in Susitna basin; drilling to proceed sometime in next two winters

Wesley Loy

For Petroleum News

Cook Inlet Energy LLC is planning to drill an exploratory well on its Kahiltna natural gas prospect in the Susitna basin.

The Anchorage-based company lays out the project in a plan of operations filed recently with the Alaska Division of Oil and Gas.

Cook Inlet Energy holds exploration licenses on extensive state acreage within the Susitna basin, located north of Anchorage.

The Kahiltna No. 2 exploratory well is planned within Susitna license area No. 4, which encompasses 62,909 acres. The 10-year license, which took effect in April 2011, carries a $2.25 million work commitment from Cook Inlet Energy.

Road upgrades required

The drilling project will involve quite a bit of preliminary groundwork, including road improvements and construction of a drill pad, the plan of operations shows.

Cruz Construction Inc. will act as Cook Inlet Energy’s contractor, the plan says.

The drill site will be southwest of Trapper Creek, a community along the George Parks Highway.

To access the site, Cook Inlet Energy plans to upgrade Oilwell Road, a 29-mile former logging road terminating at the Pure Kahiltna Unit No. 1 pad. Pure Kahiltna was an exploration well drilled in 1964.

Cook Inlet Energy’s proposed Kahiltna No. 2 drill site is west of Pure Kahiltna. To reach it, Cruz will clear a 1.6-mile trail intended for winter use only, the plan of operations says. Cruz will then construct a drill pad covering 3.6 acres.

‘Straight-hole design’

Cook Inlet Energy is aiming to drill the gas well during the upcoming winter, or in the winter of 2015-16.

“The pad will be located over a structure CIE has identified and named the Kahiltna prospect,” the plan of operations says. “This structure was identified by CIE from previously acquired seismic data.”

The well is planned as a “straight-hole design” about 6,000 feet deep.

Cook Inlet Energy plans to use its rig 37, formerly known as the Glacier rig.

In the event of a commercial gas discovery, the company says it might apply to convert the winter trail to a year-round road. It adds that no pipelines are planned at this point.

Susitna is a huge “frontier basin” that the state would like to see more thoroughly explored.

Cook Inlet Energy has spoken of a number of gas prospects in the basin, including the Kroto Creek prospect.

Miller’s new adviser

Cook Inlet Energy is a subsidiary of Tennessee-based Miller Energy Resources Inc., a publicly traded company listed on the New York Stock Exchange.

In a Sept. 26 filing with the U.S. Securities and Exchange Commission, Miller said it had entered into a consulting agreement with Nix Venture Partners LLC to “provide general strategic and business advice to us regarding capital structure, future development of our assets and related matters, as well as advice in connection with our contemplated acquisition of certain operating assets of Buccaneer Energy that we are currently considering, as previously announced.”

The filing indicates Miller will pay Nix with company stock.

Nix is a private equity and venture capital firm based in West Palm Beach, Florida, its website says.

Miller on Sept. 15 announced it had a nonbinding letter of intent to buy “substantially all” of the Alaska operating assets of Buccaneer Energy for $40 million to $50 million. Buccaneer, which has been active in the Cook Inlet region, is going through bankruptcy proceedings.

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