Gas exploration licenses offered to ANG
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Susitna Valley tracts total 915,493 acres on two leases, 10 year term, $6.3 million work commitment, one-time rent of $1 an acre
A final written finding and decision was issued June 23 by the director of the Alaska Department of Natural Resources’ Division of Oil and Gas for two Susitna Valley gas exploration licenses totaling some 915,493 acres (434,835 acres in license area 1 and 480,658 acres in area 2).
Each license area was granted a 10-year term, and the director established a work commitment of $3.3 million for one area and $3 million for the other.
The two licenses were offered to Alaska Natural Gas Corp., or ANG, originally Cook Inlet Oil & Gas Corp. ANG has an Anchorage address.
Exploration incenses are issued for various terms at a one-time rental rate of $1 per acre. Applicants make a financial commitment to explore the license area. In the case of these licenses, the division said that because the area was larger than the maximum 500,000 acres allowed for a license, ANG applied for two adjacent licenses, with a work commitment of $500,000 for each license, an amount deemed insufficient by the director. (The company has 30 days from the issuance of the final finding to accept or reject the licenses.)
Both license areas are west of the George Parks Highway. License area 1, the more southerly of the two, is west of Willow and adjacent to the highway for part of its eastern border. License area 2 is adjacent to area 1 to the north, extends west beyond Skwentna and appears to share no border with the highway on its eastern edge.
Exploration licenses are used by the state of Alaska to encourage oil and gas exploration on lands outside known hydrocarbon basins.
The applicantANG is a private company registered in Alaska. Information on the Division of Corporations, Business, and Professional Licensing website shows Robert Fowler as president and Jean-Robert Pronovost as secretary and treasurer.
On the company’s website, https://alaskanatgascorp.com/, the company says: “Our goal is to play an important economic role in Alaska by developing a new supply of natural gas for the benefit of the community and our shareholders.”
The company’s mission is “to become a significant and environmentally responsible natural gas producer.”
ANG says it is developing itself into a coalbed methane producer. CBM “is a form of pipeline grade natural gas extracted from underground coal seams while keeping the geological horizon intact” and the company says it “is using proven horizontal well designs that have the advantage of having a minimal environmental footprint while maximizing the length of underground pipes producing gas.”
RequirementsAfter a license is issued, the licensee must pay the one-time $1 per acre license fee.
Each year, the licensee must post “a bond equal to the work commitment, less the cumulative expended, divided by the years of the remaining License term.”
The bond is released upon fulfillment of the work commitment.
If the work commitment is not fulfilled, the bond is forfeited to the state.
The licensee is required to submit an annual report.
The licensee is required to complete at least 25% of the total work commitment by the fourth anniversary of the license and 25% of the license area will be deleted if less than 50% of the work commitment is completed, with an additional 10% relinquished each successive year until half of the original acreage has been relinquished.
Once the work commitment has been met, the licensee may request conversion of all or a portion of the license areas to a standard gas lease.
Susitna geologyThe division said only nine oil and gas exploration wells and four core holes have been drilled within the proposed license areas in the Susitna basin. The exploration wells were plugged and abandoned as dry holes “though some did have minor gas shows.”
The Union Texas Pure Kahiltna Unit No. 1, completed in March 1964 to a total depth of 7,265 feet, and the Unocal Trail Ridge Unit No. 1, completed in October 1980 to 13,708 feet, were drilled near the deepest part of the basin, bottoming “in possibly the Talkeetna formation of volcanic rocks,” with coal beds becoming prominent in the lower part of both wells, “suggesting a correlation with the coal-bearing formations in the Cook Inlet basin that produce natural gas.”
Subbituminous coal seams are abundant in the Susitna Valley basin, the division said, and coalbed methane can occur. Multiple coal seams were documented at shallow depths in the AK-94 CBM-1 wells, a DNR coalbed methane evaluation well in the Matanuska Susitna valleys “that encountered relatively high gas content.”
The division said that while five wells in the Susitna basin found coal seams, “none proved to have coalbed methane in economic quantities.”
There are mostly lignite and subbituminous coals in the Susitna basin, and they pose problems, including having “minimal fractures to allow methane to escape when the coalbed is dewatered.”
Well tests were done at the Pure Kahiltna Unit No. 1, Trail Ridge Unit No. 1, Fish Creek No. 1, Sheep Creek No. 1 and Kashwitna Lake No. 1. At Willow Fishhook No. 1, the division said, “various techniques were attempted to produce methane however none were proven to be economical.”
The division said the potential for conventional oil and gas, as well as coalbed methane, is “low to moderate” in the Susitna basin.
Cook Inlet Energy workCook Inlet Energy LLC conducted an exploration program in the Susitna basin beginning in 2003, planning for two gas exploration wells near the Susitna River, and, in 2011, acquired a 10-year exploration license, Susitna Basin Exploration License No. 4, covering 62,909 acres with a $2.25 million work commitment.
The company acquired a second license, Susitna Basin Exploration License No. 5, in 2012, covering 45,764 acres with a $250,000 work commitment. The company began work but it was not completed, and the company surrendered the last of its licenses in 2016.
The division said the previous licenses overlapped much of the area covered by the new licenses.