Vol. 25, No.28 Week of July 12, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

New approach

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HEX reviews Kitchen Lights reserves, aims to tap Sterling formation

Kay Cashman

Petroleum News

Alaska-owned HEX LLC is taking a fresh look at the reserves in the Kitchen Lights unit, which as of July 1 it owns and operates through its acquisition of Chapter 11 bankruptcy debtor Furie Operating Alaska LLC and related debtor companies.

“We are going to take a new approach to our natural gas reserves and future oil potential,” the company’s founder and top executive John Hendrix told Petroleum News July 7.

“That approach starts with looking at the rocks to see what our take is. There is a lot of data out there,” he said, and various opinions on the oil and gas potential of the Cook Inlet offshore field.

Right now, though, Kitchen Lights is a gas producing unit with three wells that are not producing as much as they could be and a fourth well, A-4, the newest well in the unit, that is “offline because we cannot produce the Sterling formation at this time - and there are two wireline fish and a tubing plug in the well which is preventing us to access and add perforations to the Beluga formation,” Hendrix said.

HEX wants to fix both issues as soon as possible.

When asked whether any new wells be drilled, Hendrix said with the 2018 A-4 well not yet in production, drilling a new well “is sort of like having a brand new 2018 truck with a flat tire in your driveway and going down to the dealership and buying a new 2020 truck. First you fix the 2018 truck.”

“We’re hoping to start a fishing operation on A-4 by late July,” he said.

More gas in the Sterling

Hendrix is looking to get all four wells producing from the Sterling formation, versus just the Beluga gas pool, which will require permission from the Alaska Department of Environmental Conservation to handle water on the unit’s Julius R production platform.

“We’re applying for a DEC produced water permit,” Hendrix said, noting only clean water will be disposed of from the platform.

“Once we’re able to handle water on the platform we’ll be able to produce from the Sterling formation, which has gas potential but with the gas comes water,” he said.

Handling water on the platform will also greatly reduce the possibility of frozen hydrate plugs forming again in the 15-mile subsea pipeline from the offshore production platform to Kitchen Light’s onshore gas processing facilities, a mishap that started in January 2019 for Furie, drastically slowing gas delivery and putting the company’s gas supply contract with utility Enstar Natural Gas, and therefore homeowners gas supply, in jeopardy.

Hiring Alaskans

Throughout the process of acquiring Furie and its Kitchen Lights assets in the Delaware bankruptcy court, Hendrix said any new hires for Kitchen Lights would be Alaskans and Alaskan contractors, with a focus on the Kenai Peninsula.

That process has already begun in an agreement with Udelhoven Oilfield System Services as general contractor for operations.

“All of our contract operators and field personnel will report to Udelhoven. Jim’s one of those men whose word you can trust with a handshake,” Hendrix said, referring to company founder Jim Udelhoven who started the company in 1970 in Kenai.

“As an Alaskan with a lifetime of experience working in oil fields across our great state, I couldn’t be happier that Alaskans now have the opportunity to advance the development and operation of this great Cook Inlet asset,” Hendrix said June 30 when the sale closed. “HEX looks forward to bringing Kitchen Lights from base production to growth opportunities.”

Raised in the south Kenai Peninsula town of Homer, Hendrix’s experience includes general manager of Apache Corp. in Alaska and president of NANA Commercial Group, which is made up of subsidiaries that support resource development projects and other industries in Alaska and the Lower 48.

All told, Hendrix has close to four decades of experience in the energy industry - in Alaska, the Lower 48 and internationally with Apache, BP and Schlumberger.

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