Vol. 27, No.21 Week of May 22, 2022
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil patch insider: CPAI pauses Fiord West ERD; more state Cook Inlet lease sales

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Kay Cashman

Petroleum News

In a May 18 status update of an April 11 annual update to federal and state officials on the 24th Colville River unit plan of development, ConocoPhillips Alaska Inc. says it recently completed drilling the Fiord West CD2-310 well and given the “significant challenges seen” in the well, its “drilling plans for 2022 have been updated to include a drilling break” on Doyon Rig 26 this summer to be able to “improve ERD drilling operations.”

The huge extended reach drilling Rig 26, also known as the “Beast,” started drilling the Fiord West CD2-310 well in second quarter 2021. Petroleum News sources say the rig is currently undergoing annual maintenance but remains under contract to CPAI.

“This break in the ERD program,” CPAI said, “will be used to incorporate the lessons learned from CD2-310 execution and make required engineering changes to the ERD well designs going forward.”

Also, as of May 2, Doyon Rig 142 completed operations on WD-03, having moved from CD1 pad to the CD4 pad.

There it will drill the “CD4-597 opportunity well within the Narwhal PA, contingent on equipment and infrastructure availability,” CPAI said.

Following the CD4-597 well, Doyon 142 may move back from the CD4 pad to the CD1 pad to drill the WD-04 well (replacement for the WD-03 well) “or may drill another opportunity well.”

CPAI is the operator and sole working interest owner of the Colville River unit, which is in both state of Alaska land and in federal land in the National Petroleum Reserve-Alaska.

CI gas supplies, more lease sales

Utilities and their customers along Alaska’s Railbelt primarily depend on natural gas from Hilcorp’s Cook Inlet basin fields to generate electricity.

But according to Homer Electric Association general manager Brad Janorschke’s May 10 monthly report to HEA members, Hilcorp told them in an April 12 stakeholders’ meeting that while Hilcorp has “sufficient gas for their existing fuels contracts, they did not have firm gas available beyond that. Additionally, any future contracts would be dependent on current drilling programs to secure additional reserves.”

Janorschke said, “We are following this closely as HEA’s current contract terminates at the end of the first quarter of 2024.”

For Chugach Electric, which powers Anchorage and parts of the Kenai Peninsula, the termination date is March 31, 2028, the utility’s spokesperson Julie Hasquet, told Petroleum News May 18.

“Chugach meets about 50% of our gas supply requirements from Hilcorp, with the remaining 50% from our working interest in the Beluga River unit gas field. Because this is a statewide issue impacting multiple entities, the Railbelt utilities are working together (with the State of Alaska) to explore future options. This is a high priority for Chugach, however, with our collaborative approach to addressing the issue, we are confident we have time to find alternative sources of gas along with other energy sources,” Hasquet said.

She said options include: “Increased exploration in the Cook Inlet basin and other areas in Southcentral Alaska, importation of LNG, increased renewable generation, development of the North Slope gas line.”

What does Hilcorp have to say? Spokesperson Luke Miller told PN May 18: “Since coming to Alaska, Hilcorp has invested nearly a billion dollars on natural gas projects in the Cook Inlet. We anticipate spending hundreds of millions of dollars in the next few years and drilling 17 new wells this year to produce additional natural gas for Alaskan homes and businesses. We are proud of the work we have done to revitalize the Cook Inlet basin and fuel local Alaskan markets over the last decade. Hilcorp is committed to continuing our investment into the future and satisfying the commitments we have made to local end users.”

What does the Alaska Department of Natural Resources have to say about Cook Inlet basin reserves?

Here is some of what DNR Deputy Commissioner John Crowther told PN May 18 in response to several emailed questions/statements: “We generally agree with your statement that ‘The numbers I have seen over the last few years suggest there is a great deal of untapped natural gas on state and federal acreage, including offshore in the Cook Inlet basin.’”

“There are several fields with large amounts of known natural gas reserves that companies are working on developing - if these projects are successful, they could provide significant additional volumes for the utilities to place under contract,” Crowther said.

“There are quite a few exploration opportunities that exist in the Cook Inlet: some are near infrastructure and others more remote, including both conventional and unconventional gas plays (including, per USGS technical assessments an estimated 19 trillion cubic feet of potential resources in place),” he said.

“One of the primary reasons why DNR is joining the (Railbelt) utility working group to assess energy supply questions is to provide technical support on the future of Cook Inlet supply,” Crowther said.

“DNR and DOR are also evaluating some of the Cook Inlet fiscal terms and regulatory procedures that may be obstacles to development,” he said.

“DNR is also considering additional Cook Inlet lease sales later this year and in coming years,” Crowther said.

Other oil and gas companies currently operating in the Cook Inlet basin, he said, “include Furie/Hex, BlueCrest, Vision/Gardes, Cook Inlet Energy, and Amaroq.”

- Oil Patch Insider is compiled by Kay Cashman

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