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Producers 2023: AIX maintains discipline at Kenai Loop
Steady approach has kept Kenai Loop viable, despite declines
Eric Lidji for Petroleum News
AIX Energy LLC is a steady operator. Over the past nine years, the small independent has been disciplined at its onshore Kenai Loop field in the northern Kenai Peninsula.
The company generally focuses on securing short-term, immediate sales contacts, and it usually puts most of its resources toward required maintenance activities at the field.
"AIX's marketing goals are to continue to pursue value‐added, near‐term gas sales opportunities (to align with existing and future production capacity), while maintaining pricing discipline," the company wrote in its most recent plan of development.
Under a three-year, "firm as available" contract approved April 1, 2023, AIX Energy currently sells "all gas volumes to a single purchaser," according to the company.
During its eighth plan of development, for the year ending May 6, 2023, AIX tested emergency systems, as required by schedules. It also conducted audits of its control room with Pipeline and Hazardous Materials Safety Administration personnel with no issues.
The company also obtained static reservoir pressures on the KL 1-1 and KL 1-3 wells.
Early in 2023, the state Division of Oil and Gas automatically terminated two AIX Energy leases -- ADL 393033 and ADL 393035 -- for failure to pay rental.
Plans In the coming year, AIX plans to evaluate the feasibility of tying the shut-in KL 1-4 well into the production system "to provide increased deliverability, to provide redundancy to meet firm gas sales obligations and to possibly increase ultimate recovery. AIX will also evaluate recompleting wells to provide additional deliverability," the company wrote.
AIX Energy has included the project in several recent plans of development for the field without advancing it. In early 2019, the company commissioned a new compression facility at the field, designed to improve production and deliverability at the aging field. The idea for the KL 1-4 project emerged out of that effort to install new compression at the field.
According to its most recent plan, AIX has not identified any drilling opportunities for the coming year. That fact and others -- the desire to improve deliverability, the three-year "firm as available" contract, production rates on the decline since early 2016 and especially since early 2018, and the decision to allow two leases at the field to expire -- combine to raise questions about future of Kenai Loop, especially in regard to reserves.
In its most recent plan, AIX Energy said that its existing original gas in place estimate still remains "accurate" but asked that the figure be kept confidential. Through the end of March 2023, the Kenai Loop field had produced 27.1 billion cubic feet of natural gas.
Natural gas production peaked in early 2016 around 11.5 million cubic feet per day and declined sharply in late 2017. It currently produces some 2.5 million cubic feet per day.
History Australian independent Buccaneer Energy acquired the leases at the Kenai Loop field from the state of Alaska and Alaska Mental Health Trust in late 2010 and early 2011. It drilled the KL 1-1 discovery well in May 2011 and the KL 1-2 dry hole that September.
Buccaneer also commissioned a 3D seismic survey covering 23 square miles of the area and used the results to guide additional drilling activities. It drilled the KL 1-3 producer in November 2012 and the KL 1-4 producer in October 2013. Although slightly shallower than the other two producing wells, KL 1-4 was found to be producing from the same reservoir, and so Buccaneer ultimately decided to keep the well disconnected from the existing production system and used the well instead to monitor field pressure.
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