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Marathon applies for Kasilof unit Company plans to drill two gas wells within unit from onshore location to offshore target; will also shoot seismic over area Kristen Nelson PNA Editor-in-Chief
Marathon Oil Co. plans to drill two gas wells from onshore to leases the company holds in state waters off the Kenai Peninsula. The wells are part of Marathon’s application to the Alaska Department of Natural Resources, Division of Oil and Gas, to form the Kasilof unit some five miles south of Cape Kasilof on the Kenai Peninsula.
The proposed unit includes three leases, approximately 13, 289 acres, in three oil and gas leases, all 100 percent owned by Marathon, in all or portions of sections 22-27 and 34-36 of township 3 north, range 13 west, Seward Meridian, and sections 5-8, 17-20 and 29-32 of T3N-R12W, SM. Well or seismic first year The initial plan of exploration for the proposed unit includes two wells.
In the first year of the unit, Marathon will drill an exploration well to test the Tyonek sandstone or conduct a 3-D seismic program.
If Marathon elects to acquire 3-D seismic in lieu of drilling in the first year of the unit, the seismic must cover all of leases ADL 384529 and ADL 384534 or any portions of the leases not in the seismic program will be contracted out of the unit and Marathon will pay the state $13.08 an acre (ADL 384529) and $3.08 an acre (ADL 384534) for acreage contracted out of the unit because that acreage was withheld from the state’s annual areawide leasing program.
These two tracts expire Jan. 31, 2003; the third tract proposed for the unit doesn’t expire until 2008.
Failure to begin drilling or shooting seismic by the first anniversary of the unit will result in termination of the unit.
Exploration or delineation well in second year If 3-D is acquired in the first year of the unit, Marathon will drill an initial exploration well in the second year. The second well would be drilled in the third year.
Marathon has agreed to begin at least one well by the second anniversary of the unit.
If seismic is acquired in years one and two of the unit, any lands not included in the seismic program will contract out of the unit at the end of the second year and Marathon would pay the state $26.16 per acre (ADL 384529) and $6.16 per acre (ADL 384534) for the acreage contracted out of the unit.
Failure to begin drilling the initial well by the end of the second year will terminate the unit and the $26.16 per acre and $6.16 per acre fees would be paid on all acreage reverting to state.
All acreage evaluated by end of third year In the third year of the unit Marathon will evaluate seismic and or well data and commit to future work.
The company will have two wells completed in the unit area and all acreage evaluated by the end of the third year. Any non-prospective acreage will be contracted out of the unit and Marathon will pay the state $39.24 an acre (ADL 384529) and $9.23 an acre (ADL 384534) for any acreage not delineated by either seismic or drilling.
Marathon may either accelerate the work or propose a smaller unit with a simple two-well work commitment that drills both blocks.
DNR said it intends to contract out of the unit any acreage west of the north-south trending fault which is still unexplored by the end of three years.
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