|
State approves Ninilchik unit Marathon Oil operator of 25,167 acres onshore and offshore between Clam Gulch and Ninilchik; Unocal other major owner Kristen Nelson PNA Editor-in-Chief
The Department of Natural Resources Division of Oil and Gas has approved an application by Marathon Oil Co. for formation of the Ninilchik unit.
Marathon is the unit operator, Unocal is the other majority working interest owner.
The unit consists of approximately 25,167 acres, both onshore and offshore, between Clam Gulch and Ninilchik. It includes some 18,999 acres of state lands (10 state oil and gas leases and approximately 420 acres of unleased state lands), approximately 222.67 acres of federal land, 661.35 acres of University of Alaska lands, 1,528.17 acres of Cook Inlet Region Inc. lands and 3,336.34 acres of patented fee lands.
One of the state leases would have expired Dec. 1 if the unit had not been formed; five state leases would have expired Dec. 31.
The state leases have a 12.5 percent royalty.
Unit surrounds Ninilchik anticline The state said that Ninilchik unit acreage surrounds the Ninilchik anticline, which stretches for more than 16 miles along the coastline from near Clam Gulch to just north of Ninilchik.
The structure was recognized as an exploration target in the late 1950s and mapped in the subsurface with the seismic, gravity and magnetic tools available at the time. In 1960, the Socal Falls Creek 1 well was drilled to test the anticlinal trap. Although the objective of this well was oil, it was completed as a gas well in 1961 in four sandstone zones within the Tyonek formation. It has been shut-in because the size of the accumulation did not justify the cost of facilities.
The small Falls Creek unit, also operated by Marathon, lies in the northern third of the Ninilchik unit, completely surrounded by Ninilchik unit acreage.
Union Oil Co. of California drilled the Union Ninilchik 1 well in 1962 and tested gas in two Tyonek zones. The Mobil Ninilchik 1 well was drilled in 1964 and abandoned as a dry hole. Between 1968 and 1979, five exploration wells were drilled with oil and gas objectives: the Socal Falls Creek 2, Falls Creek 43-6, Brinkerhoff Ninilchik 1, Union Clam Gulch 1 and Texaco Ninilchik 1. Of the five, only the Texaco Ninilchik 1 flow tested gas from one Tyonek zone. Marathon drilled the Corea Creek 1 well in 1996 and drill stem tested four zones within the Tyonek, recovering minimal gas with water.
The state said that results of the Corea Creek well verified the size of the Falls Creek accumulation.
Marathon has reexamined area The state said that Marathon has reexamined the area with new seismic and drilling technology. Marathon drilled and logged the Grassim Oskolkoff 1 well in 2000 and plans to test the Tyonek interval late this year. By the end of 2001, Marathon also plans to work over the Socal Falls Creek 1 well so that the well can be re-completed when facilities are in place to produce gas from the well.
Marathon plans to drill the Grassim Oskolkoff 2 well in 2002 as a southern offset to the Grassim Oskolkoff 1. Marathon also plans to re-enter the Union Ninilchik 1 well and attempt to establish a sustainable completion in the Tyonek reservoirs.
Future unit plans include a well on the northern fault block of the Ninilchik anticline to delineate gas potential within both the Tyonek and overlying Sterling reservoirs.
The first plan of exploration extends through 2004. In the second plan of exploration, or the first plan of development, whichever follows the initial plan of exploration, the division will require additional drilling, further exploration activities, sustained commercial production and/or a demonstration of efforts to proceed to further development and production within the unit area.
Majority of area held by Marathon and Unocal Marathon and Unocal control approximately 85.43 percent of the unit area and the next largest interest group is the uncommitted individual mineral interest owners with approximately 9.102 percent. Under the Ninilchik unit joint operating agreement, any party with at least 30 percent interest can propose and cause the drilling of exploratory or development wells.
The state said that despite the fact that less than 100 percent of the lease are committed to the unit, Marathon has demonstrated that a reasonable effort was made to obtain joinder of all proper parties within the proposed unit area. And, with 85.43 percent of the working interest ownership, Marathon and Unocal hold sufficient interest in the unit area to give effective control of unit operations.
| 