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Moving closer to production Evergreen Resources to test deeper coals at Pioneer unit, aims to book reserves and launch production by year-end in the Mat-Su Borough Petroleum News Alaska
Lower 48 coalbed methane producer Evergreen Resources, liking what it saw in last year’s Alaska drilling results, says it’s planning a third, four-well pilot project this year to test deeper coals at its 48,000 acre Pioneer unit north of Anchorage in the Mat-Su Borough.
Evergreen CEO Mark Sexton also told analysts in a Feb. 27 conference that Evergreen is hoping to prove up sufficient gas reserves by year-end 2003 to launch first production. The Pioneer unit will be Alaska’s first commercial coalbed methane operation.
“The goal is to have (sufficient) established proven reserves and be on line by the end of year, depending on gas quality and how fast we can get hooked up,” he said.
Evergreen plans to spend $7-$8 million in Alaska in 2003, compared to $6 million in 2002, the company told analysts. The bulk of capital planned capital spending, about $97 million, is earmarked for Evergreen’s coalbed methane operations in Colorado’s Raton Basin.
Sexton hailed the Alaska Legislature and state regulators for “completely embracing” shallow-gas exploration and development and their efforts to speed up the permitting process. Evergreen had complained about the lengthy time required to obtain a drilling permit in Alaska.
“The business climate is excellent,” Sexton said, “and there is still a recognized need for incremental gas supplies in the Anchorage area.” Two four-well pilots completed The Denver-based independent last year completed two, four-well pilots at the Pioneer unit. All eight wells penetrated coal seams with aggregate thickness in excess of 100 feet, with some wells encountering as much as 160 feet of coal, the company said.
That compares to Vermejo coal thickness of 25 to 30 feet in the Raton Basin, Evergreen’s core producing area.
“We’re looking at Alaska with over three times as much coal, but it’s not quite as gassy,” a company official said. “But we would expect, after adjustments, the wells to be about as good as Vermejo.”
He also said the coals are “a little under pressured, but that’s no big deal for us. We have a lot of coals to deal with.”
Once operations are completed on a water disposal well in the Pioneer unit, fracture stimulations operations will begin on the first four-well pilot project, the company said. Focus deeper coals Evergreen said this year’s Alaska pilot project will focus on deeper coals, explaining that these deeper targets could not be tested last year because of rig limitations below 3,700 feet.
“The lower half of the coals look more interesting than the upper 50 feet,” a company representative said. “There’s a lot more below, a lot of deeper coals. And we will be testing them with the next pilot.”
Meanwhile, as the company prepares to pull the plug on its remaining international operations, Evergreen is now looking to Canada as a possible new coalbed methane area for the company.
“We’re just looking for the right opportunity to get involved,” the company said. “There’s plenty of coalbed methane opportunities in Canada.”
Evergreen said its remaining United Kingdom properties are for sale, adding that it expects any remaining international operations to conclude by the end of this year’s second quarter.
The company reported a fourth-quarter profit of just $1 million or 5 cents a share, largely due to a non-cash, after-tax charge resulting from an impairment on the value of its remaining assets in the United Kingdom. Excluding the charge, the company would have earned $12.2 million or 62 cents a share. That compared to $5.3 million or 27 cents a share for the same quarter a year earlier. (See related story on page 5 of this issue.)
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