Aurora Gas to invest $12 million to reopen gas field

Nikolai Creek on west side of Cook Inlet requires two miles of pipeline from wells to Unocal Granite Point facilities

by The Associated Press

A small Alaska company plans to invest up to $12 million to reopen a gas field at Nikolai Creek in western Cook Inlet beginning this fall.

Aurora Gas LLC acquired a 50 percent interest in the Nikolai Creek Unit from Marathon Oil Co. on Jan. 1, said spokesman J.E. “Ed” Jones. It acquired the remaining 50 percent from Unocal on June 30.

The Anchorage company now is applying for permits to redevelop the field beginning this fall, and expects little difficulty since the field had been in production.

Aurora plans to build about two miles of pipeline from the wells to processing facilities Unocal operates at Granite Point. It will compress the gas from there for injection into the existing Cook Inlet pipeline system and sale to customers in Anchorage.

Unocal has agreed to make its Granite Point facilities available, Jones said. Aurora still is seeking an agreement with ExxonMobil, Unocal’s partner at Granite Point.

Jones said the Nikolai field, which originally was developed by Texaco in the late 1960s, has three wells, all of which produced gas.

“We believe that one well, while suspended, was killed with drilling mud,” he said. “We believe we can clean that out and restore production.”

Jones said the other two existing wells may need to be redrilled to tap more favorable regions of the reservoir. Aurora has seismic information that suggests there may be an untapped pocket of natural gas between two of the existing wells.

Next year, Aurora plans to redrill one of the existing wells and drill one or two new wells, Jones said. If that work succeeds, in 2002 it likely will redrill the third well and drill at least one more well.

“We believe we could fully develop the field with five to seven wells for $10 million to $12 million,” he said.

Proven reserves for the Nikolai Creek Unit total 15 billion cubic feet. Drilling into the previously untapped pocket could boost the total to 30 billion cubic feet, Jones said.

Half the production is under contract for sale to the Alaska Nitrogen Products fertilizer plant in Nikiski. Aurora Power Resources Inc. likely would buy the rest.