State gives Kahiltna drilling the go-ahead

Cook Inlet Energy to drill Kahiltna No. 2 exploration well in Susitna basin in one of next three winters; infrastructure this year

Eric Lidji

For Petroleum News

State officials have approved a three-year exploration program in the Susitna basin.

Under the terms of the program, which still requires permits for its various components, Cook Inlet Energy LLC will construct infrastructure this year in preparation for a single exploration well as early as December 2015 at the onshore Kahiltna prospect.

Should weather or logistical issues interfere, the company expects to return to the region in either 2016 or 2017 to drill the well and complete the initial phase of exploration.

The Kahiltna No. 2 exploratory well is planned within the Susitna License No. 4 area, which the state segmented from the Susitna Basin Oil & Gas Exploration License No. 1 area.

The roughly 6,000-foot vertical exploration well would determine whether commercial volumes of natural gas exist in the region, which could lead to development in the future.

Some logistical operations began toward the end of 2014, when Cruz Construction Inc. improved Oilwell Road, which leads to the 1964 Pure Kahiltna Unit No. 1 well.

This year, Cruz will prepare the 3.6-acre Kahiltna Drill Pad. Cook Inlet Energy might also contract a company to drill a well for water production and to drive a well conductor at the site. Cook Inlet Energy would drill the exploration well in December with its Rig 37. The company expects to complete the well and demobilized the rig by April 15, 2015.

Should those activities not come to pass this year, Cook Inlet Energy plans to return to the region to complete the water well and the exploration well next year or the year after.

The state received no comments about the program.

The Susitna basin is an underexplored region.

Recent activity in the region west of the Parks Highway between Willow and Talkeetna started in 2003, when the state issued two exploration licenses to Forest Oil Corp.

Ultimately, those license regions bounced around among various companies until Cook Inlet Energy arrived in 2009, acquired the assets of Pacific Energy Alaska Ltd.

Today, Cook Inlet Energy holds two licenses in the region.

Susitna Basin No. 4 covers 62,909 acres. The 10-year license began in April 2011 and came with a $2.25 million commitment. Susitna Basin No. 5 covers 45,764 acres to the south. The five-year license began in April 2012 and came with a $250,000 commitment.

Cook Inlet Energy also holds a license in Southwest Alaska.