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THE EXPLORERS 2005: Forest continues hunt for onshore gas Company’s strategy pays off at West Foreland, Three Mile Creek but Glennallen disappoints so far Alan Bailey Petroleum News
In October 2003 Leonard Gurule, Forest Oil’s then new senior vice president of Alaska operations told Petroleum News that Forest was bullish on Alaska. At that time Forest had been contending with severe production problems at its disappointing Redoubt Shoal oil field in Alaska’s Cook Inlet.
“I see us growing in Alaska,” Gurule said in response to a question about Forest’s future strategy.
In addition to operating the Osprey platform at the Redoubt Shoal field Forest operates the nearby West McArthur River oil field.
Forest’s recent engagement in lease sales and involvement in drilling activities in southern Alaska seem to attest to the company’s continued interest in the state, and in onshore gas drilling in particular. Moreover, as recently as September 2005 company CEO Craig Clark summarized Forest’s Alaska strategy: Forest holds 172 billion cubic feet equivalent of reserves and 41 million cubic feet equivalent of daily production in Alaska and growth will come primarily from the onshore, Clark said.
And in November 2004 Forest purchased 17 tracts on the west side of Cook Inlet west of Point MacKenzie in an Alaska Mental Health Trust lease sale. The company also picked up some tracts in the state of Alaska’s Cook Inlet areawide lease sale in May 2005.
Finding gas In February 2005 Forest announced that it had two successful gas wells onshore in the Cook Inlet area of Alaska, the 100 percent owned West Foreland No. 2 and the 30 percent owned Three Mile Creek Unit No. 1. The West Foreland No. 2 well was drilled up structure to the West Foreland No. 1 well, on the west side of Cook Inlet south of Trading Bay, and tested 15 million cubic feet of gas a day from two zones. The Three Mile Creek field, north of Tyonek on the west side of the inlet, is operated by Aurora Gas. The Three Mile Creek Unit No. 1 exploration well flowed at a rate of 1 million cubic feet per day on initial testing from shallow Beluga intervals, Forest said.
“These wells are the first of our new onshore gas focus in the Cook Inlet area,” Clark said. “We enjoy a large acreage position surrounding these discoveries so we have a lot of running room. The Cook Inlet acreage is near existing infrastructure so the time and costs it takes to hook up to sales is minimal.”
On Aug. 9 Forest announced a two-year gas sales agreement with a local consumer to sell the gas from the discovery at West Foreland. Clark told an analysts’ call that the gas sales contract is for sales of 5 million cubic feet a day, with sales to begin in the fourth quarter. The well, he said, tested at 15 million cubic feet a day, so more gas is available for sale.
In May 2005 Forest applied for an oil discharge prevention and contingency plan with the Alaska Department of Environmental Conservation to drill the Tutna prospect, near the shoreline of Trading Bay 16 miles southwest from the village of Tyonek. As part of this project Forest is looking at building four to nine miles of temporary road, including a temporary bridge over Nikolai Creek, depending upon which route is chosen to provide access between the site and the road system in the Tyonek/Beluga area. In 2002, Forest’s former top executive in Alaska, Gary Carlson, told Petroleum News Tutna was strictly a gas play with an estimated 36 billion cubic feet of gas in place. It was one of eight “hot plays” for which Forest was seeking a partner.
Glennallen disappoints Drilling results have been less satisfactory for a gas exploration well drilled on Native land near Glennallen on the west side of the Copper River Valley by Rutter and Wilbanks. Forest retains an interest in this well. The well was drilled adjacent to a Copper River Valley exploration license originally granted to Anschutz Exploration. Forest became a 50-50 partner with Anschutz in the Copper Valley exploration and Rutter and Wilbanks with partner Delphi International bought into the project.
In August Rutter and Wilbanks announced disappointing test results for the Glennallen well.
“We never got enough gas to light a cigarette,” said Bill Rutter Jr.
Rutter said the company tested the lower zone of the well even though well logs said the well contained water, because wells with similar log readings in Cook Inlet have gone on to produce gas. Unfortunately, that wasn’t the case at the Copper River basin well. Rutter said he now suspects that a small sand layer encountered early in the drilling was the source of gas traces the company detected along the way as it drilled the 7,500-foot well. The company said that it planned to perforate the five-inch casing in that section as soon as it could get specialized equipment to the site, to see if it contains commercial quantities of gas. (Look for possible update in the Rutter and Wilbanks story in this issue – or in the On Deadline section.)
When the Copper River exploration license expired on Sept. 30, 2005, Forest applied to convert about 47,500 acres of the license area around the Glennallen well to an oil and gas lease. Forest and Anschutz would own the lease 50-50.
The Susitna basin In addition to its Mental Health Trust leases in the Susitna Valley Forest holds two state exploration licenses in the valley, west of the Susitna River southwest of Talkeetna and northwest of Houston. License 1, the more northerly of the contiguous license areas, covers 386,207 acres and has a work commitment of $2.52 million. License 2, to the south, covers 471,747 acres and has a work commitment of $3 million.
In November 2004 Veritas DGC applied to the state of Alaska to shoot 2 -D and 3-D seismic for Forest in the license area in the winter of 2004-2005.
Forest is planning to drill a re-entry well in the Middle Lake Unit No. 1 well, originally drilled by Gulf Oil Corp. in 1969. The drill site at Middle Lake lies about eight-tenths of a mile inside the eastern boundary of the Susitna Flats State Game Refuge, east of the Little Susitna River nearly 25 miles northwest of Anchorage.
The plan for Middle Lake says that Forest will clean out the existing well bore at the Middle Lake Unit well, drill new hole below the 9 5/8-inch casing to an estimated 6,500 feet and test the well for natural gas. Should the well prove commercially viable, Forest said it will initiate plans for production. The well is about three miles south of the Enstar 20-inch natural gas pipeline that runs from Beluga to Anchorage.
Forest continues to hold a 12.5 percent interest in the Cosmopolitan prospect, offshore the southwest side of the Kenai Peninsula. Forest used to have a 25 percent interest in the prospect but in 2004 the company sold half of its interest to Devon Energy.
Pennzoil found oil and gas in the area in 1967, drilling offshore with a jack-up rig. But ConocoPhillips’ first well at the prospect, the Hansen 1, spud in October 2001, was drilled from onshore to a bottomhole under Cook Inlet. The measured depth of the well was almost four miles. The true vertical depth was 7,102 feet. ConocoPhillips followed with a sidetrack, the Hansen 1A, in 2003. That well was also drilled from shore. Since that time ConocoPhillips has been evaluating the prospect for possible development.
However, drilling into onshore prospects seems to remain Forest’s game plan.
“Alaska’s growth will come from our grassroots exploration on our onshore acreage position,” Craig said in September. “Alaska’s near-term growth is much like Canada’s in that it is already drilled awaiting pipeline.”
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