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Doyon drops Nenana exploration, leases
Regional Native corporation judiciously pursued geologic ‘idea’ with five wells in Cook Inlet-look-alike Interior Alaska basin Kay Cashman Petroleum News
Petroleum News has reported on Doyon Ltd.’s search for oil and gas in the Nenana basin since the Native regional corporation for Interior Alaska partnered with others in 2004, took over as operator in 2009 and drilled what would prove to be its last well in the summer of 2018.
All in all, five wells were drilled - three in the basin’s central saddle, and two wells in the deeper more northerly part of the basin, above the presumed oil and gas kitchen.
Doyon’s exploration, encouraged by pervasive evidence of oil and gas throughout the program, was carefully planned and executed, targeting potential traps identified from 2-D and 3-D seismic and related data (gravity, magnetics, lake-bed geochemical survey, etc.).
But Doyon has decided to halt the program, as evidenced by the fact it is allowing its state leases in the area to expire, with the last of the group set to terminate in June.
Aaron Schutt, Doyon president and CEO, confirmed this in an email to PN on April 15. “Doyon is not pursuing further work in the Nenana basin at this time. As with all investments, a time comes when you have to make a decision to go forward or not. Following Totchaket #1, we decided not to continue.”
Letting leases expire In January, Alaska’s Division of Oil and Gas terminated 20 Doyon leases, which in 2012 had converted from a state oil and gas exploration license to leases. The division’s current summary of acreage shows Doyon still holds 141,733 acres of state land in the Nenana basin. (A sample lease from those terminated was 5,042 acres; if the 20 leases were all in that size range the total acreage would have been more than 100,000 acres.)
A Doyon shareholder who asked not to be identified told PN, “our geoscientists were pursuing an idea we had for the area. … We’ve given it a good try, but … perhaps someone with a new idea will come in and see what they can find.”
Doyon’s focus, he said, was returning to a more typical approach, that of a lessor, referring to the subsurface rights the Native regional corporation holds for approximately 400,000 acres in the Nenana basin.
Nenana basin The Nenana basin is conveniently located close to the Parks Highway, to the southwest of Fairbanks. Recently Doyon has been particularly focusing on making an oil discovery, although the basin is also highly prospective for natural gas.
The corporation had indicated that, given the convenient location of the Totchaket project site, a development could be viable at an oil price of around $50 per barrel, even with a relatively small discovery of perhaps 40 million to 60 million barrels. If a workable oil resource had been discovered last summer, production could have begun around 2023 to 2025, or perhaps earlier if oil were to be shipped by truck or rail to the oil refinery at North Pole, or to a trans-Alaska oil pipeline pump station.
One of a number of Alaska basins formed by the pulling apart of the Earth’s crust, the Nenana basin is filled with a huge thickness of non-marine Tertiary sediments. Coal seams and shales within the rock sequence have the potential to source both oil and gas, depending on the extent to which they are heated at depth. There are sands with excellent hydrocarbon reservoir potential, interlayered with shales that could form hydrocarbon traps.
In broad terms, the basin has a northeast to southwest trending hourglass shape, with a deep basin in the north and a central saddle in the narrower, central part of the basin, immediately west of the town of Nenana. The depths reached in the northerly section of the basin are thought to be sufficient to have raised the temperatures in the potential source rocks to levels conducive to oil formation.
“The prospective sedimentary section … consists of sands, gravels, conglomerates, shales and coals … thought to be time-equivalent to the productive Kenai Group in the Cook Inlet (basin), the division said.
CIRI still saw potential The fifth well drilled last summer in the northern part of the basin, the Totchaket No. 1, encountered multiple gas shows but did not find commercial oil or gas, Doyon partner Cook Inlet Region Inc. reported following drilling and testing.
CIRI said that, based on drilling results so far, it continued to view the Nenana basin as holding considerable resources.
According to data published by the Alaska Oil and Gas Conservation Commission, the Totchaket well, which was on the east side of the Tanana River, about 20 miles north of the town of Nenana, had been drilled with Nabors 105 rig to a vertical depth of 11,225 feet.
Doyon and its partners had previously drilled one other well in 2016 in the northern part of the basin, Toghotthele No. 1, and three wells to the west of Nenana in the basin’s central saddle, targeting potential traps identified from seismic data. The hope was that hydrocarbons migrating up into the saddle from deeper parts of the basin would have become trapped. Although these wells failed to discover viable pools of oil or gas, the wells did encounter evidence of an active petroleum system. For example, the Toghotthele well, one of five prospects identified from a 3-D seismic survey conducted in 2017, found multiple oil shows, as well as natural gas. Some of that gas was “wet gas,” containing natural gas liquids that must have formed through the application of heat rather than through microbial action on organic material. But it seems that what appeared to be a trapping structure had formed after the oil had migrated through the rocks.
The Nunivak No. 1 well, drilled in 2009, also encountered some oil shows. And the Nunivak No. 2 well, drilled in 2013, found a 400-foot thick section of gas-bearing rock that also contained too much water to be commercially viable.
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