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Going offshore Alaska to allow licensing in Nushagak Bay, require directional drilling Kristen Nelson Petroleum News Editor-in-Chief
Directional drilling to offshore exploration license acreage? It could happen in western Alaska.
The Alaska Division of Oil and Gas has issued a preliminary best interest finding for an exploration license in the Bristol Bay basin, and says it is proposing to amend a 1996 ruling by the Alaska Department of Natural Resources which excluded “all submerged land in and around Bristol Bay, from Ugashik Bay north to the western boundary of Kulukak Bay…” from exploration licensing – a ruling which excluded what some industry observers believe is a prospective area for gas, and possibly oil.
A portion of Nushagak Bay south of Dillingham on Alaska’s western coast, in the exclusion area in the 1996 ruling, is included in the proposed exploration license.
The division said it proposes to allow exploration licensing within Nushagak Bay, “but with the stipulation that exploratory drilling can only be conducted directionally from onshore locations.”
The applicant for the license is Bristol Shores LLC. Bristol Shores a local group Jim Hansen, the Division of Oil and Gas lease manager, told Petroleum News that four individuals who are Native allotment owners in the Dillingham area own Bristol Shores LLC. They proposed this license, Hansen said, because they want to ensure that something happens out there. George Shade, spokesman for Bristol Shores, told Petroleum News Bristol Shores is composed of four elders originally from Dillingham. He said Bristol Shores “is moving forward, we do have some very serious interested people” and plan to help the environment as well as the economy, “to boost jobs and basically concentrate on local hire and concentrate on producing.”
Comments on the proposal are due May 3, and the division said it expects to make a final finding available in late July. First proposal from Evergreen Resources Bristol Bay residents asked the state last year to evaluate possible oil and gas development in the area because of the decline in their fishery. Interest is in both the jobs the industry could bring, and in finding a source of local energy.
As part of its response to the local request, the Division of Oil and Gas designated a study area in the northern portion of the Bristol Bay basin in July 2003, and solicited exploration license proposals for the area. Evergreen Resources Inc. submitted a proposal for an exploration license in 15 townships north of Naknek and King Salmon, and proposed a work commitment of $1.45 million.
The division solicited competing proposals in September, and received the proposal from Bristol Shores, encompassing some 737,000 acres and a work commitment of $3.2 million over a 10-year period. Since the maximum size for an exploration license is 500,000 acres, the Bristol Shores proposal will have to be pared down. Land ownership in the license area is a mixture of Native, state, federal and private holdings.
Because the Bristol Shores proposal was for a different area, the division said it did not consider it a competing proposal, and in December issued a notice of intent to evaluate the Bristol Shores proposal, and solicited competing proposals. The division said no competing proposals were received.
Evergreen Resources withdrew its proposal in mid-December, so the division did a finding only for the Bristol Shores proposal. Area believed to be gas prone The area of the proposed license, the Bristol Bay lowlands, has the greatest potential as a gas province, the division said. No petroleum exploratory wells have been drilled in the Bristol Bay/Nushagak lowlands, although 10 wells have been drilled further to the southwest along the Alaska Peninsula into the onshore extension of the Bristol Bay basin.
None of the wells was a commercial success, “but most had fair to moderate shows to gas and/or oil.” The division said it would seem reasonable to hypothesize a natural gas resource in the multiple billions of cubic feet up to 1 trillion cubic feet in the area.
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