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Cook Inlet Energy drops Otter unit Company claims that onshore gas field on the west side of Cook is uneconomic, requests return of performance bond ERIC LIDJI For Petroleum News
Cook Inlet Energy LLC terminated the Otter unit earlier this year.
After claiming disappointing results from recent drilling, the subsidiary of Tennessee-based independent Glacier Oil & Gas Corp. voluntarily terminated the west side Cook Inlet unit and surrendered the leases in March 2016, according to recent state documents.
The Alaska Department of Natural Resources formed the unit in October 2013, after Cook Inlet Energy agreed to work commitments backstopped by a $1.2 million bond.
The initial plan of exploration for the unit required Cook Inlet Energy to either deepen its existing Otter No. 1 exploration well to 7,000 feet or drill a separate delineation well to that depth and then either drill a follow-up well or relinquish the unit by March 2016.
Cook Inlet Energy drilled the Otter No. 1A sidetrack in January 2014. “Although CIE reached the target depth and gas bearing zones were found, gas was not encountered in sufficient quantities to warrant further drilling in the area,” CEO Carl Giesler told state officials in a March 8, 2016, letter. By terminating the unit before the final deadline, the company believed it was entitled to reclaim the original $1.2 million performance bond.
The Division of Oil and Gas accepted the unit termination in late July and the surrender of leases ADL 390579, ADL 390749, ADL 391621 and ADL 391624 in mid-August.
After drilling the initial Otter No. 1 well in mid-2012, Cook Inlet Energy expressed enthusiasm about the project and touted a third-party engineering reserve report estimating 45 billion cubic feet of gas at the field. By January 2015, Cook Inlet Energy was permitting a follow-up well at the Otter unit. As described in a plan of exploration, the well would have targeted the Beluga formation at a depth of at least 7,000 feet.
Cook Inlet Energy parent company Miller Energy Resources Alaska LLC filed for Chapter 11 bankruptcy in October 2015 and emerged under new ownership as Glacier Oil & Gas earlier this year. Since then, Glacier surrendered Cook Inlet Energy exploration licenses and slowed drilling at the Cook Inlet Energy-operated North Fork unit in the southern Kenai and at the Savant Alaska LLC-operated Badami unit on the North Slope.
In other leasing news The Alaska Department of Natural Resources approved the transfer of a 25 percent working interest and 21.54167 percent royalty interest in three North Slope leases - ADL 392048, ADL 392049 and ADL 392047 - from Armstrong Energy LLC to Repsol E&P USA Inc. The two companies have been partnering on North Slope exploration work.
The state terminated five Alaska LLC leases - ADL 392714, ADL 392675, ADL 392676, ADL 392704 and ADL 392713 - located in various spots across state-owned Beaufort Sea waters for failure to pay rent. The small independent company is based in Fairbanks.
In more than 100 separate requests, NordAq Energy Inc. is seeking to transfer royalty interests less than 1 percent in its Beaufort Sea lease holdings to (alternately) Alexis Dejoria, the John Anthony Dejoria 2004 Family Trust and Michaeline Dejoria Heydari.
Stuart Bregman is asking to transfer a small royalty interest (0.5 percent) in six leases at the Kitchen Lights unit to Proak LLC and Shawn Bartholomae is asking to transfer a small royalty interest (0.08 percent) in six leases at the unit to Carole Lynne Chandler.
Steve Beckendorf and the Beckendorf Trust is asking to transfer a small royalty interest (less than 1 percent) in five Redoubt unit leases to the operator Cook Inlet Energy LLC.
—A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story.
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