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Apache’s first CI well nears total depth Company plans to take rock core and test production, to assess reservoir potential for other prospects identified from seismic Alan Bailey Petroleum News
The drilling of Apache Corp’s Kaldachabuna No. 2 well near the village of Tyonek on the west side of Alaska’s Cook Inlet has reached a depth just 1,000 feet above the well’s planned target depth, John Hendrix, Apache’s general manager in Alaska, told Commonwealth North’s Energy Action Coalition on Feb. 8. Coring at the well should start during the week of Jan. 11, he said.
Apache spud the Kaldachabuna well, the company’s first well in Alaska, in mid-November. The well has proved very challenging to drill, having involved penetrating more than 100 coals seams, with 24 of those seams being more than 10 feet thick, Hendrix said.
Production? Hendrix said that there will be a pause in field operations following the coring while geoscientists evaluate the rock cores. Apache will then try stimulating the well, possibly through hydraulic fracturing, with the aim of flowing oil from the well by mid-March, if the well proves productive. Apache has been working with Hilcorp Alaska for arrangements to enable oil produced from the well to move through Hilcorp’s facilities, to bring the well on line, Hendrix said. And if the well produces natural gas, Aurora Gas, a Cook Inlet gas producer, can help ship that gas to market, he said.
But Hendrix emphasized that, although Apache would like to produce from the Kaldachabuna well, the company is primarily drilling the well for the purposes of testing.
“We’re drilling this well to understand what the (reservoir) formation is all about,” Hendrix said.
3-D seismic Apache is in the throes of conducting a major multi-year 3-D seismic program, using state-of-the-art nodal seismic technology across large areas of the Cook Inlet basin, onshore and offshore. Having drilled a well into a reservoir formation at Kaldachabuna and tested the properties of that formation, Apache wants to use the information it obtains from the drilling to infer the potential of other prospects identified from the company’s seismic data, Hendrix explained.
And Hendrix emphasized the importance that Apache attaches to the acquisition of 3-D seismic as a perquisite for drilling, saying that drilling success requires the insights about the subsurface that 3-D seismic brings — Cook Inlet geology is complex to interpret.
“If you’re drilling off 2-D seismic you’re not going to be successful,” Hendrix said. “I’ve seen it time and time again.”
Holding leases Hendrix questioned the practice of requiring the drilling of wells to hold state leases; he wondered whether it would encourage the gathering of 3-D seismic data if the state allowed the shooting of seismic to qualify as a means of retaining leases. Apache, having spent more than $200 million in Alaska so far, could lose 150,000 acres of state leases next year, he said.
The company has already gathered about 317 square miles of seismic data, on the west side of the inlet and along a fairway across the middle of the inlet. The intent now is to shoot another 200 square miles on the east side of the inlet and onshore the Kenai Peninsula, including in land owned by Cook Inlet Region Inc. in the Kenai National Wildlife Refuge.
Apache wants to be able to line up sufficient prospects to tie up a rig or two for continuous drilling opportunities, Hendrix said.
“Drilling one-off wells is very expensive,” he said.
Permitting delays But Apache has been stymied by delays in obtaining some federal permits that it needs to continue its seismic program. In particular, the company needs an authorization from the National Marine Fisheries Service for the incidental disturbance of marine mammals during planned offshore surveying. And a lawsuit against the Fisheries Service for the issue of a similar authorization for offshore seismic work in 2012 has yet to be resolved.
Hendrix said that Apache’s offshore seismic surveying has not disturbed any beluga whales. Beluga whales are protected under the Endangered Species Act.
In the fall of 2012 surveying came to a halt when the company did not receive permits that it needed to work onshore in the Kenai National Wildlife Refuge, despite being told that the permits would be forthcoming by Oct. 1, Hendrix said.
“We shut down a $50 million seismic program and it cost Apache $10 million to do that,” Hendrix said, adding that the delay could have cost Alaskans the discovery of an oil or gas field. There will be a delay of a more than a year, because Apache cannot return there until next year, he said.
Gas and oil Hendrix emphasized that Apache will develop any viable gas resources that it discovers, as well as oil.
And asked about the economics of developing a new gas field in the Cook Inlet basin, should one be discovered, given the small size of the local gas market, Hendrix said that, if more new gas comes on line than the utility market can handle, there is the potential to restart production at the existing liquefied natural gas and fertilizer plants on the Kenai Peninsula. He said that he would be happy if Apache ended up “awash with gas and oil.”
And the impact on Apache of Alaska’s tax credits for Cook Inlet exploration?
Rather than necessarily attracting Apache to the Cook Inlet basin as a new exploration area for the company, the tax credits have enabled the company to execute a much broader exploration program than would otherwise have been possible, Hendrix said. That will provide both Apache and the State of Alaska more information about potential new oil and gas resources, he said.
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