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Partners team up for gas development Holitna Energy Corp. partners with village corporation to develop shallow gas in remote Kuskokwim River area Patricia Jones Petroleum News Contributing Writer
Holitna Energy Corp. recently changed its company structure, formed a partnership with a village corporation and has slightly scaled back plans for winter exploration of shallow gas leases sought in remote southwest Alaska.
Holitna’s President Phil St. George is also actively seeking $1.2 million for gravity surveys and drilling on the four leases and plans to hold community meetings about his company’s proposed project in nearby villages.
It’s all part of the job for a long-time minerals geologist who’s now heading up a shallow gas project that, if the resource pans out, could provide energy for a number of upper Kuskokwim River villages and a large-scale gold mine that may be developed 50 miles away.
On Oct. 10, St. George told Petroleum News about plans to partner with The Kuskokwim Corp., a business entity formed by the merger of 10 village corporations, which owns the surface rights to land adjacent to the shallow gas leases.
“It’s exciting because we would not be able to develop this without them,” St. George said. “Working with a Native corporation makes a lot of agencies and government people satisfied that the development will benefit the local people, which is why we’re doing this whole thing.”
Holitna Energy, which has recently switched to a limited liability corporation structure, will hold shallow gas leases for the 19,840 acres of state land east of the Holitna River and southeast of Kuskokwim River village of Sleetmute.
Outlined in a letter of agreement, a second LLC is being formed that will develop the gas resource and related infrastructure on those leases. TKC, the village corporation, will hold a 10 percent interest in that new company, soon to be named, St. George said.
“They will have an option to earn a greater percentage through putting capital into the partnership.”
Winter exploration planned Together, the two entities are actively seeking $1.2 million to pay for the first stage of exploration in the Holitna basin, a teardrop-shaped formation that stretches for about 70 miles along the Farewell fault.
State geologists identified the potential gas-prone region, based on grassroots geological and geophysical work that includes analysis of low quality coals exposed in sections of the fault.
No detailed industry-funded exploration work has been completed in the area. St. George hopes to first complete a detailed gravity survey in the area to help identify potential drill targets. He has pulled back from earlier plans to conduct 3-D seismic tests in the area, based on recommendations from oil industry geophysicists.
“The gravity survey will provide enough detail about the structure, and it will be less expensive,” he said. “We can also accomplish it earlier in the winter, to allow more time for planning the drilling work.”
He hopes to complete both tasks this winter, with the drilling planned for March. His rapid timeframe is driven by a desire to prove up an energy resource in the area, one that could be considered by developers of the massive Donlin Creek gold deposit.
Current geological estimates put that remote hardrock deposit at nearly 28 million ounces of gold, and operator Placer Dome is working on a feasibility study for the project, located some 50 miles from the Holitna Energy gas leases.
Finding power for the mine and mill complex will be one of the greatest logical challenges for the remote project. Developers are looking at a 30,000-ton per day mill, requiring about 70 megawatts of electricity.
“Placer Dome has to decide on a power system, so we need to move along as quickly as possible so they can incorporate power and gas from the (Holitna basin) field in developing the mine,” St. George said.
He should know. In April, St. George stepped down from his job as project manager at Donlin Creek for the past two years, overseeing the exploration program for NovaGold Ventures, which also holds interest in the gold project. Public meetings planned Public comment closed in late July on Holitna Energy’s shallow gas application. State regulators received a few comments, with general concerns about hunting and fishing activities, said Jim Hansen of the Division of Oil and Gas.
The state “strongly suggested” that Holitna Energy hold community meetings in the region, to further explain plans, he added.
St. George said he’s tried to schedule such meetings, but has been put off by locals who have been busy with moose hunting and wood gathering. He’s hoping to hold meetings in December, and in the meantime, is putting together a project fact sheet that can be posted in each village.
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