Unocal drilling second Happy Valley well; plans a third well this year

Kay Cashman

Petroleum News publisher & managing editor

In late June Unocal had just spud its Happy Valley No. 1 well and was in the process of permitting a gas development well, the Happy Valley No. 2, in its Deep Creek unit on the southern part of Alaska’s Kenai Peninsula. On Aug. 4, Alaska Division of Oil and Gas Director Mark Myers told Petroleum News that Unocal was drilling the second well and was in the process of permitting a third well that it hoped to drill yet this year.

Myers offered no other information on the company’s plans for the Deep Creek unit and Unocal isn’t talking, but good news from the unit will be welcome news for Unocal, which is scheduled to begin delivering natural gas at a lucrative price to Enstar on Jan. 1.

Deep Creek gas would be delivered to Enstar via the newly constructed Kenai-Kachemak Pipeline, owned by subsidiaries of Unocal and Marathon Oil.

The primary purpose of the new gasline was to transport gas from new fields being developed on the southern part of the Kenai Peninsula, including Deep Creek, which is located on Cook Inlet Region Inc. and state lands on uplands that parallel the Cook Inlet coastline approximately five miles inland from Ninilchik and Happy Valley. Some 40 percent of the Deep Creek acreage is in five state oil and gas leases and some 60 percent in five CIRI oil and gas leases.

The 22,617 acre Deep Creek unit is the larger of the two exploration units Unocal has on the southern Kenai Peninsula. The other Unocal unit in the area — i.e. the 6,998-acre South Ninilchik unit — is adjacent to the Marathon-operated Ninilchik unit.

Superior Oil drilled the Happy Valley unit 31-22 well in the same area as Happy Valley No. 1 in 1963. Superior plugged and abandoned that 13,550 foot vertical hole.

The Deep Creek unit was approved by the state of Alaska in late 2001 and is being administered by both the state and CIRI.

The unit exploration plan included the Deep Creek NNA well, described as an offset to Socal Deep Creek Unit No. 1. The vertical 1 Deep Creek NNA exploration well was completed by Unocal in 2002 as a gas well at 10,590 feet.

Unocal told the state in 2001 that while the plan covered only two years; it envisioned at least one more exploration well on one of the other structures in the unit area.