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THE INDEPENDENTS 2003: Pelican Hill drilling first Alaska wells Al Gross of Pelican Hill Oil & Gas: from leases to drilling in Cook Inlet within two years Kristen Nelson Petroleum News
Al Gross of Pelican Hill Oil and Gas bought his first leases in Alaska in 2001 and this year will drill his first wells in the state, gas wells on the west side of Cook Inlet in the Tyonek area.
Gross, based out of California, is an oil and gas producer in Kansas, where he has drilled more than 200 wells over the last 25 years. In 1999, looking for areas with larger reserves, he considered several areas, including Alaska.
At first, he told Petroleum News, he looked at Alaska and walked away.
But in 2000 he looked harder, linked up with Anchorage-based geological consultant Arlen Ehm and made his first trip to the state in June of 2001.
By the fall of 2001, Pelican Hill had acquired its first leases, spending $258,359 for 25,187 acres of Mental Health Trust oil and gas leases on the west side of Cook Inlet in the Beluga and Nicolai Creek areas. By the time the first leases were issued, Gross was planning seismic for early 2002.
“I don't buy leases just to own them as a lease position asset,” Gross said, “ … I buy them for a reason: that's to shoot them and then to go drill them.”
Gross acquired additional Mental Health Trust acreage.
And then in November 2002, Pelican Hill said it had acquired 21,543 acres of state of Alaska oil and gas leases on the west side of Cook Inlet from Unocal in a farm out. It is there, on the Iliamna prospect, onshore west of the McArthur River field, that Pelican Hill will begin its exploration drilling this year. The leases expire Jan. 31, 2004.
In August, Pelican Hill cut a farm-in deal with Paul Craig of Trading Bay Oil & Gas in August to drill on Craig's North Beluga River prospect this year, a 1,160 acre state oil and gas lease on the northwest boundary of the Beluga gas field.
Tailored drilling Gross says existing infrastructure in Cook Inlet is key to working his prospects.
Cost-effective and timely drilling is also necessary, he said, and to meet that goal, Gross brought a truck-mounted rig to Alaska from Hawaii this summer. The Ideco H-35 KD, owned by Water Resources International, arrived in July. It was modified with a top driver and winterized, and was barged to the west side in October.
“With our own rig here,” Gross said, “we're going to be able to do what we want to do on our timeframe.”
In addition to bringing in a rig, Gross is also using a drilling technique new to Cook Inlet: casing drilling. Instead of drilling the well with drill pipe, pulling that and putting down casing, the drilling is done with the casing. Once the pipe is at the bottom of the hole, it is cemented in place.
Gross said the method is “faster, less expensive (and) safer.”
Ehm said the technique is not new, but this will be the first time it is used in Cook Inlet.
With the top drive, “you never lift it back up,” Ehm said. “In conventional drilling, you drill down …. And you pull up about 30 feet (of pipe) and add a joint and then you come down.” The coals in the Cook Inlet basin break off of the side of the well and rocks are fractured and fall to the bottom. “With this, the bit drills down, it stays there while you add another joint at the top because your power is now not on the rotary table, your power is up there in the top drive.”
And Pelican Hill won't be doing conventional mud logging on these wells, but will instead do remote mud logging, which does not require a crew on site.
Temporary roads with mats The working surface will also be an innovation: temporary interlocking polyethylene mats will be laid for roads and drilling pads.
This technique hasn't been used for drilling exploration wells in Cook Inlet, although it has been used for a pipeline installation. The mats are laid in place and locked together and removed once the work is done.
Pelican Hill's west side prospects are close to existing infrastructure and roads, so the company just needs to lay down access to reach the sites from existing roads. Dennis Swathout of Compositech, which is providing the mats, said the mats have been used for the last three years in Canada and are also being used on the North Slope.
Swathout said the mats go down fast. An area of matting some 90 feet by 26 feet went down in about an hour in mid-July at the Anchorage yard where the rig was being worked on prior to its move to the west side, and that by workers who'd just been shown how to do it.
Locations permitted Permitting for Pelican Hill's first well was expected to be complete in early October, and the company was preparing to move its rig across Cook Inlet. Pelican Hill told the state it would use the existing landing below the Trading Bay production facility, with most barge shipments coming from Anchorage and some smaller loads from Kenai. The rig is capable of drilling to approximately 7,000 feet, but the wells were expected to be drilled to a maximum depth of 5,500 feet.
The Alaska Oil and Gas Conservation Commission determined that the proposed wells “are highly unlikely to encounter oil or oil-bearing formations” between the surface and 5,500 feet true vertical depth, and Pelican Hill has applied to the commission and the Alaska Department of Environmental Conservation for an exception to the requirement for an oil discharge prevention and contingency plan.
The company told regulators that, should gas be discovered at the wells, new facilities would be limited to gas-producing wellheads and well houses, which would not be larger than 10 feet by 10 feet. Pelican Hill said it could apply to access the sites with permanent roads if the wells are put on production, but could also monitor some wells by foot and some by helicopter, with workover operations conducted on matting boards.
If gas is found and developed, pipelines would be buried and would, wherever possible, use existing pipeline rights of way.
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