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Deal is in place for the Webb prospect Craig signs agreement with Webb Exploration & Production to seek capital to drill for oil and gas on the west side of the Cook Inlet Alan Bailey Petroleum News
Alaska oil and gas investor Paul Craig has formed an agreement with Webb Exploration and Production LLC to seek capital to drill an exploration well in the Webb prospect on the west side of the Cook Inlet, Craig told Petroleum News on Sept. 6. The prospect, formerly called the Hanna prospect, appears likely to hold natural gas in rocks of Tertiary age, with the additional possibility of oil in the Jurassic, below the Tertiary, Craig said.
Drilling required
Craig, the owner of the leases over the prospect, has given Webb Exploration and Production an option through March 1, 2015, to acquire a 100 percent working interest in the leases if the company raises sufficient capital to drill down into the Jurassic. And, if the drilling project comes to fruition, Craig will become a member, a part owner, of Webb Exploration and Production. Whatever happens, Craig will retain a 5 percent overriding royalty in the leases. And, if no drilling results from the agreement, Craig will have three remaining years within the lease terms in which to find some alternative means of funding the drilling, perhaps using some of his own capital in addition to capital from other investors, Craig said.
The concept now is for Webb Exploration and Production to prepare a prospect summary and seek capital, he said.
3-D seismic Vladimir Kadic, principal of Webb Exploration and Production, told Petroleum News on Sept. 10 that prior to drilling in the Webb prospect his company anticipates conducting a 3-D seismic survey to confirm what appears to be a promising structure in the Jurassic at a depth of 14,000 to 15,000 feet. The company consists of himself, his two sons Robert and Darren, and Patrick Omara, Kadic said.
Craig said that the concept is to leverage state exploration incentives to make a gas find at the prospect viable, with the existence of both an oil play and a gas play at the prospect reducing the drilling risk.
Oil kitchen The oil prospect is in what is referred to as the “kitchen,” the portion of the geologic section of the Jurassic in which Cook Inlet oil is thought to have generated, Craig said. Drilling would target Naknek and Tuxedni sands towards the top of the Jurassic, he said. And, although there are questions over the permeability, the ability to flow oil, of potential Cook Inlet Jurassic oil reservoirs, the Naknek sands are known to be very clean at the surface, he said.
Geologists have long speculated about the possibility of finding commercial quantities of oil in deep rocks of pre-Tertiary age in the Cook Inlet basin, but no one has yet attempted the expensive and relatively risky exercise of drilling a wildcat well into these pre-Tertiary strata.
Started in 1993 Craig has been pursuing the possibility of drilling in the prospect periodically since 1993 when he purchased his first lease at the location. He purchased a second adjacent lease from investor Dan Donkel a couple of years later, Craig said.
Craig said that the promising location of the prospect, on a structure between the Pretty Creek and Lewis River gas fields, in close proximity to an existing gas pipeline, had originally motivated him to purchase the leases. He subsequently discovered that in 1984 Unocal had evaluated a deep oil prospect in the Jurassic at the location and had proposed this prospect as a drilling target. But, presumably because of the oil-price crash in the mid-1980s, the drilling never happened. However, Unocal included this deep oil prospect in its inventory when selling Cook Inlet properties in the 1990s, Craig said.
Multiple deals In 1997 Craig sold his leases to Forcenergy Inc. But Forcenergy did not drill. In 1999 Forcenergy filed for bankruptcy, with the leases ending up owned by Unocal and Forrest Oil before subsequently expiring, Craig said.
Craig purchased the leases again in a 2001 lease sale and sold the leases to Aurora Gas in 2005 after a couple of deals with other companies fell apart. Aurora Gas subsequently ran into a series of issues, including difficulties in access to capital, and did not drill the prospect before the leases expired again.
Undaunted, Craig purchased the leases again in a 2010 lease sale. He subsequently sold the leases to Escopeta Oil & Gas Co. under a two-year, performance-based agreement. But, with Escopeta not having drilled the prospect, the working interests in the leases returned to Craig, opening the way for the new agreement with Webb Exploration and Production.
But, despite the roller-coaster ride on trying to move forward with drilling in the prospect, Craig remains upbeat.
“I’m still having fun,” Craig said. “If there’s one thing that I am, it’s tenacious.”
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