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New Player in Town Unocal brings in Houston-based Ocean Energy as partner in Pioneer coalbed gas project: wells planned in Matanuska-Susitna Borough Kristen Nelson PNA News Editor
Unocal has brought in a 50/50 joint venture partner, Houston-based Ocean Energy Inc., which will operate the Pioneer gas unit in the Matanuska-Susitna Borough.
Ocean Energy merged with Seagull Energy Corp., parent company of Enstar Natural Gas Co., effective March 31.
Ocean Energy spokeswoman Susan Smith told PNA that the company has 1,400-1,500 employees and operates in three areas: U.S. onshore; Gulf of Mexico; and internationally - primarily offshore West Africa. In 1998, she said, the company had production of 1.12 billion cubic feet gas equivalent per day. The company's production mix for 1998 was 55 percent gas and 45 percent oil; its reserve mix is 61 percent gas, 39 percent oil. At the end of the first quarter the company had assets valued at $3.3 billion.
Unocal spokeswoman Roxanne Sinz told PNA that an exploration agreement between Unocal and Ocean Energy for the Pioneer unit was signed May 24. The agreement, she said, is a 50/50 joint venture with Ocean Energy as operator. Terms of the Unocal-Ocean Energy partnership are confidential, Sinz said. Unocal looked for expertise Representatives from Unocal and Ocean Energy explained the project to project area residents at informational meetings May 25 and June 10.
Kevin Tabler, Unocal Alaska Resources' manager of land and governmental affairs, said May 25 that Unocal began to take an interest in coalbed gas in the 1980s and began assembling leases in the Matanuska-Susitna borough area in the early 1990s. But, Tabler said, Unocal realized it needed a little more expertise.
"We're not a coalbed methane company," he said. "We don't have extensive coalbed methane expertise. ... We can drill. ... can physically handle the work, but we don't understand the coalbed methane reservoir..."
So the company went looking for a knowledgeable partner. More that 30 companies were interviewed, Tabler said, and Unocal selected Ocean Energy.
John Schiller, Houston-based senior vice president North America for Ocean Energy, told PNA that over the last year the company's office in Denver had been looking at several coal plays. The company presently has 27 coalbed gas wells in three different clusters in the Powder River basin in Wyoming, Schiller said. He said that he and other executives from Seagull were formerly with Burlington Resources, a major coal-seam player.
Having the Enstar connection makes the project better, he said, noting that proposed wells had been moved closer to Enstar gas pipelines. Ocean Energy's share of any gas produced, he said, would go to Enstar.
Most Cook Inlet gas from coal Rob Downey, a consultant working with Ocean Energy on the project, told the informational meetings that 95 percent of the natural gas in the Cook Inlet basin comes from coal. Conventionally produced gas has migrated into sandstone reservoirs, he said. But in most of the Cook Inlet area coal seams lie too deep for economic production of gas, Downey said.
In the area where Ocean Energy and Unocal will drill, however, coal is close enough to the surface to allow economic dewatering. By dewatering - pumping water out of the coal seams - pressure in the coal seams is reduced and that drop in pressure allows the gas to flow to the wellbore, he said. Water produced from the coal seams will be reinjected to formations some 1,800 feet below the deepest water well, and separated from that aquifer by confining layers.
Unocal had begun the permitting process for wells widely spread over the 72,000-acre unit, with the goal of testing potential in several areas.
Tabler said Ocean Energy told Unocal "you've good a good area and a good prospect, but you're going about it a bit differently than we would... What you want to do, is the smallest footprint and the smallest area that you possibly can..." and with the wells closer together.
Ocean Energy recommended two wells close together and close to existing Enstar gas lines. Downey said closer spacing of the wells allows a faster drawdown of pressure as water is removed from the coal seams, and could allow the companies to prove up production potential more quickly. By locating the wells close to an existing Enstar pipeline the companies can move gas to market without having to build new pipelines.
Unocal has modified its application based on recommendations of Ocean Energy. Tabler said Unocal is permitting multiple locations, "but the actual obligations that we have in the initial phase is two wells and reentry of existing well..." Plan for this summer The plan for this summer is to reenter an old well and attempt to establish gas production, and to drill two coalbed gas wells with the goal, Tabler said, of determining if the coalbed prospect can produce gas in commercial quantities.
The old well which will be reentered is the ARCO BLT 1, drilled by ARCO Alaska Inc. in the early 1990s near Big Lake on what is now the western edge of the Pioneer unit. The two coalbed gas wells and a water disposal well will be in the vicinity of the gravel pit on Vine Road. The companies said that they had been talking with the gravel pit owner about exact locations.
Tabler said that if commercial gas is found, Unocal's share would go to the company's Nikiski fertilizer plant. Ocean Energy said that their share would be sold to Enstar.
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