Buccaneer applies for unit at Kenai Loop

Kristen Nelson

Petroleum News

Buccaneer Alaska Operations LLC, which has been producing natural gas from its 2011 Kenai Loop No. 1 discovery well since January, has applied for a 7,500-acre Kenai Loop unit.

The proposed unit is on the northern Kenai Peninsula on a ridge between the Cannery Loop and Beaver Creek fields.

The Alaska Department of Natural Resources Division of Oil and Gas said in a public notice that the proposed unit covers some 1,397 acres within four State of Alaska oil and gas leases, some 4,828 acres within two Alaska Mental Health Trust leases and some 1,275 acres within one State of Alaska Cook Inlet Region Inc. lease.

Buccaneer holds 100 percent working interest in the leases.

The application, noticed by the division Dec. 10, was submitted in July. Typically the division has questions about a proposal and only issues a public notice asking for comments when an application is deemed complete.

Without unitization the state leases would have expired in September; the Mental Health Trust and CIRI leases expire in 2016. The Kenai Loop No. 1 well is on one of the Mental Health Trust leases and that lease is held by production.

Buccaneer said in its application that it had spent more than $48 million exploring and developing the proposed unit area.

Production facilities for the Kenai Loop No. 1 well were completed in January.

Buccaneer said in its initial plan of development that it would drill one to three additional wells in the first year of the unit, beginning with Kenai Loop No. 4. That well was spud in September.

Buccaneer also said it would propose an initial participating area for the Tyonek formation, encompassing the known producing interval in the Kenai Loop No. 1.

For the second through fifth years of the five-year unit plan, Buccaneer said it would drill one to three additional wells per year in the Kenai Loop unit.

Buccaneer told the division that the Kenai Loop No. 1 discovery well, drilled in April 2011, was placed according to available but limited 2-D seismic data.

Logs from that well “indicate that multiple gas zones in the Beluga and Upper Tyonek formations were intersected while drilling,” Buccaneer said, and estimated total gross pay of 645 feet. Initial testing of the Kenai Loop No. 1 flowed gas to the surface at more than 10 million cubic feet per day from two zones in the Upper Tyonek, some 60 feet of net pay out of 87 feet of gross pay in the two zones. The company said that additional zones remained untested, as the rig needed to be released back to Marathon June 1, 2011.

Buccaneer began sustained production Jan. 14 and in July was producing at 5 million cubic feet per day. In October the company reported that production had been increased to 6 million cubic feet per day.

A second well, Kenai Loop No. 3, was drilled in August 2011 but was a dry hole.

Last April Buccaneer completed a 3-D seismic program covering 23.4 square miles, allowing the company “to fully image” all acreage in the proposed unit.

Comments on the application are due to the division Jan. 14. Non-confidential portions of the application are available on the division’s website at www.dog.dnr.state.ak.us/Units/Units.htm#recentpubnot.