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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2018

Vol. 23, No.21 Week of May 27, 2018

The Explorers 2018: Furie still favoring development at Kitchen Lights

Company is evaluating whether to drill the Kitchen Light Unit No. 6 exploration well into the deep Jurassic this summer

Eric Lidji

for Petroleum News

The Kitchen Lights unit is the largest in the Cook Inlet basin, and its size requires a combination of development at producing wells and exploration in other corners.

The balance of those activities has changed from year to year, as Furie Operating Alaska LLC works within internal resources and within regulatory and market constraints.

As of early April 2018, Furie was planning to use the coming year to complete its Kitchen Lights Unit No. A1 well and workover its Kitchen Lights Unit No. 3 well. The company was also evaluating plans for a Kitchen Lights Unit No. 6 exploration well.

Those plans are similar to previous plans from the company. By the time The Explorers went to print, it was unclear whether the new plan would resolve concerns from the state.

Alaska Department of Natural Resources Commissioner Andrew T. Mack placed Kitchen Lights in default in late December 2017, citing an ongoing failure to meet work commitments going back to 2015. A default can lead to termination or contraction if left uncured. In this case, the cure means the KLU No. A1 well and drilling a second well.

Even with the default, the state approved the newest plan of development for Kitchen Lights. In the plan, running through Jan. 4, 2019, Furie committed to completing KLU No. A1 and to completing one of three projects: drilling one new development well from the Julius R. platform, drilling the KLU No. 6-Deep Jurassic exploration well or deepening the existing KLU No. 4 well. Division of Oil and Gas Director Chantal Walsh approved the plan but reiterated concerns about missed worked commitments in the past and required the company to file bi-annual work commitment updates throughout 2018.

Furie challenged some the state assertions, noting that it drilled three wells in 2016 and only failed to drill in 2017 because the state withheld tax credits owed to companies. In its letter, Furie also described a strategy at Kitchen Lights where the results of its drilling activities from one year have directly influenced its work program for the following year, such as its decision to focus on development work after its successful KLU No. 3 well.

KLU-6

In recent years, those activities have favored development over exploration.

Given the size of Kitchen Lights, the state has demanded exploration to justify holding acreage. The 83,394-acre Kitchen Lights unit brought together three smaller prospects in the water of Cook Inlet and divided the unit into four exploration blocks: Corsair, North Central and Southwest. All development to date has occurred in the Corsair block.

Early plans of exploration for Kitchen Lights required Furie to drill at least one well in each block. Furie drilled KLU No. 1 in 2011 and 2012, KLU No. 2 and KLU No. 2-A in 2012 and KLU No. 3 in 2013. All four penetrations were in the Corsair block. Over the end of the 2013 season and the beginning of the 2014 season, Furie drilled KLU No. 4 in the North block. At the end 2014, the company drilled KLU No. 5 in the Central block.

Activity then shifted toward development, leaving the Southwest block unexplored. The company installed its Julius R. platform and its subsea pipeline and completed its onshore production facility in 2015. In 2016, the company drilled the KLU No. A2 well, completed the KLU No. A2 sidetrack and started drilling the current KLU No. A1 well.

As it completed those activities, Furie also proposed an exploration program. A plan of exploration submitted in early 2016 called for drilling KLU No. 9 and KLU No. 12 in the 2017 season, KLU Osprey and KLU Deep Jurassic in 2018, KLU No. 10 and KLU No. 11 wells in 2019, KLU No. 6 and KLU No. 8 in 2020 and KLU No. 7 in 2021. The locations of those well moved from the northern end of the unit toward the southern end of the unit and included proposed depths ranging from 7,230 feet to some 24,000 feet.

The current exploration plans evolved from an amendment that Furie proposed to its plan of development in mid-2017. The amendment created the current commitment to drill a new development well at the unit and either deepen the existing KLU No. 4 well in the North block or drill the KLU No. 6-Deep Jurassic exploration well in the Corsair block.

The company drilled and completed KLU No. 4 in 2013 and 2014 and said at the time that the well “encountered potential oil and gas reserves.” The company proposed deepening the well to target the Sunfish Channel in a plan of development in late 2015.

Earlier in 2017, Senior Vice President Bruce Webb said that Furie planned to drill the proposed KLU No.6 Deep Jurassic well to a depth of more than 20,000 feet using the Randolph Yost jack-up drilling rig, after the rig completed work on the KLU No. A1 well.

The plan of development called for completing all the work commitments by the end of November 2017, which would roughly equate with the close of the open water season.

The company didn’t follow through on those plans in 2017, citing the tax credit issue.

In an email to Petroleum News in March 2018, Webb wrote that the company was still evaluating its plans for the KLU No. 6 exploration well. The summer well would use the Randolph Yost jack-up to target the deep Jurassic. The well would be in the Southwest block, which would resolve the outstanding commitment.

Before that, though, the company plans to complete the KLU No. A1 well to meet the terms of a gas supply agreement with Enstar Natural Gas Co. and to workover the KLU No. 3 well to increase gas production by adding perforations to the Beluga formation.






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