Headed to the Beaufort

Armstrong Resources tells state it will drill as many as three wells from ice pads on the Beaufort Sea south of Thetis Island next winter

Kristen Nelson

PNA Editor-in-Chief

A new player, independent Armstrong Resources LLC of Denver, Colo., has begun permitting discussions with the state to drill as many as three wells in the Beaufort Sea next winter.

The Armstrong oil and gas leases are offshore north and west of the Kuparuk River unit.

The company plans to drill on its acreage south and west of Thetis Island. Access will be by sea ice roads from the Oliktok Point dock.

Plans are to plug and abandon all wells prior to March 15, based on a Jan. 20 spud date at the first location.

Ice road construction would begin at the Oliktok Point dock, heading southwest along the shore for approximately three miles and then turn due west three miles to Location No. 3, continue northwest two miles to Location No. 1 and straight north to Location No. 2.

The company said ice roads and drill pads will be built up using seawater until grounded ice is obtained.

Approximately 10 miles of ice roads will be constructed beginning as early as Dec. 1, depending on the weather. All sea ice operations would be complete by March 22.

Leases acquired last year

Exxon Corp. worked this area in the early 1990s, unitizing leases previously held by Amerada Hess Corp. In its proposal for a Thetis Island unit Exxon told the state the unit “encompasses several prospective horizons throughout the proposed area.”

Exxon drilled from Thetis Island and said it planned to test “several objectives from the Cretaceous through Triassic-Ivishak.”

Exxon’s plan of exploration for the unit included as many as three wells and a seismic program. Exxon drilled an 8,460-foot vertical exploration well, the Thetis Island No., which the Division of Oil and Gas certified as capable of producing in paying quantities in February 1995. The Thetis Island unit terminated in May 1995.

In August 1996, Exxon assigned its interest in the lease containing the well to Anadarko Petroleum Corp., which still holds the lease.

Armstrong’s Location No. 1 is in the southwest quarter of section 7, township 13 north, range 8 east, Umiat Meridian; No. 2 is in the northwest quarter of section 31-T14N-R8E, UM; No. 3 is in the northwest quarter of section 16-T13N-R8E, UM.

Second independent to drill Beaufort

EnCana Corp., formerly Alberta Energy Corp. and AEC Oil & Gas (USA) Inc., plans to explore the McCovey prospect in the central Beaufort during the 2002-2003 winter season. The McCovey unit includes three federal and four state of Alaska leases and is approximately five miles northeast of Reindeer Island and 12 miles east of the Northstar field. BP Exploration (Alaska) Inc. has also filed a unit plan of exploration to drill an exploration well, the Sak River No. 1, in the Sakonowyak River exploration unit on the North Slope in the vicinity of Gwydyr Bay for independent Alaska Venture Capital Group LLC.

The surface location will be on onshore in a lease owned by BP and Phillips Alaska Inc., which is not in the Sakonowyak River unit. The bottomhole location will be offshore in a unit lease owned by Kansas-based AVCG.

The well was supposed to be drilled this past season but has been rescheduled by BP for next season.

Focus on Exploration

Kristen Nelson, PNA editor-in-chief

Kerr said the company’s focus is on finding oil.

When a prospect reaches production, he said, Armstrong has historically brought in somebody to operate. El Paso Production and Anadarko have both operated for Armstrong.

“We don’t operate wells. As far as the drilling per se, that’s something we have chosen to date not to do. We are an oil and gas company that’s heavily driven by science,” Kerr said.

He said Armstrong has a lot of ex-Exxon people on staff, predominately in geophysics and geology.

The company was drawn to Alaska by the oil basins in the state: “The best place in the world to look for a big oil accumulation is next to another big oil accumulation,” Kerr said. And, he said, Armstrong has people on its staff who have experience in Alaska.

Kerr wouldn’t speculate after the lease sale in October on when the company would move ahead with its leases, but he said the company knew what it was going to do.

“We’re going to go out here and we’re going to drill a well.”

Kerr said Armstrong would probably rely for actual drilling on companies in Alaska with drilling expertise — companies like Phillips Alaska Inc. and BP Exploration (Alaska) Inc.

“Our expertise, I would say, is in finding oil and gas. And that’s what we focus on. We do not focus on drilling of the wells…

“We would hire somebody to come in and drill the wells for us,” he said.

Phillips and BP have experience and “knowledge of how to do things right on the North Slope … it would only make sense to utilize that expertise.”