CIE to prep Kroto Creek gas prospect

The site is in Susitna basin, where company holds exploration licenses covering vast acreage; second Osprey gas well workover done

Wesley Loy

For Petroleum News

Before the spring thaw, Cook Inlet Energy LLC hopes to lay the groundwork for possible natural gas exploratory drilling in the Susitna basin.

The Anchorage-based oil and gas producer on Feb. 7 submitted a plan of operations to the Alaska Department of Natural Resources for work at what the company calls the Kroto Creek prospect.

The prospect is in the Susitna basin, a huge and lightly explored area north of Anchorage and west of the Willow community.

Cook Inlet Energy is proposing work to access the prospect. The job includes building a groomed snow trail and a compacted earth drilling pad. Reaching the site also involves crossing the Susitna River via an ice bridge.

To meet its schedule, the company says it must proceed with the work during March, before the Susitna thaws.

Winter access

The company identified the target structure using previously acquired seismic data, the plan of operations says.

The proposed Kroto Creek pad will be located about 12 miles northwest of Willow Creek Landing, a public access point on the Susitna River.

Across the Susitna, a groomed multiple use winter trail running west to the Yentna River will provide access to Kroto Creek and other Cook Inlet Energy prospects including Moose Creek and Big Bend, the plan of operations says.

Cruz Construction will build a spur trail north to the Kroto Creek prospect, the plan says. There, Cruz will clear the vegetative mat for a pad measuring 400 feet by 400 feet, covering about 3.6 acres.

“During or immediately after construction of the pad, a contractor will drill a water well and drive a conductor in the pad area,” the plan of operations says.

A conductor is a length of large surface pipe installed before drilling an oil and gas well.

Exploration licenses

DNR’s exploration licensing program complements its regular oil and gas leasing program. The idea is to encourage exploration in frontier basins with relatively low or unknown hydrocarbon potential, typically Interior land far removed from the state’s existing oil and gas fields.

Cook Inlet Energy holds three Susitna licenses, giving the company exclusive exploration rights over about 580,147 acres of state land.

The Kroto Creek prospect is located on what’s known as Susitna basin exploration license No. 2.

Cook Inlet Energy executives have spoken highly of the Susitna basin’s gas prospects.

Cook Inlet Energy is a relatively new company and a subsidiary of Tennessee-based Miller Energy Resources Inc. Miller itself is a small company, but is listed on the New York Stock Exchange.

Cook Inlet Energy operates a number of properties on the inlet’s west side, including the West McArthur River oil field and the offshore Redoubt unit and Osprey platform.

The company is pursuing a program of reviving wells on the Osprey platform, which was shut-in when Cook Inlet Energy and Miller acquired it in a late 2009 bankruptcy sale.

On Feb. 12, Miller announced completion of a successful workover on a second gas well on Osprey.

Cook Inlet Energy has been scrambling to establish its own gas supply to power field operations and avoid costs of more than $450,000 per month to acquire fuel gas from third-party suppliers.

The workover of the RU-3 well involved “a complex fishing job to remove materials and equipment left in the wellbore” by a previous operator, a Miller press release said.

In January, Cook Inlet Energy put the RU-4 gas well into production after a recompletion.

The company expects to not only produce enough gas for its own needs, but to sell some gas as well.

Miller Energy also announced, in a Feb. 15 press release, that it had completed a public offering of preferred stock, raising gross proceeds of $14.3 million.

Net proceeds to the company will be used for “general corporate purposes,” Miller said.