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Texas firm races to complete Glennallen gas well Rutter and Wilbanks Corp.’s winter drilling operation survives warm spell — just the latest challenge at Copper River basin wildcat Steve Sutherlin Petroleum News Associate Editor
In early March thaw in Alaska’s Copper River basin has pitted Midland, Texas-based Rutter and Wilbanks Corp. in a race against time, to complete its Rutter and Wilbanks Ahtna No. 119 gas exploration well before the winter drilling season expires.
By mid-month, colder temperatures returned to the area where the well is located, boosting confidence that the wintertime drilling operation can continue long enough to hit the well’s target depth of 7,500 feet, Bill Rutter III said March 16 in remarks to a luncheon meeting of the Alaska Support Industry Alliance, at the Captain Cook Hotel in Anchorage.
Rutter said he had been in Alaska three weeks to oversee his company’s investment and to meet with industry and government officials. Despite challenges, the company remains bullish on Alaska and on the Copper River basin.
“The reserves in Alaska speak for themselves,” he said.
Challenges at the wildcat well have been the norm so far. Rutter said the bit had resumed turning at the well after a surprise development caused the company to pause and reconfigure its approach to the well shortly after spudding.
The company started drilling the well in February, but encountered high geologic pressures at a depth of 1,200 feet, earlier than the company expected it would, company officials told Petroleum News early in March. Rutter said a sidetrack well had tipped the company to expect high pressures, but not at depths as shallow as 1,200 feet. Casing set at well The company set casing at the well, because it hit high pressure earlier than it expected, Bill Rutter Jr. told Petroleum News March 5.
“Geologically it’s good, but from an engineering standpoint it complicates our lives,” the elder Rutter said.
At a proposed 7,500 feet, the well, which is located approximately 12 miles west of the town of Glennallen, will be the deepest ever drilled in the region. The company expects to complete the well before the end of March — before the ground around the well thaws and turns to its usual summertime state of swampy tundra bog.
The company is no stranger to tight timelines on the project. Rutter and Wilbanks took charge in 2004 when the former operator, Forest Oil, decided it no longer wanted to operate the well.
Forest Oil had a change of heart, frontier wise,” Rutter III said. “We stepped in and said we’d do it.”
Rutter and Wilbanks took the ball and ran hard. It scrambled to obtain new seismic data during the winter 2004 seismic season, then to identify a drilling prospect and finally to obtain necessary permits in time to spud the well in early 2005.
The company hired Fairweather Inc. of Anchorage to help it navigate the regulatory maze, and to oversee the well, the company said. Well on Ahtna lands Forest Oil and Anschutz Exploration are partners in the prospect, on lands owned by Native regional corporation Ahtna Inc. Anschutz bid a $1.42 million work commitment for the five-year exploration license granted by the state in August 2000.
Rutter and Wilbanks hopes a major gas discovery will stimulate the North Slope spur line concept and convince the state to build a section of line from Glennallen to Palmer, to get the company’s gas into the Enstar system to feed consumers in the Cook Inlet area. If the company finds gas, it will be considered stranded, so the state’s idea to build a gas line from the area to Alaska’s largest market seemed almost like divine intervention, Rutter said.
“It’s an example of perfect synergy,” he said.
Rutter said a $300 million 24-inch-diameter high-pressure buried gas line proposed for the route by Harold Heinze, chief executive officer of the Alaska Natural Gas Development Authority, is larger than needed to carry Copper River basin gas to the Cook Inlet area. The 24-inch line is needed for liquids-rich North Slope gas, Rutter said, but the line is overkill for the dry gas his company expects to find.
The excess capacity of the pipe, however, could serve a useful function as dry gas storage unit, until North Slope gas flows, Rutter said.
“The line could be thought of as a storage facility,” he said. “Fill it up with dry gas and pressure it up.” Gas now asset Eleven wells have been drilled in Alaska’s undeveloped Copper River basin, but there have been none since Copper Valley Machine Works drilled the Alicia No. 1 well in 1983.
The Moose Creek No. 1 well had gas shows but it was plugged because in 1963 natural gas was considered a liability, not an asset, Rutter said. Moose Creek No. 1 was famous for being cantankerous, and gave its drillers problems from the outset, he said. It prepared the company somewhat for the challenges of drilling the Copper River basin.
Today, gas is more exciting, and the company hopes to find 100 billion cubic feet or more to justify building a pipeline to more populous areas, Rutter said.
If the field proves considerably smaller, the company is protected from marginal well danger to some degree in that it anticipates it will have a local market for the gas, supplying Glennallen and the Copper Valley Electric Association Inc., a Glennallen-based rural electric cooperative with 3,600 customers in the Copper River basin and Valdez.
“Glennallen is not very big, but they cover quite a bit of area for electric generation, and they have very high rates,” Rutter told Petroleum News. “There are a lot of people watching our progress with anticipation.”
Rutter said the local market could be filled if the company makes a find of 10 bcf or so.
The company is working with Ray Latchem, one of its working interest partners, to plan gas service for the Glennallen area, Rutter said. Latchem has experience with small rural gas distribution systems, having been instrumental in bringing local gas service to Deadhorse on the North Slope, and to the city of Fairbanks, which is served by trucked-in LNG from Cook Inlet. Daunting layers of regulation Rutter said the company encountered daunting layers of regulation in Alaska, beyond what his home state requires, but he understands why Alaskans want to protect the natural wonders of the state. Exploration in Alaska could be boosted if the state can find ways to streamline, without endangering safety or the environment, he said.
The state could further stimulate investment by encouraging entities like the Alaska Industrial Development and Export Authority to be very creative in structuring deals to stimulate exploration and development, he said.
Alaska is an expensive place to operate, but as more independents move into the state, more service companies will follow, Rutter said, adding that the competition and the resulting lower prices will make the state more attractive to his company and others — ultimately benefiting the industry.
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