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Alaska shallow gas pioneer DaveLappi maintains quest; Unocal partner in Homer shallow gas leases State may hold 1,000 trillion cubic feet of shallow and coal seam gas, Dave Lappi says, equivalent to 30 Prudhoe Bays Steve Sutherlin PNA Managing Editor
Lapp Resources Inc. of Anchorage is 100 percent owned by David W. Lappi, who has been a leading voice in the effort to exploit Alaska’s shallow gas potential. The company, which was incorporated in 1991, is pursuing oil and gas exploration projects in the Matanuska Valley, Homer and Delta Junction areas.
Lappi, a long-time Alaskan, earned a bachelor of science in geology from the University of Alaska Fairbanks and a postgraduate diploma in geoscience from Macquarie University in Sydney, Australia. After working with a variety of resource firms in Australia, Lappi returned to Alaska and in the early 1990s began seeking joint venture partners to explore for shallow gas in the Cook Inlet basin. He was instrumental in the establishment of Alaska’s shallow gas leasing program and he assisted the Alaska Oil and Gas Conservation Commission to develop drilling requirements for coalbed methane wells, which can be drilled with smaller rigs and with different techniques than conventional gas wells.
Lappi sees an important role for shallow gas in Alaska’s future, and is endeavoring to make Lapp Resources an important part of shallow gas industry.
“The goal is to become a producer,” he told PNA. “Hopefully we can do that with coalbed methane.”
Lappi said the company is focusing its exploration efforts on the road system, where costs are lower, but as the technology emerges to drill economically in Alaska, he believes shallow gas will greatly benefit rural areas that can’t be practically added to the state’s natural gas distribution network. Currently, many bush communities must bring in heating oil and other fuels by aircraft or barge.
Lappi has been working on technology to identify shallow gas prospects by aerial mapping so that rural communities in Alaska could find gas sources for local use. The state’s shallow gas leasing program is targeted for such use, with royalties set at 6.25 percent if gas is used in the immediate area and at the standard 12.5 percent otherwise.
While private companies are providing the technology, Lappi sees a need for government involvement in exploring for gas to serve these small communities.
“It’s difficult for private companies to take the risk for such small markets,” he said.
Drilling in the Matanuska Valley Lappi obtained conventional state oil and gas leases in the Houston area, and in 1997 Lapp Resources assigned its working interest in the acreage to an Australian company. In early 1998, with Lappi as project manager, the Australian company drilled Alaska’s first coalbed gas production wells into coal seams on the up-thrown block of the major Castle Mountain fault.
The three Houston wells pioneered a number of drilling techniques new to the state, including the use of compressed air instead of mud as the drilling fluid. It was the first time the Alaska Oil and Gas Conservation Commission approved the air drilling technique, also called under-balanced drilling, Lappi said.
On the 2,030-foot Houston No. 3 well, the company used a reverse-driven downhole progressing cavity pump mounted on a packer in a tubingless completion to transfer 500 barrels per day of water from the producing zones to a thick salt-water-bearing disposal sandstone at the bottom of the well, without first producing that water to the surface, Lappi said — another first for Alaska. The well was perforated and placed on a long-term production test from five seams.
In 2000, the Australian company lost its interest in the acreage through a lack of development activity, Lappi said. To continue the quest Lappi turned to Evergreen Resources Inc. of Denver, a successful coalbed natural gas developer with projects in Colorado, Chile, the Falkland Islands and Great Britain. Evergreen has 800 shallow gas wells producing 125 million cubic feet. per day, Lappi said.
Evergreen bought the Unocal Alaska and Ocean Energy Inc. coalbed and conventional gas prospect at Pioneer in May 2001 and has applied for additional shallow natural gas leases in the Matanuska Valley area. It is currently gearing up to drill eight wells in the area beginning in late 2002, Lappi said.
Shallow gas for Homer Lapp Resources applied for eight leases in the Homer area in February 2000, under the state’s new shallow natural gas leasing program. The leases have not yet been granted due to a backlog of lease applications and a shortage of staff at the state Division of Oil and Gas to deal with shallow gas, Lappi said. Once the leases are awarded Lappi will work with Unocal Alaska as a farm-in partner.
The Homer area is not on the gas pipeline system and the area’s 10,000 residents are not considered to be a large enough market to extend the existing gas pipeline system from Kenai, Lappi said. Local residents use a variety of fuels including beach coal, wood, propane, oil and electricity for heat.
“If we are successful in finding producible gas in shallow wells, it will provide a cleaner low-cost energy source for the community,” Lappi said.
Lappi said that if a pipeline were extended to Homer, it would actually benefit the project by providing access to a larger market for the Homer gas.
Delta Natural Gas Project Lapp Resources Inc. has farmed into the separate application areas of several individuals in the area to form the Delta Natural Gas Project, Lappi said. Combining acreage applications into a single contiguous lease block allows the orderly exploration and development of the conventional and coalbed natural gas thought to exist there.
Evergreen Resources has farmed into the Delta project and, as operator of the project, is expected to begin exploration and production testing in 2002 with two stratigraphic holes to identify the resource, Lappi said.
Access to the Fairbanks market may be sped by the existence of an abandoned military fuel pipeline from Delta Junction to Fairbanks, Lappi said. The military has allowed the legal right-of-way with various owners to lapse, but the physical right-of-way still exists and Lappi sees it as the best route to cover the 100-mile stretch to Fairbanks.
The potential benefits for Fairbanks are great, Lappi said, because its electricity is generated by fuel oil and coal, while building and process heat is supplied almost exclusively by heating oil at great cost.
The benefits of shallow gas loom large for the state as a whole as well, he said. The state contains potentially 1,000 trillion cubic feet of shallow and coal seam gas, Lappi said, equivalent to 30 Prudhoe Bays.
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