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Commission approves new South Ninilchik well location Unocal and Marathon disagreed last year on Albright gas exploration well; Unocal has changed plans, will drill Pearl well south of Albright Kristen Nelson PNA Editor-in-Chief
Unocal Alaska and Marathon Oil Co. may be partners in the Kenai Kachemak Pipeline, but they are still working out gas reserves ownership at South Ninilchik, one of the fields where the companies are proving up gas that will go into the new pipeline.
Last year the companies disagreed on the location of Unocal’s proposed Albright No. 1 well at South Ninilchik. The Alaska Oil and Gas Conservation Commission approved the Albright well location over Marathon’s objections and subject to commission approval of testing and subsequent commission action to make sure any production from the Albright well wouldn’t drain gas from adjacent leases.
The commission has to approve, as an exception to its regulations, any gas well closer than 1,500 feet to a lease boundary where lease owners and landowners change.
Jan. 15 the commission approved a different location for an exploratory well at the South Ninilchik drilling pad. The new location, for the Pearl No. 1 well, is also within 1,500 feet of a property line. The well will be a straight hole from a surface location 1,970.4 feet from the west line and 1,569.5 feet from the north line of section 24, township 1 south, range 14 west, Seward Meridian.
Delays, ownership dilution concerns Unocal told the commission in its request for the Pearl well spacing exception that Marathon’s objection to the Albright location and correlative rights issues at the Albright well could have led to additional delays and the threat of an adverse commission ruling which would dilute Unocal’s working interest in the South Ninilchik prospect.
The commission said granting a spacing exception to allow drilling and testing of the Pearl No. 1 exploration well “will not result in waste or jeopardize the correlative rights of adjoining or nearby owners.” The spacing exception is reasonable “to provide Unocal with a timely opportunity to establish the volume of gas reserves it owns in the general area.”
The commission also said that before regular production is permitted from the Pearl No. 1 well, the commission “must take such action as will offset any advantage which the person securing the exception may have over the other producers by reason of the drilling of the well as an exception, and so that draining from development units to the tract with respect to which exception is granted will be prevented or minimized.”
The well must be logged and tested, and Unocal must obtain the commission’s approval before beginning a production testing program for the well. No regular production is authorized.
Pearl a better location for Unocal Unocal had approval to drill the Albright No. 1 from 2,277 feet from the west line and 550 feet from the north line of 24-1S-14W, SM, but told the commission the Pearl No. 1 is better situated to meet the needs of its exploration program. Unocal said permitting setbacks for the Albright site put its contractual obligations to Enstar at risk.
The commission held a hearing on the Albright location after Marathon protested. Kevin Tabler, Unocal Alaska’s manager of land and government affairs, told the commission at the June 28 hearing that Unocal had acquired new two-dimensional seismic data over the area in May. The companies disagreed over the location of a fault, and Tabler said the 2-D seismic would help identify the fault’s location.
Unocal told the commission in the Pearl request that 2-D seismic interpretations indicated there was no geologic risk from moving the well to south of the Albright location.
Marathon has extensive acreage in the South Ninilchik area and completed the Grassim Oskolkoff No. 1 in July 2001 to the northwest of Unocal’s locations. The Grassim Oskolkoff is classified by the AOGCC as having found gas. Marathon permitted the Grassim Oskolkoff No. 2 in September.
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