|
Caelus buying Smith Bay tracts from NordAq; plans winter drilling
Caelus Energy Alaska is expanding its North Slope operations to the west, acquiring 26 tracts in Smith Bay from NordAq, and has announced plans to drill the Tulimaniq leases this winter. Pat Foley, senior vice president of the company’s Alaska operations, told a joint meeting of the House and Senate Resources committees June 17 that he’d been locked in a room for the past two days with representatives of NordAq, Doyon Drilling, Cruz Construction and CIRI, finalizing the deal, expected to close June 18 and be recorded June 19. He said NordAq, which had planned to drill this past winter, wasn’t able to carry out those plans.
A June 17 press release from Caelus, released after the June 17 committee hearing, said the company is acquiring a 75 percent working interest in NordAq Energy Inc.’s Tulimaniq leases in Smith Bay, some 150 miles west of Prudhoe Bay.
The area is “well documented for its extensive hydrocarbon potential,” the company said. Slightly more than 117,000 acres (gross) and 26 leases were assigned to Caelus Energy Alaska Smith Bay LLC, a wholly owned subsidiary of Caelus, the company said.
Caelus, as operator, will lead the exploration program this winter.
Foley, testifying at a committee hearing on the state’s tax credits, told legislators that without the state’s oil tax credits the company would not be planning to drill wells at Tulimaniq.
Caelus has recently sanctioned its onshore Nuna oil development at the North Slope Oooguruk field which it operates and acquired 323,000 North Slope acres in the state’s fall lease sales.
Defining Smith Bay “The NordAq team has done a great job of defining the geologic potential at Smith Bay,” Caelus President and CEO James Musselman said in the company’s release. “Our team is ready to take the helm and get to work on exploring and appraising the Tulimaniq play. What we see in this region has us all pretty motivated.”
Musselman said Caelus’ winter exploration planning is under way, and said the company looks forward to continuing its strong working relationships with North Slope communities, the North Slope Borough and state and federal regulators to ensure a smooth transition.
“We’re also extremely fortunate to be supported in our efforts by North Slope veterans Doyon Drilling and Cruz Construction. The winter exploration operation will require upwards of 400 personnel to drill 1-2 exploration/appraisal wells - it’s a large-scale program,” Musselman said.
He also said the state’s oil fiscal system, including exploration credits, is what attracted Caelus to Alaska in 2013 and said it has been a “key component in the company’s recent business decisions.”
NordAq comments NordAq Energy Chief Executive Officer Paul Devine said his company is encouraged by Caelus’ commitment to Alaska and the experience Caelus brings to the project.
“NordAq is very grateful to have a partner of their caliber to operate on our behalf, and commit the energy and capital to a significant play like Tulimaniq.”
“We are also very grateful to CIRI Energy, NordAq’s secured lender, for the role it played in facilitating this important transaction,” Devine said. Where is Tulimaniq? Smith Bay is roughly 150 miles from Kuparuk River unit Drill Site 2P and some 70 miles from Barrow. NordAq had proposed drilling from a single ice island in some 1 to 4 feet of water near the mouth of the Ikpikpuk River, with a 64-man drilling camp and a 19-man camp at the staging pad, either Oliktok Point or DS-2P Pad. NordAq proposed two access routes, with route selection to depend on weather and sea ice conditions at the time of project startup in December 2014. The priority route was along Harrison Bay and the Kogru River, maximizing the use of sea and lake ice and allowing smoother travel; the staging for this route would have been just offshore from Oliktok Point.
The alternate route would have begun from a staging area at DS-2P or an adjacent ice pad, cross the Colville River at Ocean Point and proceed along the historical travel route before heading north to the Tulimaniq drill site.
- Kristen Nelson
| 