THE EXPLORERS 2005: The clock ticks for Holitna gas exploration

DOG expects to make a final finding available in November; comments were due by Sept. 30

Alan Bailey

Petroleum News

Holitna Energy and its Native corporation partner, TKC (the village corporation for the Kuskokwim Delta), have been planning to drill for gas in the Holitna basin for several years. Back in 2003 the company filed with the Alaska Division of Oil and Gas for four shallow gas leases, covering 19,840 acres of state land in the basin. Then, following the Alaska coalbed methane debacle and the cancellation of the state’s shallow gas leasing program in 2004, Holitna Energy applied for a state exploration license.

“We’ve got new information that there’s a good possibility of finding conventional gas (in the basin), so we think there’s a better chance,” Holitna Energy’s President and founder Phil St. George said at that time. “We’ve got some more data on the basin and I don’t want to say any more about that.”

The Alaska Department of Natural Resources issued a preliminary finding for the proposed Holitna basin gas-only exploration license in August 2005. The 26,880-acre license would encompass an area near the confluence of the Holitna River and Basket Creek, approximately 10 miles southeast of Sleetmute, and would allow the licensee to explore for conventional and unconventional gas resources. Public comments on the finding were due by Sept. 30 and DNR will likely issue a final finding in November.

The Holitna basin underlies the Holitna Lowlands, a flat area of tundra in the Interior of southwestern Alaska, between the Alaska Range to the southeast and the Kuskokwim Mountains to the northwest. Little is known about the geology of the basin, although gravity data indicates the existence of 4,600 meters of Cenozoic strata under the lowlands. Cenozoic rocks in a similar setting to the northeast along the nearby Farewell fault zone appear in surface outcrop and suggest that the basin contains Tertiary sandstone, conglomerate, mudstone and coal. Older rocks with petroleum potential outcrop around the perimeter of the basin and may also lie under the basin. The geological setting supports the possible presence of both thermogenic and biogenic gas but no one has drilled any wells in the area.

The relatively small size of the basin and its remote Interior location make the economics of oil or gas development in the area challenging. However, advanced plans for the development of a world-class gold mine at Donlin Creek about 50 miles northwest of the basin have encouraged Holitna Energy to explore for gas at Holitna. The mine will require large quantities of electrical power — natural gas could provide the cheapest means of generating electricity. And, if it’s possible to establish natural gas-fueled electricity supplies for Donlin Creek, it might be possible to use the same power plant to supply relatively cheap electricity for village communities in the region.