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Escopeta, Altus to drill North Alexander prospect
Kay Cashman Petroleum News Publisher & Managing Editor
Houston-based Escopeta Oil & Gas has attracted a new player to Alaska’s upper Cook Inlet basin. Altus Explorations (OTCBB: ATUX), an independent oil and gas company headquartered in Olive Branch, Miss., has acquired 100 percent working interest in Escopeta’s North Alexander prospect and is moving forward with plans to drill a natural gas well in January or February, company officials told Petroleum News in mid-July.
Escopeta President Danny Davis and Altus Explorations President Milton Cox said Anchorage-based Fairweather will handle permitting and drilling operations.
As of July 17 no rig had been selected for the North Alexander project, but permit applications were expected to be filed starting in August.
The 22,882-acre prospect lies onshore on the northwestern edge of the Cook Inlet basin along the western margin of the Susitna River drainage, just southeast of the Castle Mountain Fault. The prospect is six to 10 miles north of the Stump Lake gas field; and six to nine miles east of the Lewis River gas field, both of which have established gas production.
The well will target the Beluga and Tyonek formations, which Altus said are made up of sandstones, siltstones and pebble conglomerates. A secondary objective is the shallower Sterling sandstones. Almost 400 billion cubic feet of gas The three objectives represent the major gas producing zones in the Cook Inlet basin and nearby gas fields, the companies said.
Estimated recoverable natural gas reserves from the first two objectives are expected to total 398.5 billion cubic feet.
Escopeta acquired three seismic lines over the prospective area, which were reprocessed and interpreted, a procedure that included Energy Absorption Analysis, Davis said. Structural interpretations on horizons within the Beluga and Tyonek formations were constructed.
In an informational statement about the prospect Altus said “three distinct structural closures were identified. Two closures separated by the north-south trending Alexander fault represent the major prospect or North Alexander. This prospect is a northwest-southeast faulted anticlinal structure plunging to the southeast and faulted by the Alexander fault. The third closure, East Alexander (see map on page 14), is also a northwest-southeast treading anticline, exhibiting four-way closure and lying to the northeast of the East Alexander fault.”
The North Alexander prospect consists of three leases totaling 17,122 acres that were acquired by Escopeta in state of Alaska lease sales in 1999 and 2000.
After completing its analysis, Escopeta picked up the third closure encompassing 5,760 acres (see smaller block to east on map on this page).
The three closures are “inter-related,” Davis told Petroleum News July 21. “You prove one, you prove the other. It looks like it could be a pretty long structure.”
The company refers to all three closures as the North Alexander prospect, Davis said. Altus looking at other prospects Although it is not an operator, Altus has working interests in oil and gas leases in Texas, Kansas and Oklahoma, and has recently partnered with Escopeta in two other Lower 48 oil and gas ventures.
Cox said Altus was looking at investing in other Cook Inlet prospects.
“In its recent report on Cook Inlet, DOE (U.S. Department of Energy) estimated there are 17 tcf of undiscovered natural gas in the Cook Inlet basin. Undiscovered gas. DOE said as of Jan. 1, 2004, the remaining discovered reserves were at 1.8 tcf of gas. Those reserves will last, will meet demand, until 2012. That’s if Agrium shuts down its fertilizer plant in 2005 because of inadequate supplies and the Kenai LNG plant stops exporting in 2009 when its export license expires. Otherwise, DOE predicted shortages could occur as early as 2009,” Davis said.
What Davis likes about Cook Inlet today is that a new gas field like Unocal’s Happy Valley project “can be connected to the market with a six-mile pipeline and get $4.84 for gas. The old contracts were at $1.50. The price of natural gas has changed the economics of drilling gas wells in the Cook Inlet,” he said.
“Cook Inlet, with a lot of infrastructure in place, is a bargain, compared to the Gulf of Mexico, where companies are drilling in 6,000 feet of water and risking a lot more money to find smaller reserves than they would be in the inlet.”
The same can be said about the North Slope, Davis said, where the “cost of doing business is significantly higher” than in the Cook Inlet basin.
NOTE: In 2002 Escopeta transferred 100 percent of its working interest in its Cook Inlet leases to BBI Inc., a holding company owned equally by Escopeta Oil & Gas President Danny Davis and Lawrence Berry of Berry Contracting Inc. of Texas. At that time, BBI was the third-largest leaseholder in the inlet with 120,000 acres. It has since added to its acreage base. An Escopeta team under the direction of Davis handles the geological, geophysical and marketing work for the holding company’s Cook Inlet acreage.
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