Devon says no deal yet on Cosmopolitan unit

ConocoPhillips to shoot seismic in the summer of 2005; ‘if that turns out’ a well in 2006 contingent on getting a jack-up rig into Cook Inlet

Kay Cashman

Petroleum News Publisher & Managing Editor

When ConocoPhillips Alaska told regulators that it would begin shooting 3-D seismic at the Cosmopolitan unit in Southcentral Alaska within a year, Petroleum News reported it on the front page of the Nov. 14 edition.

Since ConocoPhillips had been looking for another working interest partner to help fund seismic and a delineation well in the 24,600 acre exploration unit, Petroleum News asked the company if its plans to shoot seismic were the result of having found another partner.

Official channels at ConocoPhillips said there was “nothing new” to report regarding the unit off the lower Kenai Peninsula.

A likely investor was Devon Energy, which picked up half of Forest Oil’s working interest in the unit, effective Aug. 1. Devon had held a 5 percent interest in the seven state of Alaska leases and the two federal leases in the unit and in the August deal added half of Forest’s 25 percent working interest, giving Devon a 17.5 percent interest, Forest a 12.5 percent interest and operator ConocoPhillips a 70 percent working interest.

Devon was not able to provide a comment in time for the Nov. 14 edition, but an industry source told Petroleum News that Devon was farming in for another chunk of working interest in Cosmopolitan “in order to get another well drilled” in the unit.

Deal, jack-up being discussed

Minty said Devon and ConocoPhillips were talking and “while there is an interest, there hasn’t been a decision by Devon.”

He also said ConocoPhillips was looking at shooting seismic in the summer of 2005 and “if that turns out” there “is a possibility of another well in 2006” contingent on getting a jack-up rig into Cook Inlet.

“As I understand it, it’s pretty shallow water” where ConocoPhillips “would want to drill and subject to tidal influences,” Minty said.

A former executive with Forest Oil, which has several other offshore Cook Inlet prospects that require a jack-up to explore, told Petroleum News it would take a jack-up rig to really test Cosmopolitan.

Pennzoil found oil and gas in the area in 1967, drilling offshore with a jack-up. But ConocoPhillips’ first well at the prospect, the Hansen 1, spud in October 2001, was drilled from onshore to a bottomhole under Cook Inlet. The measured depth of the well was almost four miles. The true vertical depth was 7,102 feet.

A sidetrack, Hansen 1A, followed in 2003. It was also drilled from shore.

Since that time ConocoPhillips has been evaluating the prospect for possible development.

Got one year from the feds

The new plan and its work commitment prompted the U.S. Minerals Management Service to extend its suspension of operations on the two federal leases in the unit from November 2004 to Nov. 15, 2005, albeit one year short of the termination of the unit plan.

But the deadlines for work commitments in the unit plan are one day earlier than when the suspension expires — an expiration that MMS said would effectively terminate Cosmopolitan’s federal leases.

The new plan calls for ConocoPhillips to shoot a minimum of 40 square miles of 3-D seismic, beginning no later than Nov. 14, 2005, with acquisition to be complete by Nov. 14, 2006. Or, the company can drill another well in the unit.The well alternative requires ConocoPhillips to commit to drill by Nov. 14, 2005, and drill before the plan expires in November 2006.

The new well has “to penetrate the Lower Tyonek sand-prone interval” found in the Starichkof State No. 1 well, or a true vertical depth of 6,500 feet subsea, by Nov. 14, 2006. The well could be a sidetrack or a new well, but the bottomhole would have to be more than 500 feet from the bottomhole location of the Hansen 1 and Hansen 1A wells.