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Producers 2021: AIX perseveres with Kenai Loop production
Small natural gas field went into production in 2012; company said in 2020 it had an estimated 5 years of remaining economic life
Kristen Nelson Petroleum News
AIX Energy acquired the Kenai Loop natural gas field after Buccaneer Energy went bankrupt in 2014. AIX was Buccaneer’s largest secured creditor and agreed to be the stalking horse bidder in the 2014 bankruptcy sale, setting the lowest acceptable price and assuring that the field did not fall prey to an unreasonably low bidder in the bankruptcy sale.
In the seventh plan of development and operations for Kenai Loop, effective May 7, 2021, through May 6, 2022, AIX said it became field operator on Nov. 10, 2014, retroactively effective to Oct. 1 of that year. AIX finalized lease agreements with the stakeholders in the field - the Alaska Department of Natural Resources, Cook Inlet Region Inc. and the Mental Health Trust Land Office - in February 2015.
In August, the latest month for which production by field data was available from the Alaska Oil and Gas Conservation Commission, Kenai Loop averaged 1,567 thousand cubic feet, mcf, of natural gas, down 69.2% from an August 2020 average of 5,087 mcf per day.
The August volume was down 66.3% from a July average of 4,646 mcf per day, so the August volume may reflect work at the field.
Production in both 2020 and 2021 was from two wells.
AOGCC data show the field, east of the Kenai Airport in the Kenai Industrial Park, had cumulatively produced 24.98 million mcf of natural gas, 2,815 barrels of condensate and 10,400 barrels of water as of the end of August 2021.
The field produces from a single drill pad, KL-1. A second pad was constructed in 2012, AIX said, but was never used in operations, and AIX decommissioned that pad in June 2017, returning the surface lease to the Trust Land Office.
Drilling by Buccaneer There are four wells at the field, AIX said in its seventh plan of development and operations, all drilled by Buccaneer: KL 1-1 (the field discovery well; drilled in 2011 it flowed 10 million cubic feet per day from the 9,700-foot Tyonek sand) is an active producer; KL 1-2 (drilled in 2011 and reported as a dry hole) is temporarily suspended and has possible future use as a disposal well; KL 1-3 (drilled in 2012, a 9,700-foot sand producer, 300 feet structurally deeper than the KL 1-1 discovery well) is an active producer; and KL 1-4 (drilled in 2013, in 9,700-foot sand, 100 feet shallower than KL 1-1; tested at 2.5 million cubic feet per day, but was determined to be in the same reservoir as KL 1-1 and KL 1-3; has been used to monitor reservoir pressure), a shut-in producer which is not tied into the production system.
Buccaneer completed a 23 square mile 3D survey at Kenai Loop in 2012.
A field production chart from startup in 2012 indicates that field production peaked in 2016 at more than 11,000 mcf per day.
Current plans AIX said its marketing goal is to continue to pursue gas sales opportunities, aligning with existing and future production, while maintaining price discipline. It said that on April 1, 2021, it “will begin selling all gas volumes to a single purchaser under a one year ‘Firm as Available’ contract.”
The company said it will evaluate tying KL 1-4 to the production system for increased deliverability and to provide redundancy to meet firm gas sales obligations “and to possibly increase ultimate recovery.” This is the well, determined to be in the same reservoir as current producers KL 1-1 and KL 1-3, which is currently a shut-in producer used to monitor reservoir pressure.
AIX also is evaluating recompleting wells for additional deliverability.
The company said it plans to obtain static reservoir pressures on KL 1-1 and KL 1-3 during this plan year to “update the material balance estimates of gas in place and reserves.” It requires a 72-hour field shutdown and AIX said it “will attempt to shelter the work during planned pipeline or facility maintenance.”
The company will be doing a workover, planned for the second quarter of 2021, on KL 1-1 to replace the subsurface safety value as required by AOGCC.
AIX said it has not identified any drilling opportunities at the field.
In 2013 DNR’s Division of Oil and Gas denied a request by then-operator Buccaneer to unitize Kenai Loop and the field remains un-unitized.
Reserves data for Kenai Loop is confidential, but in February 2020 testimony to AOGCC on bonding requirements, Wendy Sheasby, the company’s chief financial officer, said the remaining economic life of the field is five years.
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