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Explorers 2011: Pfoff focuses on Aurora Exploration Building healthy mix, including wildcat wells; stars and planets for Cook Inlet basin aligned now Alan Bailey Petroleum News
Having purchased a couple of leases in the State of Alaska’s June Cook Inlet lease sale, Aurora Exploration is still deciding on its plan of action for the leases while it waits for the state to formally issue the lease assignments, company President Scott Pfoff told Petroleum News Sept. 2. The leases include the North Alexander and Wolverine natural gas prospects, both on the west side of Cook Inlet
The company is trying to locate all of the existing seismic data available for the leases tracts before deciding on what new seismic it needs to shoot, Pfoff said.
New seismic needed The quality of existing seismic data for the Cook Inlet basin, typically acquired quite a few years ago, tends to be of marginal quality, especially given the difficulty of obtaining clear seismic images from the challenging Cook Inlet geology. And the two prospects that Aurora Exploration is interested in are rank wildcat prospects, with no history of previous exploration drilling.
“Regardless of what we find with existing seismic, I have almost no doubt that we will have to run more seismic to get these prospects to a drillable state,” Pfoff said. And at this point Aurora Exploration has not determined whether to acquire new 2-D seismic or whether to shoot some strategically placed 3-D data — 3-D would be preferable but is more expensive to obtain, he said.
“One thing we have learned, and sometimes the very hard way up here, is that you’re better off a lot of times investing money up front to get good seismic, rather than drilling based on multiple vintages of older seismic. That has scorched us a few times,” Pfoff said. “It’s a very difficult puzzle to try to put together without modern seismic techniques.”
Multiple interpretations For example, there are multiple interpretations of the old seismic for the North Alexander prospect, the larger of Aurora Exploration’s two prospects, with some interpretations placing the prospect squarely within the North Alexander lease that Aurora Exploration has purchased, while other interpretations place the prospect at a location that crosses into adjacent leases, either to the south or to the west, Pfoff explained, commenting that he has been familiar with this particular prospect for the better part of 15 years.
Pfoff said that he is trying to work with adjacent leaseholders to find a path forward to future drilling. He anticipates exploration at North Alexander being quite challenging, given the prospect’s remote location and the prevalence of wetlands in the area.
Wolverine, the smaller of Aurora Exploration’s two prospects, sometimes referred to as the “East Lewis River prospect,” is relatively close to existing infrastructure, being adjacent to Chevron’s Lewis River unit.
Company activated Aurora Exploration, as a company, dates back a number of years as an unused 100 percent owned subsidiary of Aurora Power Services, a Southcentral Alaska natural gas company. Pfoff and business colleague David Boelens decided to activate Aurora Exploration, to bid for leases in the June Cook Inlet lease sale. Pfoff has an 85 percent ownership interest in Aurora Power, and with David Boelens and his father Floyd Boelens having recently completed the acquisition of the remaining 15 percent, Pfoff and the two Boelens are now joint owners of both Aurora Power and Aurora Exploration.
Until he resigned from that position on Aug. 1, Pfoff had for quite a number of years been president of Cook Inlet gas producer Aurora Gas, another member of the Aurora family of companies that have shared a common purpose of developing and marketing Cook Inlet hydrocarbon resources. The other member of the Aurora family is Aurora Well Services, the owner and operator of the AWS No. 1 drilling rig that has done most of Aurora Gas’s Cook Inlet drilling, as well as providing drilling services for other companies in the Cook Inlet region.
Aurora Power has a one-third ownership stake in Aurora Well Services, with the Boelens family owning the remaining two thirds, Pfoff said.
Aurora Gas is primarily owned by Kaiser Francis Oil Co. But with Kaiser Francis mainly interested in the development of known resources rather than exploring for new oil and gas, the company has been trying to sell Aurora Gas, waiting for a purchaser willing to pay what Kaiser Francis believes the business to be worth. Apache Corp. is rumored to be a potential purchaser.
New opportunities Pfoff said that for the past couple of years he has been looking to move into a position where he can seek new business expansion possibilities.
“I’ve been wanting to make this move and focus more on opportunities in Cook Inlet and outside of Alaska,” Pfoff said, referring to his new position in Aurora Exploration and adding that Aurora Power owns an acreage position in Colorado.
However, Pfoff doesn’t see the future as entirely focused on the drilling of wildcat wells, but wants a “healthy mix” of wildcatting and the pursuit of other opportunities in the Cook Inlet region. He declined to say what those other opportunities might be.
But Aurora Exploration will be seeking partners or investors to help fund its business activities, including seismic surveying and drilling in its Cook Inlet gas prospects, Pfoff said.
Optimistic And Pfoff feels very optimistic about the current business climate for the oil and gas industry in the Cook Inlet basin, with the basin going through a transition into a new phase of development as several newcomers to the region embark on exploration and development plans.
“The phrase I hear most often is that the stars and the planets are aligned now,” Pfoff said.
And, when it comes to gas, Pfoff feels encouraged about the speed with which the Regulatory Commission of Alaska is now processing gas sales agreements between gas producers and local utilities: Gas pricing is now gas market index based, with price floors and ceilings to limit the price risk. With the Cook Inlet region having an isolated gas market, price floors are especially important to gas producers, to protect against the potential market impacts of a glut of shale gas elsewhere in North America, Pfoff said. Price ceilings, on the other hand, protect gas consumers against the “Hurricane Katrina effect,” where an unexpected event unrelated to anything happening in Alaska can cause a price spike.
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