One-year extension for Guitar unit drilling

Alan Bailey

Petroleum News

The Alaska Department of Natural Resources has issued a notice of default to Alliance Exploration for the Guitar unit on the North Slope, and has given the company until March 31, 2020, to drill a well in the unit. The company had requested a two-year extension to the drilling commitment. Alliance’s plan of exploration requires a well to be drilled by March 31, 2019.

In a Feb.7 letter to Alliance President Samuel Nappi, DNR Commissioner Corri Feige said that, if the company does not drill the well by the March 2020 deadline, the unit may be terminated.

Feige said that Alliance’s request for a two-year deferral remains pending before the director of the Division of Oil and Gas. In addition to Alliance’s request for the drilling deferral, it is now too late in the winter drilling season on the North Slope for it to be practical to conduct the drilling this year. And so, with it being clear that the well will not be drilled this winter, Alliance is failing to meet its drilling commitment for the Guitar unit. Thus, the unit is now in default, Feige wrote.

The unit consists of three state leases on the southwestern side of the Prudhoe Bay unit, which had previously formed part of the Hemi Springs unit, formed in 1983 and terminated in 1992. In addition to requesting an extension to its drilling commitment, Alliance has asked for the addition of a fourth lease tract to the unit. However, the division has told Alliance that its request has not met the requirements for a unit expansion application.

- ALAN BAILEY