Providing coverage of Alaska and northern Canada's oil and gas industry
April 2021

Vol. 26, No.14 Week of April 04, 2021

Looking for natural gas, not oil in Alaska

Explorers magazine preview: Gardes aims to produce, sell natural gas, a clean burning fuel, plus build gas powered infrastructure

Kay Cashman

Petroleum News

Bob Gardes of Lafayette, Louisiana, entered Alaska last year with the three-fold purpose of becoming a natural gas producer by acquiring bypassed and/or underdeveloped gas deposits in the Cook Inlet basin, securing off-take commitments to sell gas to Alaska utilities and large industrial end users on a long-term basis, and developing, building and operating gas and power infrastructure that supports the use of the clean burning fuel.

Gardes Holdings’ website further indicates that compressed natural gas, or CNG, and liquefied natural gas, LNG, also play a part in the company’s plan for Alaska.

Gardes purchased the southern Kenai Peninsula North Fork unit in September 2020 from Cook Inlet Energy, a Glacier Oil and Gas company. The 2,601.84 acre, five-lease unit produces from a single participating area covering 800 acres.

While Gardes is “currently negotiating” additional “potential acquisitions in the Cook Inlet region,” its operations crew on the ground, led by Mark Landt, has its attention focused on enhancing production from the company’s first natural gas acquisition - the North Fork unit that Bill Armstrong first brought online in 2011, even though the field was first unitized by Standard Oil Co. of California in 1965. In a deal with utility Enstar Natural Gas Co., North Fork supplied southern Kenai Peninsula residents with their first natural gas in 2014 - prior to 2014, the area was not serviced by a gas pipeline.

What’s next

“For the next year or more” Gardes operating subsidiary Vision Resources is “focused on North Fork,” Landt, vice president of land and upstream business development for Gardes, told Petroleum News on March 10. “We see some definite opportunities to pursue there,” he said, noting the company has a “full G&G staff” working on North Fork.

“Now that we have our plan of development for the unit approved with the Division of Oil and Gas and have purchased 3D seismic … we are going to be working the 3D data and generating our own ideas going forward.”

Landt said Vision sees “additional gas to be recovered” at North Fork, mentioning the possibility of “additional sands” in the field and more workovers.

The plan of development approved by the division was the 56th POD for North Fork.

Gardes is waiting on more decisions from the division.

The first was approved in mid-March and that was to delay for one year a unit contraction; requested because it would allow the new owner time to assess opportunities for additional drilling targets outside the participating area and other methods of enhanced production from the unit.

Unit contraction is required after a unit has been in production for 10 years, at which point the unit is contracted to areas actually in production.

With North Fork having only one participating area, the contraction was a logical step; until Gardes came into the picture, that is.

The other two requests are to assign interest in the North Fork leases and unit operatorship to Gardes. As of March 31, both requests, which were made in November, were under review.

Through the end of 2020, North Fork had cumulative production of 21.46 billion cubic feet of natural gas and 27,414 barrels of water, all from the original participating area.

Deal with Enstar

Gardes has also been working on its North Fork gas sales agreement. In February, Vision entered into a five-year natural gas sales and purchase contract with Alaska Pipeline Co. that will result in APC’s utility affiliate Enstar continuing to distribute gas from North Fork after Cook Inlet Energy’s contract expires on May 10.

Vision’s starting price will be $7.30 per thousand cubic feet. After the first year the gas price will increase annually by 7 cents per mcf through the end of the contract for a final price of $7.60 per mcf.

North Fork gas production averaged 3,037 mcf per day in February, down 11 mcf per day, 0.4%, from a January average of 3,048 mcf per day and down 18.3% from a February 2020 average of 3,715 mcf per day.

Major gas province

Bob Gardes views the Cook Inlet basin as one of the four top gas regions in the world.

Gardes Holdings website said he has “over 40 years engineering, drilling, completions in the oil and gas industry” and is “a pioneer in lateral drilling and completions and coalbed methane development world-wide with more than 3,000 wells drilled under his management and supervision.”

Bob Gardes’ companies own “multiple drilling patented methodologies related to lateral drilling and completions.”

He views natural gas as the “fuel of the future,” the website said.

“We hope to be gold star presence among oil and gas companies in Cook Inlet,” Gardes told Petroleum News in early November. (Landt said the company will not thumb its nose at an oil discovery, but gas is most important to it.)

“For the last 20 years we’ve been coming to Alaska. … There is a lot of bypassed gas here because the deposits weren’t big enough” for the companies to bother with them.

There also wasn’t a major market for gas in Alaska for many years. But eventually gas became the fuel of choice for heating buildings in much of Southcentral, while gas-fired generation became the favored source of electrical power.

“We think the future in the U.S. is gas. It burns 98% cleaner than oil and coal. It is a transformational resource,” Gardes said.

Editor’s note: See full story in the upcoming annual Explorers magazine.

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