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Cook Inlet license draws competitive bids
In a finding issued June 20 the director of the Alaska Division of Oil and Gas has called for competitive bids for an Iniskin Peninsula exploration license.
In April 2013 the division received a proposal for an exploration license in Southwest Cook Inlet onshore and offshore in the Chinitna Bay and Iniskin Bay area. In May 2013 the state issued a notice of intent to evaluate the proposal and asked for comments and competing proposals (see story in June 9, 2013, issue).
One competing proposal was received.
The decision, signed by Bill Barron, director of the Division of Oil and Gas, offers a four-year oil and gas exploration license covering some 169,000 acres to the winner of the competitive bid process. The invitation to bid was sent to the applicants concurrent with issuance of the decision. The two applicants have 20 days to return the bid application.
The division is not releasing either the name of either bidder.
The minimum work commitment bid is $1 million.
Seeps in area Oil seeps have been known on the Iniskin Peninsula since at least 1853, the division said. The earliest exploration wells in Cook Inlet were drilled near Oil Bay and oil seeps at Well Creek by the Alaska Petroleum Co. in 1902. The division said there are no official records, but the well is reported to have encountered gas and a “considerable” oil flow, cut off when water was encountered in further drilling. A second well northwest of the first, drilled in 1903, encountered oil shows but was abandoned due to collapsing shale. A third well to the south encountered oil and gas in three thin sandstones, while no information is available on the company’s fourth and final well, drilled north of the second hole.
The Alaska Oil Co. drilled near a seep on Brown Creek north of Dry Bay in 1902, but the well was abandoned without oil shows when drilling tools were lost in the hole. A second attempt by the company was abandoned at a shallow depth after an equipment mishap.
No additional wells have been drilled at either Oil Bay or Dry Bay since these early wells.
Later wells Exploration activity in the license area between 1903 and 1934 was limited to geologic field studies by U.S. Geological Survey geologists.
The Iniskin Bay Association obtained exploration rights to 51,000 acres on the anticline near the Fitz Creek oil seep, built a road into the interior of the peninsula and began drilling in 1936, with drilling on the well continuing over four summers. The well encountered trace oil and gas shows and 12 barrels of high gravity oil were recovered. When the well was abandoned in 1939 it was flowing 240 barrels of water a day with minor oil and gas shows.
A new group of investors, the Iniskin Unit Operators, drilled in the area after World War II, drilling the Beal No. 1 well in 1954 and 1955, east of the Fitz Creek fault. The well had oil and gas shows, with a computed gas flow of 4,000 cubic feet per day, but further efforts to achieve commercial flow rates were unsuccessful.
Alaska Consolidated Oil Co. drilled the Antonio Zappa No. 1 in 1958-59 west of the Beal No. 1, and encountered minor to fair oil shows.
The division said the most recent exploration activity in the area was two-dimensional seismic acquisition conducted mostly onshore in the summer of 2013.
The division did not identify the company doing the 2-D seismic, but as previously reported by Petroleum News that shoot was a project of Hilcorp Alaska and was proposed to cover 41 miles in the area between Chinitna Bay and Iniskin Bay, with the work done by SAExploration Inc.
- Kristen Nelson
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