Gross of Pelican Hill Oil & Gas plans seismic, wells on west side in 2002

Independent producer has been drilling in Kansas for 23 years; acquired Cook Inlet leases at Mental Health Trust Land Office sale in September

Kristen Nelson

PNA Editor-in-Chief

In September, Al Gross of Pelican Hill Oil & Gas Inc. was high bidder on five oil and gas leases on the west side of Cook Inlet. By the time the leases were on his desk, he was planning seismic for late January and February and he plans to drill later in the year.

“I don’t buy leases just to own them as a lease position asset. I don’t need that. I buy them for a reason, that’s to shoot them and then to go drill them,” Gross told PNA Nov. 29.

“Some people get huge lease positions, or try to,” said Anchorage-based geological consultant Arlen Ehm, who is doing geologic work for Gross, “he was already planning to do the seismic before he actually had the leases in his hands…”

The California-based Gross, president of Pelican Hill Oil & Gas, has been drilling in Kansas for 23 years. Two years ago, he started looking for areas with larger reserves, and he looked at Alaska — but walked away.

“A year ago, I looked at it a lot harder,” he said.

He connected with geologist Ehm and after some preliminary discussions, Gross came to Alaska for the first time in June. In late November he was on his eighth trip.

By September, Gross and Ehm had identified prospects on the west side of Cook Inlet that were included in an upcoming Alaska Mental Health Land Office lease sale, and on Sept. 29 Gross bid $258,359 for five tracts, 25,187 acres.

Three of the tracts are north of Tyonek, west of the Phillips Alaska Inc.-operated Beluga River gas field. The other two tracts are west of Tyonek, one at Granite Point near Aurora’s Nicolai Creek gas field and the other to the northwest.

Kansas independent

“I’m an operator and producer. I drill my own wells,” Gross said. “We’re not promoters. I’m not a promoter — I hate that word anyway. I’ve got great partners and myself. And we spend our own money doing what we’re doing. …

“We’re putting our own money on the line to do these things. And we’re just not up here for a fashion show.”

As an independent oil and gas producer he has drilled more than 200 wells in Kansas. “Of the wells that I drilled entirely I’ve sat on almost 99 percent of them and only missed two of over 200 wells… So I’m a hands-on operator,” he said.

Independents do things a little differently, he said: “We don’t necessarily need five or six approvals to do things, because when you own your own company … we make the decisions and carry them through…”

Gross said he is not interested in the North Slope: “Cook Inlet is perfect for me: weather conditions, time of the year that you can drill down there. There are conditions up here that are different than where I’ve drilled and where I’m drilling now, but they’re still turning that bit to the right and getting a hole in the ground.”

Seismic next step

Their are big potential rewards in Alaska, but also big risks, Gross said. “And we’re just trying to find more that’s out there by using the more sophisticated data in finding it.”

That more sophisticated data is three-dimensional seismic. Acquiring that is the next step.

Gross wouldn’t comment on how much 3-D he planned to shoot, but said it would be two programs, with permitting work slated to begin Dec. 3 with the goal of acquiring the seismic in late January and February.

Ehm said this will be the first 3-D seismic shot beyond the Beluga River area on the west side of Cook Inlet and only the second 3-D seismic on the west side.

Rod Hodgin of Basin Geophysical LLC made his second trip to Alaska this year with Gross in November. He has shot seismic for Gross in Kansas and will be shooting on the west side.

Once the seismic is shot so that drilling locations can be picked, if there isn’t a rig available, “we’re considering bringing a rig in. And by doing that, it will not only take care of our needs, but others that may be interested in hiring it in the Cook Inlet. But our needs are first.”

And how do the depths compare?

“I drill anywhere between 4,500 and 6,000 feet in Kansas, so we are easily (in Cook Inlet) within the means of what I’ve done back in Kansas,” he said.

Looking elsewhere in Cook Inlet

Gross said he is also looking at other areas in Cook Inlet.

“We have had the luxury of using all the information acquired by Arlen (Ehm) to pick these locations that we went after with Mental Health. We are also exploring the different areas of Cook Inlet and not just the ones that we already own. We continue to look at new prospects, new sales that come up if they fit into our scheme of things.”

Changes in the industry, such as mergers of larger companies, sometimes create opportunities for independents, Gross said, as larger companies abandon existing fields.

“It’s happened in Kansas where I drill, where a lot of the majors pulled out of there five, six years ago. And we got the leftovers and it’s made us very successful.”

Independent geophysical firm to work on west side

He will be shooting seismic for Gross on the west side of Cook Inlet next year.

Hodgin is currently Montana-based, but his Basin Geophysical has an office in Hays, Kansas, and he has shot seismic for Gross in Kansas.

He has also done seismic work in Cook Inlet.

“I was working for other companies at that time and I spent several winters here in the Cook Inlet area, both sides of Cook Inlet, managing and operating seismic crews,” Hodgin said. This was in the late 1970s and 1980s, he said, and he worked both in Alaska and in Canada.

“He’s not just fresh up here… He just didn’t fall off the bus up here and I just didn’t bring him up here to do my jobs,” Gross said.

In fact, Hodgin said, “we wanted to eventually come to Alaska and work here.” When Gross said he was looking at Alaska, Hodgin said he told him, “include me in.”

Twenty-five years in the business

“We’d like to see more independents come to Alaska, too. They have traditionally been our customers.”

“Typically independents … (are) doing a little smaller project. They might do more projects, but they’re smaller. And that’s what we’re geared for,” Hodgin said.

Hodgin said his family has been in the geophysical business for 25 years.

“We’re a small family-owned and operated company, but we have the same technology, state-of-the-art equipment that the large companies have to do our work,” he said.

“I manage the crew and my wife does the books,” Hodgin said. “One of my sons runs the electronics. One does the surveying. One does the permitting. And then we hire — we have long-term employees that have been with us for a long time for all of our key people. We’re kind of like a big extended family. And we get the job done, and usually for less money, because we don’t have any overhead,” he said.