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Exploration incentive credits play ‘significant role’ in attracting Andex to Nenana Basin Doyon’s Jim Mery says the state program “was a bit ahead of its time” because when the law was first enacted, there were not many independents interested in Alaska Kay Cashman PNA Publisher
A Houston independent’s interest in exploring 538,000 acres of state and Native land in Interior Alaska is “proof positive” that exploration incentive credits work to draw oil and gas companies to undeveloped basins in Alaska, Jim Mery told PNA Feb. 5. Mery is Doyon Ltd.’s vice president of lands and natural resources.
Andex Resources LLC, which has applied to the state for a 500,000 acre exploration license in Interior Alaska’s Nenana Basin, is close to a deal with Doyon to explore a strategically placed 38,000 acre parcel of Native land within the license area.
Andex is working on an agreement with the Native regional corporation that would give the privately owned independent the right to explore and develop oil and gas resources in what is thought to be the deepest part of the Nenana Basin, Mery said.
Andex hopes to get its exploration license early enough this year so it will be able to shoot seismic over the basin in the winter of 2002-2003.
But exploration incentive credits go away in 2004 — the first year Andex will be able to drill in the basin — unless House Bill 307 passes the state Legislature, extending the exploration incentive credit program for three years to 2007. (See related story on page 1.) Ahead of its time Mery told PNA that Doyon was a supporter of the 1994 exploration incentive credit legislation and is solidly behind an extension of its sunset date as provided for in House Bill 307, recently introduced by Rep. Hugh Fate, R-Fairbanks.
“In retrospect, the concept was a bit ahead of its time. We thought that exploration companies large and small would respond positively. The majors were only interested in oil and Interior basins for the most part are more prospective for gas. Now, we think that these incentives are what will help attract some of the independents to under-explored basins,” Mery said.
Andex’s interest in the Nenana Basin is “proof positive” that exploration incentives credits work, he said.
“When the law was first enacted, there really were not many independents interested in Alaska. That is obviously changing.”
For several years Doyon has “actively promoted oil and gas exploration” in the Interior, especially the Nenana Basin — including state and Doyon oil and gas interests, Mery said. “The availability of exploration credits has been part of our presentations. As a result of working with Andex, we know that these credits played a significant role in attracting them to the Nenana Basin, pretty close in line behind very favorable geology for natural gas and potential gas markets,” Mery said.
“Although the Nenana Basin is a good place to look for gas, the exploration risks are still very high. The credits help temper those risks, including the ‘Alaska factor’ of high costs, compared to opportunities in the Lower 48. It would be a shame if this program is allowed to expire just as it begins to fulfill its initial promise,” he said.
HB 307, exploration incentive credits, moved out of the House Special Committee on Oil and Gas Jan. 31 and out of House Resources Feb. 1 after hearings in both committees.
Editor’s note: In the August 2001 edition of Petroleum News Alaska, PNA covered Andex Resources’ plans for the Nenana Basin, which is thought to hold between 250 Bcf to 1 Tcf of recoverable natural gas. In the article, Jim Dodson talks about supplying gas to Fairbanks, as well as possibly Anchorage. See PNA archives at http://www.PetroleumNewsAlaska.com for a complete report.
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