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Aurora Gas installing facilities at Nicolai Creek, Pfoff tells Alliance Natural gas will be flowing from re-worked well this summer; two more
re-entries, one new well planned at field Kristen Nelson PNA Editor-in-Chief
Aurora Gas LLC has pipe at its Nicolai Creek site and is preparing to ship equipment across the inlet to hook up gas production, Scott Pfoff, president and CEO of Aurora Gas, told the Alaska Support Industry Alliance May 11.
“I’d hoped to be able to tell you that a barge departed Nikiski this morning… Unfortunately our barge was delayed and the pipeline equipment that is going across the inlet to commence our pipeline project should be departing tomorrow and we’re very anxious to get this well hooked up and generating cash flow for the company,” Pfoff said.
The company was formed as Aurora Gas and changed its name to Aurora Power Resources in late 1997, because, Pfoff said, marketing natural gas has been its foundation.
“But from day one,” Pfoff said, “ Aurora has had its sights on becoming a producer and an operator in the Cook Inlet.” To this end, he said, the company began a modest drilling program in central Texas to gain company experience as an operator. Aurora has drilled eight wells and made a small discovery at its Rough Creek Ranch field.
Early on, he said, Aurora was a successful bidder in Cook Inlet lease sales on some 8,000 acres on the Kenai Peninsula, and in 1998 the company acquired Chevron’s working interest in the Marathon-operated Kenai and Cannery Loop gas fields.
But the company lacked the technical expertise necessary to make the transition to an operating company, so it teamed with Ed Jones and Andrew Clifford of Orion Resources, both formerly with BHP Petroleum, to form a 50-50 joint venture, Aurora Gas LLC in early 2000. All exploration and production assets were transferred to Aurora Gas. Aurora operator at Nicolai Creek Aurora Gas purchased the interests of Unocal and Marathon in the Nicolai Creek gas field in early 2000. Wells were drilled there when companies were looking for oil.
The Nicolai Creek No. 3 well was worked over, cleaned up and re-completed.
“In December of last year, we reentered the Nicolai Creek unit well No. 3, which had been shut in for over 20 years. The well was cleaned up and re-completed with gravel pack to prevent sand production problems.
“The well was tested in February at flow rates in excess of 4 million cubic feet per day and was still unloading fluid at the end of the test, so we’re optimistic that it will do even better,” Pfoff said.
He said Aurora will spend between $2 and $2.5 million on the first Nicolai Creek well, including hookup and facilities.
Aurora plans two more similar re-entries at Nicolai Creek this year, Pfoff said, and the company is also in the process of permitting one new well at the field which it hopes to complete this year.
The company plans, he said, to pursue similar development opportunities with small fields already discovered in Cook Inlet.
“We see this as a real niche for us.”
In addition, Aurora hopes to drill at least one exploratory well sometime within the next two to three years.
Ed Jones, vice president of Aurora Gas, told PNA the company should be moving gas from the Nicolai Creek well this summer. Facilities will be installed at the well site and the gas will flow directly into an existing pipeline, he said.
The gas will be compressed and dehydrated at the well site, he said, and then shipped down the line.
The mile of pipeline construction should take about two weeks, Jones said, “and then we’ve got some work on the production facility… so we’re four to six weeks away” from moving gas. Aurora’s main business gas marketing Pfoff and Steve Severy, both formerly with Marathon Oil Co., started Aurora in 1994 buying and selling natural gas and signed their first contract in August 1994 to provide gas to the Tesoro refinery in Nikiski. In 1995 the company began its commercial marketing efforts in the Cook Inlet and in 1999 signed a three-year $50 million contract to supply natural gas to the Department of Defense for Elmendorf Air Force Base, Fort Richardson and other federal facilities in Southcentral.
Aurora’s market share in Cook Inlet is 5-6 percent, Pfoff said, with other shares for local use 38 percent and for export 62 percent. Among local consumers, however, Aurora has 15-20 percent of the market for space heat and power generation, and more than 55 percent of the large commercial market. And, he said, Aurora is not in competition with Enstar, but is in fact its largest customer for transportation on the Enstar system. Marathon Oil Co. is currently Aurora’s largest gas supplier.
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