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Evergreen Resources plans coalbed methane wells in 2002 Company acquired 48,000 acre Matanuska-Susitna Borough Pioneer unit in May; will bring own drilling, cementing and completion equipment to Alaska Kristen Nelson PNA Editor-in-Chief
Mark Sexton, president and CEO of Evergreen Resources Inc. of Denver, told the Legislature’s Joint Committee on Natural Gas Pipelines by phone Nov. 8 that the company plans to drill at least six wells — and perhaps as many as eight or 10 — in the Pioneer unit in the Matanuska-Susitna Borough in 2002. The wells, Sexton said, will be in two pilot areas.
The company will bring its own drilling, cementing and completion equipment — currently in Ireland — to Alaska for the work, he said. Sexton said the equipment is state of the art and was built specifically for coalbed and shallow gas development.
After the wells are completed, Evergreen will begin testing the productivity of the coals and Sexton said those tests will give the company information on how best to develop the resource.
Evergreen acquired the Pioneer unit, a coalbed methane play, from Ocean Energy Inc. and Unocal Alaska in May of this year. Evergreen has a 100 percent working interest in 48,000 acres. An Enstar 20 inch gas line runs across the bottom of the unit and two coalbed methane wells, one water disposal well and one gas re-entry well have been drilled in the unit.
At least 1 trillion cubic feet at Pioneer Sexton said Evergreen believes coalbed methane has the potential to replace declining conventional gas reserves in Cook Inlet. The company has not yet determined that Pioneer development will be economic, he said, but conservative estimates show the unit contains reserves of at least 1 trillion cubic feet. Sexton said the reserves could be several times that large.
Six prior attempts to produce coalbed methane in the north Cook Inlet area have been unsuccessful, and Sexton said that after reviewing the well histories, “we are not surprised that none of the wells produce gas.”
He said that Evergreen knows, through experience, that “slight variations in drilling, cementing, completion and production practices” spell success or failure in coalbed methane wells. It is for that reason, he said, that Evergreen has invested in its own service company, Evergreen Well Service, its own gas marketing and gathering company, Primero Natural Gas, and its own operating company, Evergreen Operating Corp.
Evergreen, along with several other parties, has also applied for shallow gas leases in the vicinity of Pioneer, and Evergreen said once the leases are granted it will negotiate with the lessees and then unitize the acreage.
If a unit can be established in 2002, he said, exploration activities could begin that year on the new acreage and wells could be drilled as early as 2003 or 2004.
He said that Evergreen’s proposed Southcentral drilling budget is $5 million for 2002. If drilling is successful, Sexton said he expected the pace to “accelerate prudently” in subsequent years.
Legislative issues Sexton said that coalbed methane drilling is different than the drilling Alaskans are used to. In the Raton Basin in southern Colorado where Evergreen has extensive operations, the company drills, logs, cements, completes, equips and places on line a new well every 72 hours.
“Doing this type of development requires streamlining the permitting and regulatory processes” and there may be bills proposed in Juneau to address this, he said.
But Sexton said the greatest challenge in Alaska coalbed methane development is the split estate issue. The areas with the most potential for coalbed methane production, he said, are areas where the state owns the subsurface rights and the surface is owned by an individual. Split estates are manageable when a few wells are drilled in an area, Sexton said, but in Alaska the plan is to drill “several dozens of wells” in close proximity.
In Alaska, gaining surface access for mineral development “may become the major obstacle to development,” Sexton said, and Evergreen believes legislation “must be passed that encourages the surface owner to cooperate with the gas companies wanting to develop natural gas on their lands.”
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