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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2021

Vol. 26, No.23 Week of June 06, 2021

The Explorers 2021: Looking for natural gas, not oil in Alaska

New player Gardes signs contract with Enstar to continue distributing North Fork gas; works 3D to generate own ideas for southern Kenai Peninsula unit

Kay Cashman

Petroleum News

Bob Gardes of Lafayette, Louisiana, entered Alaska in September 2020 with the three-fold purpose of becoming a natural gas producer by acquiring bypassed and/or underdeveloped gas deposits in the Cook Inlet basin, securing offtake commitments to sell gas to Alaska utilities and large industrial end users on a long-term basis and developing, building and operating gas and power infrastructure that supports the use of the clean burning fuel.

Gardes Holdings’ website further indicates that compressed natural gas, or CNG, and liquefied natural gas, LNG, also play a part in the company’s plans for Alaska.

Gardes purchased the southern Kenai Peninsula North Fork unit in September 2020 from Cook Inlet Energy, or CIE, a Glacier Oil and Gas company. The 2,600-acre unit produces from a single participating area covering 800 acres.

While Gardes, per its website, is “currently negotiating” additional “potential acquisitions in the Cook Inlet region,” its operations crew on the ground, led by Mark Landt, has its attention focused on enhancing production from the company’s first natural gas acquisition - the North Fork unit.

North Fork was first brought online in 2011 by a Bill Armstrong joint venture, even though the field was first unitized by Standard Oil Co. of California in 1965.In February 2021 Vision Resources, a Gardes operating subsidiary, entered into a five-year natural gas sales and purchase contract with Alaska Pipeline Co. that will result in APC’s utility affiliate Enstar Natural Gas continuing to distribute gas from North Fork after CIE’s contract expires on May 10, 2021. (In a nearly $65 million deal Armstrong sold the small gas field to CIE’s original parent in 2014. At the time Anchorage-based CIE was a subsidiary of publicly traded Miller Energy Resources Inc. of Tennessee.)

What’s next

“For the next year or more” Vision is “focused on North Fork,” Landt, vice president of land and upstream business development for Gardes, told Petroleum News on March 10, 2021. “We see some definite opportunities to pursue there,” he said, noting the company has a “full G&G staff” working on North Fork.

“Now that we have our plan of development for the unit approved with the Division of Oil and Gas and have purchased 3D seismic … we are going to be working the 3D data and generating our own ideas going forward.”

Landt said Vision sees “additional gas to be recovered” at North Fork, mentioning the possibility of “additional sands” in the field and more workovers.

The plan of development approved by the Alaska Department of Natural Resources’ Division of Oil and Gas was the 56th POD for North Fork.

Gardes is waiting on more decisions from the division.

The first was approved in mid-March 2021 and that was to delay for one year a unit contraction; requested on behalf of Gardes by operator CIE because it would allow the new owner time to assess opportunities for additional drilling targets outside the participating area and other methods of enhanced production from the unit.

Contraction of a unit is required after a unit has been in production for 10 years, at which point it is contracted to areas that are producing.

With North Fork having only one 800-acre PA, the contraction was a logical step; until Gardes came into the picture, that is.

The other two requests are to assign interest in the North Fork leases and unit operatorship to Gardes. As of April 9, 2021, both requests, which were made in November, were still under review.

Through the end of 2020, North Fork had cumulative production of 21.46 billion cubic feet of natural gas and 27,414 barrels of water, all from the original participating area.

Deal with Enstar

APC’s Enstar contract with CIE to distribute gas from North Fork expires on May 10.

Gardes’ contract goes into effect the next day, at a starting price of $7.30 per thousand cubic feet. After the first year the gas price will increase annually by 7 cents per mcf through the end of the contract for a final price of $7.60 per mcf.

North Fork gas production averaged 3,037 mcf per day in February 2021, down 18.3% from a February 2020 average of 3,715 mcf per day.

Work in the unit

The North Fork unit currently includes five state leases, encompassing a total of 2,601.84 acres, the division said.

North Fork’s single PA, Gas Pool No. 1, was established in 1965 on 640 acres. In 2011, the same year in which the Armstrong venture achieved sustained production, the PA was expanded to 800 acres.

The division said CIE completed some of the work proposed in its 55th POD. The company added perforations to one of the wells in the field, and although the COVID-19 pandemic forced suspension of that work, CIE did accomplish modification of compression capabilities “to assist in extending the life of the wells” and used offsite disposal to assist in controlling water production, as well as identifying equipment and resources necessary to decrease system pressure at the facility.

For the 56th POD, CIE offered “no specific plans for exploration or delineation,” the division said, but said the operator will continue to evaluate opportunities to drill outside the existing PA, as well as analyze and optimize current production from the unit.

As with the 55th POD, in its 56th plan the company said, “additional drilling will depend on favorable economic conditions.”

When the division approved the 56th POD, it said the plan protects the public interest “by maintaining and optimizing current production while evaluating future drilling opportunities.”

Mark Landt returns

Gardes is awaiting lease assignments applied for in November 2020 from the division. Once it has those in hand, Landt said, the firm will assign the leasehold to Vision Resources, one of two companies Gardes Holdings formed in Alaska. The other is Vision Operating, which will operate the North Fork unit.

Landt, who is well known in Alaska’s oil patch, began his career with ARCO where he spent 25 years in various land, negotiations, acquisition, business development, marketing and senior management positions in their Denver, Lafayette, Dallas, Houston, Anchorage, Bakersfield and Plano (International) offices.

He has more than 25 years of direct experience in Alaska and was based in Anchorage for five years.

After leaving the company, Landt co-founded Prodigy Alaska, Renaissance Alaska, Buccaneer Alaska and Stellar Oil & Gas, all focused on E&P in Alaska.

Landt has previously worked with Stephen Hennigan, vice president of engineering for Gardes Holdings.

Per the company’s website Hennigan is the lead on engineering, drilling and completions in Alaska.

He has a “40-year track record of success in the oil and gas industry throughout the Lower 48 and, importantly, the Cook Inlet of Alaska. Steve has been directly engaged in successful drilling and development of North Fork unit and other Cook Inlet fields since 2007, for previous operators and owners,” having “institutional knowledge of North Fork,” gardesholdings.com reported.

Major gas province

Bob Gardes views the Cook Inlet basin as one of four top gas regions in the world.

Gardes’ website said he has “over 40 years engineering, drilling, completions in the oil and gas industry” and is “a pioneer in lateral drilling and completions and coalbed methane development world-wide with more than 3,000 wells drilled under his management and supervision.”

Bob Gardes’ companies own “multiple drilling patented methodologies related to lateral drilling and completions.”

He views natural gas as the “fuel of the future,” the website said.

“We hope to be gold star presence among oil and gas companies in Cook Inlet,” Gardes told Petroleum News in early November 2020. (Landt said the company will not thumb its nose at an oil discovery, but gas is most important to it.)

“For the last 20 years we’ve been coming to Alaska. … There is a lot of bypassed gas here because the deposits weren’t big enough” for the companies to bother with them.

“We think the future in the U.S. is gas. It burns 98% cleaner than oil and coal. It is a transformational resource,” Gardes said.






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