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State tells UltraStar Dewline has expired
Kristen Nelson Petroleum News
The Alaska Department of Natural Resources, Division of Oil and Gas, notified UltraStar Exploration Sept. 26 that the Dewline unit has expired. The small North Slope unit straddles the shoreline just west of the Prudhoe Bay unit.
There has been litigation over a 2014 decision by the DNR commissioner that UltraStar did not qualify for a unit extension and an appeal related to a plan of exploration.
Superior Court remanded the plan to the commissioner for a decision on the merits, but did not, the division said, remand the decision that Dewline did not qualify for a unit extension. The commissioner denied the company’s plan appeal in early August.
The unit was approved by the division in 2009 with a five-year term allowing extension of three state leases covering 3,253 acres and requiring two exploration wells to be drilled to test the hydrocarbon potential of the Ivishak by May 31, 2013.
UltraStar had already completed its Dewline No. 1 well and was aiming to drill the North Dewline No. 1 in 2010 or 2011.
The division said earlier this summer that data from the 2009 Dewline 1 were scheduled to be released. The release is a result of companies making use of tax credits in support of exploration activities.
UltraStar Jim Weeks, who died in 2013, became involved in the industry as an independent after he retired from ARCO in 1999, essentially running a one-man operation at UltraStar, founded in 2002, working with a group of investors. The division’s Sept. 26 letter is addressed to UltraStar at a Dallas address.
As Winstar Petroleum, formed in the late 1990s with the same group of investors, Weeks drilled the Oliktok Point State No. 1 well in 2003. He formed UltraStar in 2002 to chase prospects west of Point McIntyre uncovered in a package of 3-D seismic he acquired.
The Dewline unit was expanded in 2011, bringing it to four leases, some 4,533 acres. For that expansion the state required an additional well - the N. Dewline No. 1 well by the end of 2013 and the N. Dewline No. 2 by the end of May 2014. Neither of the N. Dewline wells were drilled.
Status of leases The division said the leases automatically extended for 90 days after the June 4, 2014, unit expiration, but because of ongoing appeals, the division said it “did not give notice of the lease expiration and UltraStar was obligated to continue paying annual rent on the leases.”
The division said with this renewed notice of unit expiration, the leases will expire 90 days from the Sept. 26 letter.
UltraStar recently paid rent on the leases, and the division said it would return a prorated amount of rent when the leases expire and said relinquishing the leases sooner would result in a greater return of rent.
There is an appeal period of 20 calendar days for the current decision.
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