Oil Patch Insider

Wadeen Hepworth

Murkowski takes charge, Andex looking for partners at Nenana

On Dec. 2, Frank Murkowski was sworn in as the eighth governor of Alaska.

In remarks following the ceremony at Juneau’s Centennial Hall, the new governor said for the first time in a long time “there is unity in the House and Senate, not only in Juneau but in Washington. … And never before have the stars been so in alignment.”

Murkowski, who had promised in his campaign to increase oil production by 3 percent per year beginning in 2005, said he would rebuild the state’s wealth and revitalize its economy with greater resource development: “Today, we re-dedicate ourselves to an Alaska that lives up to the statehood promise of a productive government built on a foundation of resource wealth.”

The state’s oil production has fallen from its peak of 2 million barrels a day in 1988 to 920,591 barrels, the average daily production in November.

The day after he was sworn in as governor, Murkowski visited the Alaska Division of Oil and Gas in Anchorage to tour the office and visit with agency staff.

ANDEX LOOKING FOR PARTNERS….

“Right now the biggest thing we’re working on is just we’re talking to several potential partners to come into the project with us to help share some of the risk and capital and of course to put more than one head together to the problems that are going to be faced out here. And to help us with the exploration effort,” Dodson said Nov. 21.

Houston-based Andex is a privately owned firm with 520,942 acres under lease in what the company refers to as the “deepest portion of the Tertiary sedimentary” Nenana Basin. It says the basin is highly prospective for gas and probably oil, plus has “huge potential” for coalbed methane gas development.

An executive summary Andex was handing out earlier this year said it was looking for one to three partners.

The summary said the company estimates the basin contains recoverable reserves of gas ranging from 1 to 10 trillion cubic feet, “with a risk-adjusted most likely estimate of 3 tcf.”

Dodson said at the RDC conference that Andex plans to acquire 2-D seismic in late 2003 and take “the summer after that to interpret our data … and begin drilling in the winter of 2004-2005. Assuming we have success out there we would like to begin the developmental phase in 2005-2006, and be selling gas into Fairbanks in the fourth quarter of 2006.”

In the past, Andex has said it expects to spend $25 million on the Nenana project before the pipeline is built.

In the executive summary it said the purchase of existing 2D seismic would cost the company “approximately $500,000” and shooting 200 miles of new 2D would run in the neighborhood of $4.2 million. The drilling of two test wells would cost approximately $6.5 million each, Andex said, using an illustration of a 12,000 completed well as an example.

The company said it might also look at acquiring 300 miles of 3-D seismic at a cost of $10 million.

PALM STARTS PRODUCING….

He said the Kuparuk accumulation at Palm is estimated to contain 35 million barrels of recoverable reserves.

Drill site 3S came online Nov. 14 and is currently producing 2,350 barrels of oil per day from one well, with production is expected to peak at some 16,000 barrels per day in 2004.

“The time from the spud of the discovery well to first production was a mere 20 months, and I think this is a real significant metric in the performance of the company,” Mott said.

Editor’s note: Oil Patch Insider runs at least twice a month in Petroleum News Alaska. It is compiled by Wadeen Hepworth, who can be reached by phone at 907 522-9469 or by email at [email protected], and Kay Cashman, 907-245-2297 or [email protected].