Aurora, Forest looking at two prospects at Three Mile Creek

Aurora Gas and Forest Oil are looking at two natural gas prospects in the Three Mile Creek unit on the west side of Cook Inlet in Southcentral Alaska.

Aurora filed an application with the Alaska Division of Oil and Gas to form the Three Mile Creek exploration unit, on the west side of Cook Inlet about four miles from the Beluga River unit. The unit would be smaller than the proposal described in a Petroleum News story Dec. 7 — 8,156 acres rather than 9,200 acres.

The application proposes the state and Cook Inlet Region Inc. jointly manage the Three Mile Creek unit agreement. The state owns 5,596 acres in the proposed unit and CIRI owns 2,560, 68.61 percent and 31.39 percent, respectively. Aurora holds 100 percent working interest ownership in 6,455 acres, including the CIRI acreage and one of the state leases, while Forest owns 100 percent working interest ownership in the other state lease, 1,701 acres, giving Aurora approximately 79 percent of the unit and Forest 21 percent.

The state said the applicants have identified two natural gas prospects within the Three Mile Creek unit area, and plan to acquire new seismic data over the unit area and drill an exploration well in each prospect during the three-year term of the unit agreement.

In the first two years of the plan, before Jan. 31, 2006, Aurora would drill the first exploration well or acquire at least 20 miles of new 2D seismic. The first well would be on state lease ADL 388233, owned by Aurora. Either the first well or the seismic acquisition must be completed in the first year or the unit terminates and the owners pay the state $8 an acre for the state leases.

Both the well and the seismic must be completed by Jan. 31, 2006, or the unit will terminate and the owners will pay the state $8 an acre for the expired state leases for each of the two years.

A well is required in the third year, unless the companies decide to shoot at least 15 additional miles of 2D seismic “over acreage not previously shot to better delineate the prospective trend.”

If the seismic option is exercised, Aurora will pay the state $8 an acre for the state acreage comprising the 15 lines miles of seismic for each of the three years, “gaining one additional year within which to commence drilling” the second well.