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Oil Patch Insider Novice company joins oil sands fold; Cosmopolitan unit leases set to expire
Toss another name into the oil sands mix.
Deep Well Oil & Gas has doubled its oil sands holdings to almost 40,000 acres in the lightly developed Peace River area of northwestern Alberta.
With a former Alberta cabinet minister Horst Schmid as its chairman, Calgary-based Deep Well is following the lead of Blackrock Ventures, which expects to produce 15,000 barrels per day later this year from its Seal lease in the Peace River area.
The Deep Well bitumen deposit is estimated to be about 115 feet thick and could hold 2 billion barrels of recoverable reserves. Cosmopolitan federal leases set to expire Two federal leases in the Cosmopolitan unit on Alaska’s southern Kenai Peninsula are set to expire. The Minerals Management Service would like to see a firm work commitment for the joint state-federal unit before it grants a lease extension – something unit operator ConocoPhillips has not yet applied for.
“The leases are being maintained under an approved suspension of operations until this November. The SOO was issued to enable ConocoPhillips to complete a number of geologic and reservoir studies on the economic potential of the prospect,” Alaska Regional Director John Goll told Petroleum News in a written response Aug. 25.
ConocoPhillips’ first well at the prospect was spud in October 2001. A sidetrack was drilled in 2003. Since that time ConocoPhillips has been evaluating the prospect for possible development.
A former executive with Forest Oil, a working interest partner in Cosmopolitan, told Petroleum News it would take a jack-up rig to really test the prospect. (Pennzoil found oil and gas in the area in 1967, drilling offshore with a jack-up.)
There are no jack-up rigs in Alaska, although a number of companies, including Escopeta Oil (see page 1 story) have been talking about bringing one in for a few years.
Continuance of the suspension of operations, Goll said, will depend on the findings from ConocoPhillips studies “and future work commitments,” which he said “could include additional seismic surveys to better delineate the prospect before drilling another well.”
Both MMS and the state of Alaska have to approve “the scope and nature of any future work commitments,” Goll said. “If MMS does not approve a continuance of the SOO before the current SOO expires … the federal leases will expire.”
ConocoPhillips spokesperson Dawn Patience said Aug. 25 that it was “too soon to tell” if the company was going to file for extension or bring in a jackup as part of its work commitment. Cook Inlet running low on propane Alaska propane suppliers are currently shipping it in from Canada by rail because propane production has dropped off at Unocal’s Swanson River field in the Cook Inlet basin.
“Swanson has our highest BTU producers, highest propane producers. It is in a natural decline but the reason for the recent drop-off was well work we did at the field,” Unocal spokesperson Roxanne Sinz told Petroleum News recently.
The well work — coiled tubing velocity string inserts – was finished three weeks ago but production from the Hemlock, she said, has still not come back on.
“It was unforeseen that these wells would be slow in coming back around. … We’re still trying to get them back on. … It forces the wholesalers to buy from Canada,” Sinz said.
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