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THE INDEPENDENTS 2003: Evergreen boosts Alaska gas holdings Despite controversy, Sexton says coalbed methane producer remains committed to Alaska project Kay Cashman Petroleum News
Two and a half years after Denver-based Evergreen Resources purchased the 48,000-acre Pioneer unit in Alaska’s Matanuska-Susitna Borough, its subsidiary Evergreen Resources (Alaska) has expanded its acreage position to more than 300,000 acres, drilled eight coalbed methane wells in the Pioneer unit and set up an office and yard in Wasilla.
In late September Evergreen said it was testing five of the eight wells and planned to drill five stratigraphic test wells on various parts of its acreage “to obtain additional petrophysical data, including information on coal quality and gas content.”
Based on the results of the test wells, Evergreen said it “will determine potential locations in 2004 for additional stratigraphic test wells or multi-well pilots.”
2004 production possible The company could, in fact, begin some production in early 2004, but “begin” is the operative word because coalbed methane deposits take “several years to evaluate,” John Tanigawa, Evergreen’s Alaska projects manager, said at a presentation in early 2003.
The wells will “have to produce a lot more than a few hundred Mcf (thousand cubic feet) a day per well just to cover costs,” he said.
Despite the time-frame involved and the fact Evergreen has run into some opposition from Mat-Su surface property owners who do not want to grant subsurface owners access to the subsurface, Evergreen Resources President and CEO Mark Sexton said, “The expansion of our leased acreage base demonstrates our commitment to making shallow gas production a reality in Southcentral Alaska.”
Sexton’s comment was part of a prepared statement Evergreen issued Sept. 22, announcing it had acquired an additional 230,000 acres of “prospective unconventional gas properties” in the Mat-Su area, bringing the Denver-based independent’s total leased acreage in Southcentral Alaska from approximately 70,000 acres to more than 300,000 acres.
Evergreen said in a press release that the new properties — state shallow gas leases — were acquired through “several separate transactions.”
One tcf gas, 500 jobs A portion of the new acreage was included in the company’s Pioneer unit north of Anchorage between Wasilla and Houston, bringing Evergreen’s total net unit acreage position to approximately 75,000 acres.
However, the majority of the 230,000 acres are adjacent to Pioneer on the northwest, extending about 25 miles up the Susitna River Valley.
Sexton said recently that Evergreen thinks the recoverable gas in its Pioneer unit is approximately 1 trillion cubic feet, where several of the wells to date, drilled to an average of 3,000 feet, have encountered “over a hundred feet of coal.” He said the reserves are similar to what the company has in Colorado’s Los Alamos County where it employs directly or through contractors about 500 people for its Raton basin development.
Evergreen has not quoted a reserve estimate for the rest of its Alaska acreage, because “it’s way too soon to tell. We haven’t drilled into the rest of it,” company spokesman Jack Ekstrom said Oct. 7.
Prior attempts to produce coalbed methane in the area have been unsuccessful and Sexton said that after reviewing the well histories, “we are not surprised that none of the wells produce gas.” Evergreen knows through experience, he said, that “slight variations in drilling, cementing, completion and production practices” spell success or failure in coalbed methane wells.
Evergreen’s 2002 capital budget for Alaska was $6.4 million out of a company-wide budget of $113 million, Sexton told Petroleum News in late 2002. In 2003, Alaska’s share of a company-wide budget of $113 million was expected to be $6.5 million, Ekstrom said Oct. 7
Leanest, cleanest methane Since Evergreen applied for shallow gas leases in Alaska in August 2000, the company has been “encouraged” by the “enthusiastic” response it has received from state and local officials, Ekstrom said Sept. 23.
Knowles presents environmental award The administration of former Alaska Gov. Tony Knowles often flaunted the fact the Knowles administration had brought Evergreen to the state, pointing to the coalbed methane producer’s environmental record in Colorado — a state as “green” as Alaska in terms of environmental protections.
In fact, just before Evergreen acquired leases in, and took over operatorship of, the Pioneer unit in May 2001, Knowles presented the company with the prestigious chairman’s stewardship award from the Interstate Oil and Gas Compact Commission, an organization of oil and gas producing state governors of which Knowles was chairman.
Evergreen received the award for its produced-water handling program in the Raton basin of southern Colorado — i.e. for its stewardship of the land and its water resources.
Typically, coalbed methane wells produce as much as 95 percent water to 5 percent gas at first, but that ratio can reverse in five years to a level of 95 percent gas and 5 percent water, Sexton said.
The methane, after dewatering, is generally quite pure. “It could easily be pipeline quality gas coming right from the well head,” he said. “It’s the leanest, cleanest form of methane.”
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