|
Cook Inlet finally pays off for Danco investors As his corporation wraps up its affairs, and with royalty income from Redoubt Shoal soon to flow in, Dan Donkel is looking at forming a new corporation to pursue other prospects in Alaska, including Cook Inlet’s Harriet Point Steve Sutherlin PNA Managing Editor
Danco Exploration and its founder Dan Donkel will finally cash in on their Cook Inlet investments later this year when they collect on overriding royalties from the Redoubt Shoal unit, an offshore oil field under development by Forest Oil Corp. in northern Cook Inlet. Depending on whom you talk to — the state or Forest Oil — Redoubt is expected to hold between 100 million and 200 million barrels of recoverable oil.
“My clients and I will be well heeled on these leases,” Donkel says.
Began buying leases in 1983 Dan Donkel started buying leases in Cook Inlet in 1983.
“I said Cook Inlet was underdeveloped … had tremendous potential, but I couldn’t get anybody to listen to me,” he says.
He did eventually secure some private investment to back his acquisition of both leases and technical data.
One of Donkel’s smartest investments, a fellow investor told PNA, was his purchase of Chevron’s geological and geophysical data from Cook Inlet as the company was exiting the inlet.
When asked if he has based a lot of his lease purchases in the inlet on that data, Donkel said yes.
“I got 3,000 miles of seismic from them and just about everything they had from studies of the inlet. I even agreed to hire some of their people for awhile, including their Cook Inlet exploration manager.”
It was Chevron’s data and the acquisition of former Redoubt Shoal leaseholder Amoco Production Co.’s seismic and drilling data that convinced Donkel Redoubt Shoal was a viable prospect.
Amoco discovered oil at Redoubt Shoal in 1967, but did not develop it in favor of other Cook Inlet projects, eventually letting the leases go back to the state. Danco Exploration picked them up in two state lease sales in 1991 and 1993.
“We’re more than a lease hound that buys leases just to sell. We interpret scientific data,” he says. “We’re explorationists.”
Danco sells Redoubt to Forcenergy By 1994, Danco had amassed 247,000 acres in Cook Inlet was in the top 10 leaseholders in the state.
Danco sold its Redoubt leases in 1996 to Forcenergy Inc. (predecessor to Forest Oil), keeping an overriding interest in the leases which have since been unitized. (See sidebar)
Danco Exploration, along with related companies Danco Inc. and Danco Alaska Partnership, voted to dissolve and wind up affairs in 1997 after the sale to Forcenergy.
Danco Inc. still exists for the sole purpose of pressing legal claims for Danco investors, Dan Donkel, its president, told PNA. Several of those claims have been against the state of Alaska.
Donkel says case law important Donkel has been an outspoken, sometimes turbulent, presence in Alaska’s oil patch and has been more than willing to go to court to prove a point. He thinks he is in court too much and he worries about the message that is sending.
But Donkel sees a higher purpose in his court battles, fighting for the right of a small company like his to exist in Alaska, and in the challenging environment of Cook Inlet.
“These cases are generating a lot of case law, and it’s important that we get good case law in Alaska,” Donkel says.
As his corporation wraps up its affairs, and with royalty income from Redoubt Shoal soon to flow in, Donkel sees an opportunity to redefine his position in the industry. Going into the future, Donkel told PNA, he wants to focus on the positive future opportunities for the public of Alaska and investors.
“We’ll form a new corporation, under Danco, or a new name,” he says. “People want to put money in but it’s hard to get people up there under the current regulatory conditions.”
Donkel’s future prospects This past May, at the state’s Cook Inlet areawide lease sale, Donkel invested in leases that expand his position in the area.
Before the sale he owned an interest in six Cook Inlet leases with Richard Wagner and Bolt, including one tract off the northeastern edge of Kalgin Island, one directly south of Redoubt, one east of the North Middle Ground Shoal field and one adjacent to the North Cook Inlet unit.
Donkel says he thinks the Redoubt Shoal structure extends as far south as Kalgin Island.
He also wants to develop a promising prospect at Harriet Point.
Jerry Hodgden, geologist and former director of Danco Inc., echoes Donkel’s excitement for Harriet Point.
“Harriet Point is a wonderful little prospect; I like it better in some ways than Redoubt Shoal,” Hodgden told PNA, adding that he would like to see a bit more seismic before drilling, but that he had seen enough to know they have something there.
“There’s a lot of undiscovered petroleum in Cook Inlet but the dollars were diverted to the North Slope,” Hodgden says. “But now we know there’s a lot of undiscovered oil; our seismic ability is better. We know about Cook Inlet.”
On the North Slope Donkel has interests in leases southeast of Kuparuk; two are directly south of the Prudhoe Bay unit and two are adjacent to the Prudhoe Bay unit near Deadhorse. Three tracts south of Prudhoe Bay and one west of the Dalton highway near the trans-Alaska oil pipeline have abandoned wells, he says.
| 