Explorers 2011: State says no to Donkel Oil & Gas offshore unit

Kristen Nelson

Petroleum News, Sept. 11, 2011

The Alaska Department of Natural Resources’ Division of Oil and Gas has denied an application from Donkel Oil and Gas LLC to form a unit offshore the Arctic National Wildlife Refuge east of the Point Thomson unit. (See “Donkel proposes new unit off ANWR coast,” in Sept. 11, 2011 Petroleum News at http://bit.ly/uY1Yrl.)

The Aug. 31 decision, signed by both division Director Bill Barron and DNR Commissioner Dan Sullivan, said formation of a unit “is not necessary or advisable to protect the public interest.”

The decision said the only benefit of formation of the Donkel unit would be to the leaseholders (Samuel Cade holds a 75 percent working interest in the leases and Donkel Oil and Gas LLC holds the remaining 25 percent), because it would extend the primary lease term of five of the seven leases proposed for the unit. Those leases expired May 31; the other two leases expire Aug. 31, 2016.

In a discussion of decision criteria, the decision said a proposed unit may be approved if it will “(1) promote conservation of all natural resources, including all or part of an oil or gas pool, field, or like area; (2) promote the prevention of economic and physical waste; and (3) provide for the protection of all parties of interest including the state.”

One of the leases is the location of the 1989 ARCO Alaska Inc. Stinson No. 1 well, which did not find oil at its primary or secondary objectives, but did find what the decision describes as “a significant zone of hydrocarbon shows and flow” beginning at 12,500 feet, with an open hole test at 14,863-15,194 feet achieving a flow of 430 barrels per day of crude oil and 7.1 million cubic feet per day of natural gas.

ARCO plugged and abandoned the well in 1990; ConocoPhillips relinquished the lease in 2008.

Can be done on leases

The four-year exploration plan proposed by Donkel Oil and Gas included seismic with a well to be drilled by Aug. 31, 2015, the fourth year of the exploration plan, but there was no plan to bring the unit into production.

Donkel Oil and Gas “has not submitted a plan to bring the proposed unit into production during the unit’s five year term,” the decision said.