Providing coverage of Alaska and northern Canada's oil and gas industry
December 2017

Vol. 22, No. 49 Week of December 03, 2017

OK on Nenana drilling

Doyon board approves plan for fourth exploration well in basin for summer 2018

Alan Bailey

Petroleum News

The board of Doyon Ltd. has sanctioned the drilling of a fourth exploration well, the Totchaket No. 1 well, in the Nenana basin, the Native regional corporation for the Alaska Interior has announced. The drilling will take place during the summer of 2018.

The drilling targets are prospects identified from a 64-square-mile 3-D seismic survey that Doyon conducted last winter in the more northerly part of the basin, James Mery, Doyon vice president for lands and natural resources, has told Petroleum News. The prospects lie in a combination of state of Alaska leases and Doyon owned subsurface. Doyon plans to drill the well to a depth of about 12,500 feet, penetrating the Grubstake, Sanctuary and Healy Creek formations.

Mery also commented that amplitude anomalies in the seismic data suggest the presence of hydrocarbons - natural gas or possibly light oil - at several levels in the subsurface.

“We see multiple prospects at several horizons,” Mery said.

Doyon is particularly focused on finding oil but thinks that the basin also holds substantial volumes of gas. The seismic anomalies have the potential to be a game changer for the corporation, Mery said.

East of the Tanana

The planned drill site lies east of the Tanana River, north of where the Nenana River flows into the Tanana and 10 to 12 miles west of the Parks Highway, Mery said. Rather than building a substantial, all-season road to the site, summer access to the site will primarily be by river, supported from the town of Nenana 20 miles to the south by barge and crew boat. A small, less than one-mile access road will connect a barge landing on the Tanana to the gravel drill pad. The pad, road and barge landing will be constructed during the winter.

Doyon has still to determine which drilling rig to use for the project and is evaluating a couple of options, Mery said.

In addition to the promising seismic results, wells that Doyon has previously drilled have encouraged the Native corporation in its exploration efforts, Mery said. The Nunivak No. 2 well, drilled in 2013, penetrated several hundred feet of gas saturated sand, but the gas pressure was too low for commercial production. Doyon concluded that the prospect’s hydrocarbon trap had failed at some time in the past. However, the gas did include propane, a finding that provided evidence for a thermal rather than biogenic origin for the gas and, hence, the possibility of oil in the basin. And then the Toghotthele No. 1 well, drilled in 2016, encountered several dozen oil shows, indicating that oil had moved through the subsurface at some time in the past.

Convenient location

The Nenana basin, a large sediment-filled basin southwest of the city of Fairbanks, is conveniently located near the road and rail transportation corridor between Southcentral Alaska and the Interior, thus making the basin an attractive target for potential oil or gas development. The hour-glass shaped basin has a relatively shallow saddle in the middle, near the town of Nenana, and deeper sub-basins to the north and south. Doyon has previously drilled three wells in the basin, all on the central saddle, at locations into which Doyon hoped hydrocarbons had flowed from deeper sections of the basin. The deepest sub-basin is in the north, where Doyon now plans to drill. Basin depths in this area are thought to be sufficient to subject coals, the likely hydrocarbon sources, to temperatures and pressures conducive to the formation of oil. Prior to last year’s 3-D seismic survey, Doyon conducted 2-D surveys in the northern part of the basin in 2012 and 2014. The 2014 survey also revealed some direct hydrocarbon indicators, Mery said.

The new drilling targets are adjacent to the hydrocarbon kitchen in the north. The seismic hydrocarbon indicators also point to other prospects that could become drilling targets in the future, Mery said. In addition, while the leakage of hydrocarbons in potential traps to the south may be related to the uplift of the rocks in that area, the northern part of the basin appears relatively undisturbed, he said.

Gas for Fairbanks?

Doyon says that, had the trap for the reservoir penetrated by the Nunivak No. 2 well not failed, the reservoir could have delivered some 150 billion to 180 billion cubic feet of natural gas, enough gas to supply Fairbanks for more than 25 years. Success at Totchaket No. 1 could result in a similar size of gas resource, Doyon says.

As part of a Doyon news release announcing the Totchaket drilling decision Mery commented on the potential impact of the Alaska Industrial Development and Export Authority’s Interior Energy Project on Doyon’s efforts in the Nenana basin. As part of the IEP, Interior Gas Utility in Fairbanks is about to decide on whether to agree to purchase Pentex Natural Gas Co. from AIDEA, a deal that would provide IGU with a liquefied natural gas supply from the Cook Inlet basin and would be funded through an AIDEA financing, including a loan with a 50-year term.

“Although our primary target is oil, our gas prospects are greater,” Mery said. “So it is unfortunate timing to see the Interior Gas Utility ready now to commit to a course of action with AIDEA which will tie Fairbanks for at least a generation to imported LNG by truck at much less favorable price projections. This potential IGU purchase also eliminates the option for use of future Nenana gas as well as foreclosing future opportunities to tap into any North Slope gas export line.”

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