Doyon set to spud; Ahtna awaiting rig

Bigger uncertainty than drilling rig for Ahtna is whether Legislature extends ‘middle earth’ exploration credits, now set to expire

TIM BRADNER

For Petroleum News

Doyon Ltd. is set to begin drilling June 1 on its third exploration well in the Nenana basin southwest of Fairbanks. “All rig parts are now on site and are being assembled. Other support equipment is there as well. Our estimated ‘spud’ date is June 1,” said Jim Mery, Doyon’s vice president for lands.

While Doyon prepares to drill, Ahtna Inc.’s exploration drilling near Glennallen has been delayed by difficulties in securing a suitable rig for the well, which is to test a shallow natural gas prospect.

This will also be Ahtna’s third exploration well in the basin.

Ahtna had planned to use a rig from Cook Inlet that is now being used by Hilcorp Energy, but that has been delayed. “We’ll probably be able to get it by July,” Ahtna’s CEO, Tom Maloney, said in a text message.

However, a bigger uncertainty for Ahtna right now is the outcome of oil and gas tax credit legislation in Juneau, where the Legislature is meeting in special session.

“Tax credits for ‘middle earth’ are a big deal for us,” Maloney said in the text. Ahtna has been depending on a certain set of incentive credits, the “Frontier Basin” credits, aimed at stimulating exploration in middle earth, a nickname for the largely unexplored Interior Alaska sedimentary basins between the North Slope and Cook Inlet, which are due to expire in July.

Doyon is relying on another set of incentives that are likely to remain in law until 2022, although the situation with the legislation in Juneau is very fluid and almost anything could happen, it seems.

The initial prospect for Ahtna is at a depth of 5,000 feet and is likely to be natural gas, Joe Bovee, Ahtna’s vice president for lands, said in a previous interview. There will be a ready market for gas in the region, for power generation and space heating, Bovee said.

If enough gas is discovered a pipeline to the Matanuska-Susitna Borough might be possible, to connect with the existing Enstar Natural Gas Co. pipeline system.

For Doyon, this is the third try at finding oil and gas in the Nenana basin, a sedimentary basin that is mostly state-owned but with parts owned by Doyon itself along with the University of Alaska.

Doyon is drilling on state of Alaska leases, however, which were converted from an exploration license issued by the state when the Fairbanks-based Native corporation first began exploring.

Considerable seismic work in the basin has been done by Doyon and the initial area of interest is in a group of prospects a few miles west of the city of Nenana. A permanent road has also been built to the area, which facilitates access and allows drilling to be done in the summer.

When Doyon first began working in the basin the interest was in natural gas because the region was considered to be gas-prone. However, results from the first two wells showed indications of heavier hydrocarbons and the presence of a petroleum-generating system.

Doyon is using the Arctic Fox rig owned and operated by Doyon Drilling, the corporation’s drilling subsidiary. The rig was brought down from the Slope after it finished drilling winter exploration wells at Smith Bay for Caelus Energy.

Doyon and Ahtna had both previously had partners in their exploration but the partners pulled out, leaving the two Native corporations proceeding with the exploration with their own funds plus the help of the state tax credits.