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Forest bullish on Alaska Company’s new Alaska head sees growth opportunities for Forest in Alaska Kristen Nelson Petroleum News Editor-in-Chief
Despite disappointing production results from the Redoubt Shoal field in Cook Inlet, Forest Oil is looking for growth opportunities into Alaska.
“Forest is bullish on Alaska,” the company’s new senior vice president for Alaska operations, Leonard Gurule, told Petroleum News Oct. 27.
Forest said Sept. 24 that Gurule had been named to fill the Anchorage post, left vacant when Gary Carlson left the company in August. Gurule, who spent 19 years with ARCO, including management positions at Prudhoe Bay and Kuparuk, was most recently chairman of the board and chief executive officer of Virginia Indonesia Co.
Gurule said he is “going through all of our properties, all of our assets,” to determine what prospects look good for drilling and where the company wants to defer work, where it should take on partners and where it should drill itself.
And the company just acquired two exploration licenses in the Susitna basin, he said, an indication the company plans to continue exploration in the state. Field study under way for Redoubt Production from the Redoubt Shoal field has been a disappointment, but a field study under way in Anchorage will help the company understand the reservoir and produce new reserves estimates, he said, and a drilling review should identify the most cost-effective ways to drill at the Cook Inlet field, where Forest in 2000 set the first new platform since the late 1980s.
“Redoubt, obviously, is producing less than what we had expected,” Gurule said. Forest’s “concern is that we understand the reservoir, that we understand the producing mechanism.” That field study is on schedule, he said, so that by the end of the year, when reserve estimates have to be filed with the Securities and Exchange Commission, Forest will have a new determination of what it believes the Redoubt Reserves to be.
The field study includes “reevaluating the geology and the geologic model,” information which will go into a reservoir model to help the company determine how many wells to drill into the reservoir, whether or not to waterflood, what recovery the company can expect, “given the wells that we have,” and what recovery could be expected if more wells are drilled. Seventh well being drilled Six wells have been drilled at Redoubt Shoal: Four are producing oil, one is producing gas and one has been suspended because of collapsed casing. A seventh well is being drilled now.
All of the wells are directional, drilled from the platform in shallower water to the structure in the deeper channel in Cook Inlet. True vertical depth of the wells (vertical distance to the surface) is about 12,000 feet, Gurule said, but the measured depth (length of the well bore) is as much as 20,000 feet.
Work is also under way, Gurule said, to minimize the drilling costs at Redoubt.
This is a typical drilling assessment, he said, and involves comparing drilling costs at the Redoubt wells interval by interval, to ensure that we’re “applying the best practices that we’ve discovered throughout all of the wells that we’ve drilled to date on the Redoubt structure, as well as using information from Unocal, who’s been drilling in the inlet for a number of years.” Three exploration licenses On the exploration side, Forest has three exploration licenses in Alaska: one in the Copper River basin and two, just awarded by the state, in the Susitna basin. Gurule said the company is “looking at some activities now in the Copper River,” determining how the company might go forward in that area, where a five-year license was awarded in 2000.
Some seismic has been shot there, and Gurule said Forest will shoot more seismic and also do some reinterpretation of the seismic the company already has.
The goal, he said, is to determine if there are any oil plays, because Copper River’s location is an issue.
It is “far from infrastructure. So, if it’s oil, you’re close to the Taps system. If it’s gas, where’s your market?”
Forest is just starting to look at what it will do on the Susitna basin licenses. Cook Inlet exploration acreage Forest has extensive acreage in the Cook Inlet basin, and Gurule said he is “going through all of our properties, all of our assets, to determine what looks good for us to drill, what looks like something that we’ll want to lay off… Where will we take partners? Where will we drill ourselves? Where do we want to explore?”No jack-up rig in 2004 Asked if Forest would bring a jackup rig into Cook Inlet, Gurule said, “it is too early to tell.”
But, he said, “if we’re going to have a jack-up in the inlet next year, we almost need to have that under contract now.” And there is no jack-up under contract now.
“Where we’re at today is looking at all those prospects. Determining what additional work we need to do, determining whether we take partners in some, none or all of those prospects.” Forest is also talking to other operators in the inlet to see who would be interested in partnering on a jack-up rig, “to share the costs of mobilization and demob of the jack-up rig.”
All of that, Gurule said, takes time, “so we’re not in a position to be able to contract for a rig at this point, which almost clearly says there won’t be a rig here next year.” Future for Alaska In spite of its litigation difficulties over Redoubt, which delayed getting the project online, Gurule said Forest is not discouraged about operating in Alaska.
“I would say it’s the opposite. We are encouraged, in Alaska, given how favorably oil and gas companies are treated by the Legislature, by the current governor. I would say the environment in Alaska is friendly.”
There is a “differential quality to operate in Alaska” compared to the Gulf of Mexico or maybe the south Texas coastal area, he said.
“I just think the standards we’re held to are much higher here. There’s no doubt about it.”
It’s a different standard in Alaska, but Gurule said he doesn’t “view that as discouraging to what we’re doing in Alaska. It’s the environment that we’re operating in, and I accept that. And we hold ourselves to the higher standard.”
As for the future, Gurule said he sees Forest “growing in Alaska. I see us looking at all of our assets and all of our resources, and making sure that we have the right resources that we need to face the challenges that we’re facing in Alaska, so that we can grow profitably.”
That’s what he’s doing now, Gurule said, making sure the company has the resources it needs to grow profitably.
“But that’s what makes it fun, in my opinion: Forest didn’t hire me to come and be the custodian of what is already here.”
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