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Evergreen Resources negotiating with Cominco, Lappi on shallow gas plays Pioneer drilling delayed one or two quarters until early 2002 Kay Cashman PNA Publisher
Mark Sexton, president and CEO of Evergreen Resources Inc., told PNA in August that his firm is in negotiations with Dave Lappi and Cominco Alaska Inc. regarding the exploration and development of 65 shallow gas leases in the Interior and four shallow gas leases north of the Red Dog Mine, respectively. Evergreen holds a 100 percent working interest in the 50,000 acre Pioneer unit, a prospective coalbed methane property 30 miles northwest of Anchorage in the Matanuska-Susitna borough. Lappi working on unitization Sexton said Evergreen has “reached agreement with Lappi’s group,” the contact name on 65 shallow gas leases that the state recently issued near Delta Junction to eight different leaseholders. Lease acreage totals 333,383 acres.
“We’re in discussions now about what makes sense for the exploration and potential development of that area and what is a reasonable time frame to test those properties.”
Sexton said he thinks the leases should be unitized: “We have agreements in place to drill wells but we think a necessary next step is to get a unit set up. … We have a lot of experience in Colorado with coalbed methane. To do it right you really need to unitize — you need the orderly development a unit provides.
“Mr. Lappi is working with me now to get a consensus as to what a proper unit would look like for that area. There’s no point in drilling if we don’t set it up right,” Sexton said.
“Individual wells make sense for a conventional play, but with coalbed methane individual wells benefit from offset wells. … production is enhanced when you drill wells in a cluster … and that’s hard to do without the benefits if unitization,” Sexton said.
A unit, he said, “gives you the time and flexibility to do it right; time to work with surface landowners. Our track record is that we have always performed beyond what was required in a unit.”
Unitization, Sexton said, is going to involve “another level of discussions with state. … We need the help of people inside the Alaska oil and gas division.”
Lappi told PNA that he is in “ informal discussions” with the state regarding setting up a unit to develop the eight leases.
“There’s nothing in state statutes that will prevent formation of a unit. … I think we can do it — there’s no magic to it. We’ll just be doing something that hasn’t been done before,” he said. Waiting for geologists’ report Evergreen is one of the companies that Cominco has approached to develop its four shallow gas leases on 23,040 acres in the Wulik basin some 8 miles north of the Red Dog Zinc Mine in Northwest Alaska. (See latest news about Cominco development on this page.)
“I visited the Cominco mine about two weeks ago and personally think there is a good opportunity for a natural gas play in the area,” Sexton said in early August. He is waiting for a report from Evergreen “senior geologists to determine” the extent of the “shallow tight gas sand play.” As of press date for PNA, Aug. 30, he had not received it. Pioneer re-completions postponed While Sexton was in Alaska looking at Cominco’s Wulik basin leases, he visited the Pioneer unit in the Matanuska-Susitna borough. Evergreen acquired the unit in May from Unocal Alaska and Ocean Energy Inc.
Evergreen had planned to move its drilling equipment from Ireland this fall to re-complete the coalbed methane wells drilled in Pioneer by Unocal and Ocean Energy, but Sexton said the re-completions have been delayed until after the first of the year.
“The equipment that is now in the U.K. and Ireland will be shipped to Alaska when we finish that drilling and completion program, which is not expected until the first quarter of 2002. Depending on shipping times and weather, we expect to fracture stimulate the CBM wells in the Pioneer unit in the first or second quarter next year, and to be drilling six to eight wells in the Pioneer unit in the spring or summer,” Sexton said.
Evergreen is a couple of years away from a decision to fully develop the Pioneer unit, and will be evaluating results of the re-completions and new wells next year. But if results from the re-completions and the next batch of wells are good, the company could be drilling in the neighborhood of 100 wells on the 50,000 acre unit, Sexton said.
The target at Pioneer, Sexton said, is about 1/2 trillion cubic feet of gas recoverable over a 20-30 year field life, produced at daily rates of 50-100 million cubic feet.
Mark Myers, director of oil and gas for the state, told PNA that “bringing Evergreen in was a very positive thing” for Alaska.
Myers said that in his opinion the Denver-based independent “is a very dedicated company. I expect an honest appraisal of the Pioneer unit and should it be economic, I would expect a significant amount of development activity.”
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