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Aurora gets Three Mile Creek PA approval Two additional pads possible in this area of unit; Olson Creek prospect in northern part of unit target for well in 2006 or 2007 Kristen Nelson Petroleum News Editor-in-Chief
Aurora Gas is a step closer to getting its west side Cook Inlet Three Mile Creek gas unit online with approval from the state of a participating area at the unit, a requirement before production can begin.
Aurora drilled the Three Mile Creek No. 1 well in December and perforated and tested four zones in the Tyonek and Beluga formation reservoirs in January. The Tyonek zones were non-commercial and were plugged back, Aurora said in its first plan of development for Three Mile Creek. The Tsuga 2-6 interval in the Beluga formation tested at some 2 million cubic feet a day, and Aurora said combined Beluga sand intervals tested this spring had a flow rate of approximately 5 million cubic feet a day.
The company plans to drill up to two appraisal/development wells in the participating area during 2005, and is seeking permits for two development drilling pads to be constructed to the north and south of the existing well pad, the Three Mile Creek central pad. The No. 2 well will be drilled from the northern pad and the No. 3 well from the southern pad. Aurora said two additional wells planned for 2006 “will be sited after a review of the results of the subsequent drilling.”
The Alaska Division of Oil and Gas approved the 960-acre Three Mile Creek participating area July 29. Aurora was the only working interest owner, but the state said Aurora has a contractual agreement to transfer 30 percent working interest to Forest Oil.
The participating area is limited to the Beluga formation sands between 3,530 feet and 4,605 feet measured depth in the Three Mile Creek Unit 1 well, and the state said data provided by Aurora indicates the Beluga formation within the proposed participating area “is capable of producing or contributing to the production of gas in paying quantities.”.
For purposes of royalties gas from the participating area will be allocated 87.5 percent to the state lease and 12.5 percent to the CIRI leases. Plan of development includes exploration The first plan of development for the participating area runs July 1, 2005, through Jan. 31, 2007, and includes plans to develop reserves underlying the Three Mile Creek participating area and to explore the unit area outside of the participating area. The exploration plan for Three Mile Creek called for an exploration well in what is now the participating area and additional seismic data over the unit area: both of those requirements were met.
A second exploration well, at the Olson Creek prospect, has been rolled over from the exploration plan into the development plan. Aurora identified two natural gas prospects, Three Mile Creek in the southern area and Olson Creek to the north, when it applied for the Three Mile Creek unit, which was approved in 2004. The development plan gives Aurora until Jan. 31, 2006, to agree to drill an exploration well in the Olson Creek prospect, and until Jan. 31, 2007, to drill the Olson Creek exploration well or the two northern tracts will contract out of the unit. There are contraction penalties of $16 an acre in January 2006 and $24 an acre in January 2007 if the Olson Creek well is not drilled and the northern tracts contract out of the unit. Two additional pads planned at Three Mile Creek The central pad at the unit will include facilities for water separation, compression and dehydration of the produced gas; a six-inch gathering line will ship pipeline quality gas approximately five miles to Aurora’s Lone Creek pipeline.
Aurora told the state that when it begins production from the Three Mile Creek it will gradually increase the rate from the initial well to approximately 5 million cubic feet per day. When cumulative production reaches 300 million cubic feet Aurora plans to shut in the well to perform a pressure build-up test, and if reservoir pressure is favorable, will proceed with further drilling to delineate the participating area.
The state said Aurora’s first plan of development includes plans to install two additional development drilling pads north and south of the central pad and to drill four delineation/development wells, two in 2005, one from the north pad and one from the south pad, with data from the first three wells to determine bottomhole locations for the two additional wells.
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