On Dec. 29 Cook Inlet Energy, a Glacier Oil and Gas company, filed its latest plan of development for the Kenai Peninsula North Fork unit with Alaska’s Division of Oil and Gas. The 56th POD runs from March 31, 2021, through March 30, 2022.
Glacier sold the North Fork unit to Gardes Holdings, parent of Gardes Energy LLC, which applied with the division to be the new operator and leaseholder of the field in early November. (Per a previous announcement by Glacier, the purchase agreement with Gardes was dated Oct. 13 and effective Nov. 2.)
Glacier’s Cook Inlet Energy will remain the operator of the unit “during the transition process,” which is expected to be completed in first quarter of this year, Glacier COO David Pascal said in the POD filing.
The document, which was signed by Pascal, includes an annual report listing what Cook Inlet Energy accomplished during North Fork’s 55th POD period.
North of the city of Homer on the southern Kenai Peninsula, the North Fork unit produced an average of 3,184 thousand cubic feet of natural gas per day in November, down 13.8% from a November 2019 daily average of 3,693 mcf.
Looking for bypassed gas
In a Nov. 6 interview with Petroleum News Bob Gardes, president of Gardes Holdings, said he’s in the market for more gas properties in Southcentral and Interior Alaska and is aiming to be a top gas producer in the state.
“North Fork is just the first one of several we have been negotiating. … We see the Cook Inlet basin as one of the four top gas regions in the world,” Gardes said.
Gardes Holdings, which was registered in Nevada four years ago, is affiliated with his main firm Gardes Energy Services of Lafayette, Louisiana, incorporated in May 1977. All Gardes companies are privately owned.
“Natural gas is the fuel of the future. We hope to be gold star presence among oil and gas companies in Cook Inlet,” Gardes said. “We plan on acquiring our service needs from local Alaskan companies.”
“For the last 20 years we’ve been coming to Alaska,” he said, noting his company was one of the early pioneers of coalbed methane in the Lower 48.
“There is a lot of bypassed gas here because the deposits weren’t big enough” for the companies to bother with them, Gardes said. There also wasn’t a market for it in Alaska. But eventually gas became the fuel of choice for heating buildings in much of Southcentral Alaska, while gas-fired generation became the favored source of electrical power.
“We think the future in the U.S. is gas. It burns 98% cleaner than oil and coal. It is a transformational resource,” he said.
Accomplished under 55th POD
The annual report that Pascal filed included the “extent to which the requirements of the previously approved plan were achieved” in the period from March 31, 2020, through March 30, 2021.
The first requirement Cook Inlet Energy proposed in its 55th POD, which was approved by the division, was to enhance production from currently producing wells through infrastructure; specifically, additional compression and separation facilities.
The operator “partially completed a phase approached project” to enhance production by adding perforations to well NFU 24-26 in April 2020, increasing its output by 100 mcf per day. “The work was suspended due to outbreak of Covid-19,” the annual report said.
The second requirement was to continue monitoring and analyzing production from the existing North Fork wells and optimize production accordingly. This was to include monitoring water volumes and if necessary, converting a depleted well for water disposal.
Per the annual report, Cook Inlet Energy did continue to monitor, analyze and optimize production and was able to extend the life of the wells by “modifying compression capabilities on-site to accept reduced incoming pressure from wells.”
The third directive of the 55th POD was to evaluate the possibility of drilling wells outside the current boundaries of the North Fork Gas Pool No. 1 participating area, but that requirement was not directly addressed in the annual report and no such drilling occurred, likely because of unfavorable economic conditions as mentioned in the next paragraph.
The fourth and fifth requirements noted in the annual report were to look for opportunities for small production improvements through “small ball" projects, including “perforating additional zones and setting plugs as necessary to control water intrusion,” as well as doing “additional drilling,” which would depend on favorable economic conditions, including negotiation of long-term gas sales contracts.
In response to these conditions, the annual report said the operator “was able to control water production and utilize offsite disposal effectively” preventing the need for a water disposal well on site and that it “was able to further plan work on a booster compression and identify major equipment and resources required for decreasing overall system pressure in the facility.”
In regard to “actual operations that deviated from or did not comply with” the previously approved plan and an explanation of the deviation or noncompliance,” the annual report said that “unfavorable economic conditions, lack of resources and effects of the pandemic” resulted in an inability to invest in “major capital investment projects that covered workover operations to new drills.”
Plans for 56th POD period
As for the new owner and soon-to-be new operator Gardes’ plans, Glacier said in its Dec. 29 filing that “all planned development activities anticipated” are based on “all data reasonably available at this time.”
“Long-range proposed development activities” in the 56th POD, including plans to delineate all underlying oil or gas reservoirs, bring the reservoirs into production, and maintain and enhance production once it’s established will involve the following:
* Enhance and extend production from currently producing wells through infrastructure improvements, including additional compression and separation facilities.
* Continue monitoring and analyzing production from the existing North Fork wells and optimize production accordingly, such as monitoring water volumes and, if necessary, converting a depleted well for water disposal:
* As economic conditions warrant, “analyze additional prospective Tyonek zones for perforation in existing wells which are currently shut in.”
As “appropriate” and based on data review, market conditions and negotiation of long-term gas sales contracts, the operator plans to continue a development drilling program to fully delineate and develop all fault blocks within the current unit.
Further, the operator “will continue to evaluate the possibility of drilling wells outside of the current boundaries of the North Fork Gas Pool #1 PA.”
- KAY CASHMAN
