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Vol. 24, No.35 Week of September 01, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

Guitar unit exploration plan filed, then approved by DNR in 2 days

Kay Cashman

Petroleum News

On Aug. 28 Barry Foote of Alliance Exploration LLC received approval for the Guitar unitís second plan of exploration from the Alaska Department of Natural Resourcesí Division of Oil and Gas two days after the small independent had submitted it.

Alliance said in the plan it would spud a vertical well from an ice pad prior to March 31, 2020, to evaluate the Kuparuk and Ivishak formations.

James Beckham, acting director of the division, approved the Guitar unit plan of exploration for the period of Sept. 1 through Aug. 31, 2020.

Formed in August 2017, the unit consisted of three leases on the North Slope, just south of the Prudhoe Bay unit - ADL 391544, 391545 and 392104.

In June, Alliance said it had finalized a lease transfer document and production sharing agreement with ConocoPhillips on a fourth lease, ADL 28249, that sits at the northwest quadrant of what, with the three unit tracts, forms a square shape.

The fourth lease was of intertest to Alliance because the well head of the Hemi Springs State No. 1 discovery well, drilled by ARCO in the mid-1980s on the tract, was certified as capable of producing hydrocarbons in payable quantities from the Kuparuk C formation. The bottom hole of the well was on one of Allianceís three Guitar unit leases.

Those three leases and the fourth Conoco tract had previously been part of the Hemi Springs unit, formed in 1983 by ARCO Alaska and terminated in 1992.

Second default involved well

As previously reported in Petroleum News, one of the two Guitar unit defaults issued by the division was cured, per an Aug. 19 decision by DNR Commissioner Corri Feige.

On March 26, Alliance had received a notice of unit termination for failure to provide a plan of exploration update and failure to comply with applicable statutes and regulations requiring a unit operator bond to be posted with DNR.

The company had promised to secure the $500,000 bond by June 25 but did not do so until Aug. 5.

In her decision to dismiss the March 26 default, Feige asked that Alliance also file its second plan of exploration no later than Sept. 1.

The second default, however, was not cured and was still in effect after the plan of exploration was approved Aug. 28. It had been issued Feb. 7 for failure to meet work commitments; specifically, to spud a well on one of Allianceís three leases by March 31 of this year.

In the companyís Guitar unit plan of exploration, approved by the division in 2017 in conjunction with the unit formation approval, Alliance said that it would drill a well in one of its three leases in the winter of 2018 or 2019.

The well would penetrate the Ivishak, the formation that hosts the Prudhoe Bay reservoir, with a lateral well targeting a seismic anomaly in the Kuparuk C. Depending on the results from the first well, Alliance said it might drill a second well the following year.

And positive results from the first well would trigger a plan for delineation drilling, Allianceís plan said.

Oil potential

The divisionís approval document for the Guitar unit said that Alliance had used an interpretation of the logs from the Hemi Springs well to infer the location of the oil-water contact at the base of the Kuparuk C oil accumulation and had used 3D seismic to trace that contact into the Guitar unit leases - the seismic interpretation suggested space for a potential oil accumulation up dip of the oil-water contact.

Foote told PN June 25 that although Guitar could have an upside about 200-300 million barrels of oil, his company needed a partner to help cover the cost of drilling a well.

- KAY CASHMAN



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