Years before small independents flocked to Alaska to explore passed over corners of Cook Inlet, Aurora Gas saw an opportunity in the basin for a company of its size.
Aurora began acquiring properties in early 2000, picking up a block of acreage from ConocoPhillips Alaska Inc. and later grabbing another block from Anadarko Petroleum Corp., always with an eye toward shallow, discovered and undeveloped gas prospects.
The local independent currently operates five gas fields on the west side of Cook Inlet: Nicolai Creek, Lone Creek, Moquawkie, Albert Kaloa and Three Mile Creek.
Averaging cumulative production, Aurora Gas produced 3.4 million cubic feet per day between July 2012 and July 2013, according to the Alaska Oil and Gas Conservation Commission.
The Nicolai Creek unit
Aurora Power Resources Inc. created Aurora Gas in 2000 as an exploration and production arm. That same year, Aurora also traded its working interest in the Kenai and Cannery Loop gas fields to Marathon Oil Co. in return for the Nicolai Creek unit.
“We essentially traded a modest quantity of proved developed producing reserves at Kenai and Cannery Loop for a larger quantity of proved undeveloped reserves at Nicolai Creek,” Aurora Power President G. Scott Pfoff told Petroleum News in January 2000.
Between 1968 and 1977, Nicolai Creek produced fuel gas for offshore platforms. A pipeline would later allow the field to contribute to the regional grid, but in the early 1990s a former operator killed the best producing well at the field with drilling mud.
After cleaning out the well — Nicolai Creek Unit No. 3 — Aurora restarted production in late 2001. In subsequent years, Aurora also restarted production from the Nicolai Creek No. 1B and No. 2 wells and drilled Nicolai Creek No. 8 (now Nicolai Creek No. 9).
Aurora shut-in the Nicolai Creek field in 2005 while it sought a commercial arrangement to use the Cook Inlet Gas Gathering System, which transports gas across Cook Inlet.
In 2006-07, Aurora suspended drilling operations across its properties while it settled a dispute with Enstar Natural Gas Co, but recompleted Nicolai Creek No. 1B and No. 9.
Renewed focus at Nicolai
In recent years, Aurora has been renewing its focus at Nicolai Creek by bringing the Nicolai Creek No. 11 online in late 2009 and drilling the Nicolai Creek No. 10 in 2011.
Pleased with the results, Aurora permitted the Nicolai Creek No. 13 and No. 14 wells in early 2013 and expects each to yield an average production bump of 3 mmcf per day, according to Aurora Gas President Ed Jones. Aurora also plans to workover Nicolai Creek No. 10, which is producing more than 3 mmcf per day, but needs sand control.
Effective Jan. 31, 2012, Aurora sold the deep rights at Nicolai Creek — defined as starting below the Middle Tyonek — to Apache Alaska Corp. and Hilcorp Alaska LLC. As part of the deal, Apache included the area is its broad seismic plans for the Cook Inlet basin.
Averaging cumulative rates, Nicolai Creek produced 2.2 mmcf per day between July 2012 and 2013 and 3.1 mmcf per day between January 2012 and 2013, according to the AOGCC. In July 2013, the field produced nearly 55 mmcf, or nearly 1.8 mmcf per day.
Cumulatively, the field had produced nearly 7.9 billion cubic feet through July 2013.
For several years, Aurora has wanted to use a section of Nicolai Creek for third-party gas storage, a business proposition that would also improve deliverability in Cook Inlet.
The project would have converted Nicolai Creek No. 2 into an injection well.
Aurora held an open season in 2009 and got AOGCC approval in 2010, but has failed to sign up any customers in the years since.
With the Cook Inlet Natural Gas Storage Alaska facility now operational, the local storage market looks different, but if the current Cook Inlet exploration boom becomes a production boom, another third-party storage facility in the region may be welcomed.
Lone Creek and Moquawkie
The Anadarko acquisition also included the Lone Creek and Moquawkie fields.
Anadarko and ARCO Alaska discovered Lone Creek in the late 1990s with the Lone Creek No. 1 and also drilled Lone Creek No. 2. Aurora brought the field online in summer 2003, producing 5 mmcf per day from the original discovery well.
In 2005, Aurora offset Lone Creek No. 1 with the Lone Creek No. 3 well, which tested at 16.4 mmcf per day. The following year, Aurora recompleted several wells, including Lone Creek No. 1, describing the venture as a moderate success. After its two-year hiatus, Aurora returned to the field in 2009, drilling the Lone Creek No. 4 well.
Averaging cumulative rates, Lone Creek produced 749 thousand cubic per day between July 2012 and 2013 and 1.2 mmcf per day between January 2012 and 2013, according to the AOGCC. With no summer production listed, the field appears to have been offline.
Cumulatively, the field had produced 9.8 bcf through July 2013.
Concurrent with its efforts at Lone Creek, Aurora also developed the Moquawkie field, which is adjacent to Lone Creek along its southern border. The two prospects primarily consist of Cook Inlet Region Inc. acreage, and their management is intertwined.
Discovered in late 1960s
Mobil Oil Corp. had drilled the Moquawkie No. 1 discovery well in the late 1960s to look for oil, but completed it as a gas well. Aurora recompleted the well in 2003, testing it at a rate of 7.6 mmcf per day, and brought the field online in July 2004 at 5 mmcf per day.
The success gave Aurora optimism for its chances at bringing the other existing Moquawkie wells back into production. Those included Simpco Moquawkie No. 1 and No. 2 from 1978 and 1979, respectively, and Mobil Oil West Moquawkie No. 1 from 1970.
It was successful with Moquawkie No. 2.
In 2005, Aurora drilled Moquawkie No. 3, to offset the discovery well. It tested at 5.5 mmcf per day and came online that summer at nearly 4 mmcf per day. In 2006, Aurora recompleted the discovery well, work it handled in the same batch at Lone Creek No. 1.
Contract dispute
In 2006, the field became the center of a contract dispute with Enstar Natural Gas Co.
The dispute came when Aurora tried to exercise its contractual right to suspend deliveries at prices it called “far below what is economic.” Enstar sued Aurora for breach of contract. Under a 2008 settlement, Aurora agreed to pay Enstar more than $11 million to compensate the utility for the more expensive gas it purchased during the proceedings.
The debate raised questions about the fiscal regime for Cook Inlet.
With the state calculating taxes and royalties based on the “prevailing value” of all gas under contract, a producer selling below that value ended up making less for its gas.
Having resolved the legal issue, Aurora resumed its operations, drilling the Moquawkie No. 4 in 2008. The well encountered a shallow gas pocket, forcing drilling mud out of the wellbore, but the drilling operator was able to control the blowout within 24 hours.
Aurora also planned to drill a Moquawkie No. 5 well, but its parent company deferred the well until natural gas prices improved and ultimately never sanctioned the well. The well would have been near Moquawkie No. 4 and would have tested the high pressure gas responsible for the Moquawkie No. 4 blowout, as well as some coal beds in the area.
Averaging cumulative rates, Moquawkie produced 237 mcf per day between July 2012 and 2013 and 339 mcf per day between January 2012 and 2013, according to the AOGCC. In July 2013, the field produced 5.6 mmcf, or some 180 mcf per day. Cumulatively, the field had produced 4.9 bcf through July 2013.
The Albert Kaloa field
Albert Kaloa also came from the search for oil.
Pan American Petroleum Co. discovered the field in 1967 with the Kaloa No. 1 exploration well. The results from the Beluga formation justified bringing the well online in 1970, but Pan Am suspended operations in 1971, after sand and mud plugged the well.
Aurora took a stab at the Albert Kaloa field in 2004, drilling the Kaloa No. 2. The results led Aurora to bring the field back online in October 2004. Aurora subsequently drilled the Kaloa No. 4 in 2005 and the Kaloa No. 3 in 2009, but both wells were dry holes.
Albert Kaloa is located between the Nicolai Creek and Moquawkie units.
Averaging cumulative rates, Albert Kaloa produced 141 mcf per day between July 2012 and 2013 and 158 mcf per day between January 2012 and 2013, according to the AOGCC. In July 2013, the field produced nearly 2.6 mmcf, or 83 mcf per day. Cumulatively, the field had produced nearly 3.6 bcf through July 2013.
The Three Mile Creek unit
A little ways to the north, Aurora also operates the Three Mile Creek field.
Aurora and Forest Oil proposed the Three Mile Creek unit in 2003 to cover some 9,200 acres of State of Alaska, Alaska Mental Health Trust and Cook Inlet Region Inc. leases.
Using a slate of previous drilling and a recent seismic acquisition, the partners said they had identified at least two natural gas prospects and proposed an exploration campaign.
The state approved the unit in 2004, requiring two wells and new seismic.
Aurora drilled the Three Mile Creek No. 1 well in late 2004. It was the first exploration well for the company and tested at 5 mmcf per day from two Beluga intervals. Aurora brought the field online in August 2005 and drilled the Three Mile Creek No. 2 delineation well in November 2005. Aurora deferred a third Three Mile Creek well.
In 2006, Aurora performed an acid stimulation of the Three Mile Creek No. 2 as part of its recompletion activities. In 2008, after the hiatus, Aurora recompleted Three Mile Creek No. 2 to perforate some additional zones. Aurora hydraulically fractured the well in 2010 to improve production from the thin layers of productive sands in the Beluga. The successful program led Aurora to consider using the technique at its other wells.
Forest sold its Alaska assets, including Three Mile Creek, to Pacific Energy Resources Ltd. in 2007, but Pacific Energy filed for bankruptcy protection in 2009. The Miller Energy Resources-subsidiary Cook Inlet Energy acquired the minority stake in late 2009.
Aurora Gas drilled the Three Mile Creek No. 3 well in recent years, but despite completion work in numerous intervals the well has yet to support sustained production.
The fate of the well could determine whether Aurora drills a fourth development well.
On average, Three Mile Creek produced 134 mcf per day between July 2012 and 2013 and 231 mcf per day between January 2012 and 2013, according to the AOGCC. With no production listed, the field appears to have been offline this summer.
Cumulatively, the field had produced nearly 2.4 bcf through July 2013.
