Doyon Plans New Interior Gas Exploration Effort in Nenana Basin

- Doyon Plans New Interior Gas Exploration Effort in Nenana Basin

Monday, August 15, 2011
Alaska Journal of Commerce
by Tim Bradner

Doyon Ltd., the Interior Alaska Native regional corporation, is planning new seismic work this winter in the northern part of the Nenana Basin, an Interior Alaska basin about 60 miles west of Fairbanks that is considered gas prone but also has oil potential.

About 120 miles of two-dimensional seismic is planned for this winter, according to Jim Mery, Doyon's vice president for lands. The seismic will set the stage for a possible exploration well drilled in the area, he said. It would be the second test well drilled in the Nenana Basin in recent years.

Doyon is an Alaska Native development corporation with about 11 million acres of surface and subsurface land holdings in Interior Alaska. The Nenana Basin project is on state-owned lands held under an exploration license, a form of state lease. The license area includes 483,000 acres of general state lands and an additional 9,500 acres of lands owned by the Alaska Mental Health Trust Authority, a state agency that leases its lands to support mental health programs.

Mery said Doyon plans to press ahead with exploration in spite of an announcement by Golden Valley Electric Association, the regional electric utility, and Flint Hills Resources, operator of a refinery near Fairbanks, that they will pursue a project to truck liquefied natural gas from the North Slope.

The Fairbanks area is a near-term market for any gas discovered in the Nenana Basin, although a 60-mile pipeline would be needed to bring the gas to the Interior city.

On the other hand, a plan by the state of Alaska to pursue a 24-inch pipeline built from the North Slope to Southcentral Alaska would have its line pass through the Nenana Basin near where Doyon plans exploration. If gas is discovered, and if the pipeline is built, Doyon could ship its gas to Southcentral Alaska through the pipeline.

"There are a lot of moving parts to the pipeline and natural gas picture, and our decision is to move ahead with our plans," Mery said.

Doyon and three partners drilled a well two years ago in the southern part of the basin with mixed results. No gas was found but there were indications that hydrocarbons were present in the region. Doyon's partners in the Nenana Basin exploration have been Arctic Slope Regional Corp., another Native development corporation with holdings on the North Slope, and Usibelli Energy LLC, an affiliate of Usibelli Mines, which operates a coalmine near Healy, also in Interior Alaska.

Mery said this winter's program will involve the first seismic done in the northern part of the Nenana Basin, which is believed to hold the deepest part of the basin, with sedimentary rocks possibly as deep as 16,000 feet.

State geologists have said the basin exhibits somewhat similar geology to the prolific Cook Inlet basin in southern Alaska and is generally considered prospective for natural gas. A geologic assessment of the basin indicated the possibility of 3 trillion cubic feet of technically recoverable thermogenic gas in the basin, with the possibility of additional biogenic gas. There were two earlier exploration wells drilled, by Unocal in 1962 and ARCO in 1984, but the wells were drilled at the far southern, and shallowest, part of the basin and were unsuccessful.

A key advantage of Nenana Basin gas for the state's 24-inch pipeline is that a 500 million cubic feet per day limit that applies to the state project because of its contract with TransCanada Corp. does not apply to gas found in Interior Alaska and shipped through the pipeline, said Dan Fauske, president of the Alaska Gasline Development Corp., the state corporation planning the 24-inch pipeline.

The state's 24-inch pipeline could move 500 million cubic feet per day from the North Slope to comply with the TransCanada contract and any gas from the Nenana Basin could be above that amount, Fauske told legislators in recent briefing.

TransCanada and ExxonMobil Corp. are planning a 48-inch pipeline built from the North Slope to Canada and are working with incentives offered by the state. As a part of the agreement the state is limited in helping a competing pipeline that would ship more than 500 million cubic feet per day from the slope.

The 500 million cubic feet per day limit is a source of frustration to many state legislators because it limits the development of industrial customers who would need more than the gas that could be delivered under the limit. Industrial customers are needed for the 24-inch pipeline build to Southcentral Alaska to be economically viable.

Copyright (c) 2011, Alaska Journal of Commerce, Anchorage

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Interior Dept Asks Congress to Raise Oil-Drilling Violation Fines

- Interior Dept Asks Congress to Raise Oil-Drilling Violation Fines

Wednesday, June 29, 2011
Dow Jones Newswires
WASHINGTON
by Tennille Tracy

The Interior Department is asking Congress to increase fines for oil and natural gas companies that break offshore drilling laws, with one Interior official saying current fines are more of a "trivial nuisance than an effective deterrent."

The department urged Congress to take this step while announcing a modest increase to existing fines to reflect inflation adjustments, as required by law. The department said it is restricted from raising penalty rates beyond inflation rate increases.

The maximum civil penalty rate for violations of the Outer Continental Shelf Lands Act will increase from $35,000 to $40,000 per day, while violations under the Oil Pollution Act go from $25,000 to $30,000 per day.

Michael Bromwich, director of Interior's Bureau of Ocean Energy Management, Regulation and Enforcement, said in a statement Wednesday that Congress should raise the rates "significantly."

"The inadequacy of our civil authority hampers our ability to effectively regulate offshore activities, and renders such fines a trivial nuisance rather than an effective deterrent" he said.

The bureau has undertaken several measures to tighten offshore drilling standards since the Deepwater Horizon oil spill.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Murphy Oil climbs after receiving deepwater drilling permit

Murphy Oil climbs after receiving deepwater drilling permit



The Interior Department yesterday granted a deepwater drilling permit to Murphy Oil (MUR) for a sidetrack well, according to a press release issued by the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement. A sidetrack well is drilled to a new geologic target or a new location within the original target from the existing wellbore.

The company had a rig on location when drilling preparation activities were halted due to the temporary drilling suspensions imposed following the Deepwater Horizon oil spill. In early afternoon trading, Murphy gained $2.41, or 3.21%, to $77.48.

Bills Requiring US Action on Oil Leases, Permits Gain Support

Bills Requiring US Action on Oil Leases, Permits Gain Support

Friday, April 01, 2011
Dow Jones Newswires

by  Ryan Tracy

A proposal to require the Obama administration to sell offshore oil leases and act on drilling permits within a set time frame gained more supporters Thursday, with Senate Republicans introducing legislation to do so a day after House Republicans backed the idea.

The bills announced by Senate Republicans also took a far broader approach than the House proposals and included a grab bag of initiatives. The Senate bills would open up the Arctic National Wildlife Refuge in Alaska for drilling and direct royalty monies on those lands to "renewable energy development," according to a summary of the legislation distributed by the office of Sen. David Vitter (R., La.).

They would direct the Environmental Protection Agency to reissue a permit to a much-debated coal mine project operated by Arch Coal Inc. (ACI) in West Virginia, direct the State Department to issue permits for TransCanada Corp.'s (TRP) proposed pipeline connecting producers extracting oil from sands in Alberta, Canada, to the central U.S., and prevent the administration from considering greenhouse gases linked to climate change if the administration moves to protect endangered fish or wildlife.

The set of bills announced Thursday by Vitter, John Barrasso (R., Wyo.), and 26 other senators would also require the administration to conduct lease sales in the outer continental shelf, including in the Gulf of Mexico and Virginia.

The bills would require the Interior Department, which oversees offshore oil and gas drilling, to act on permits within 40 days, including a 10-day period for the applicant to respond to possible problems. The House Republicans' bill would require action within 60 days, depending on the application.

The bills have support from many Republicans, but at least one has expressed concern that they outline too rigid a framework.

Sen. Lisa Murkowski, (R., Alaska), the ranking Republican on the Senate Energy Committee, which oversees the Interior Department, told reporters Wednesday that she had "reservations" about rigid timetables for permitting and leasing.

"I think it's important to understand that not all permits may be equal and all leases are not equal," Murkowski said, explaining that permits and leases in less explored areas in Alaska might take longer than permits in "well-established" areas in the Gulf.
"If what we are doing is putting in place a more efficient permitting process, I'm all over it, but I think you need to give yourself a little bit of leeway in the event that it's not a 'one size fits all' type of approach," Murkowski said.