Friday, September 2, 2011

Buccaneer starts drilling second Kenai Peninsula gas well

By Tim Bradner
Alaska Journal of Commerce

Buccaneer Energy Ltd. has begun drilling on a second gas well at its new Kenai Loop project on the Kenai Peninsula south of Anchorage, the company said Aug. 29.

Drilling is expected to take 30 days, and testing will require an additional 14 days, company spokesman Dean Gallegos said.

The second well is development well drilled from the same surface pad as a discovery well drilled earlier this year.

"If the well is successful there is likely to be a significant increase in the current proved and probable estimates of 38.3 billion cubic feet of gas," in the Kenai Loop reservoir, which is about one mile from the producing Cannery Loop gas field, and near the city of Kenai.

The discovery well, Kenai Loop No. 1, tested at 6 million to 8 million cubic feet per day earlier this year. Buccaneer will put the well into production later this year and recently completed a gas sales contract with Enstar Natural Gas Co. The contract is now pending before the Regulatory Commission of Alaska.

Enstar spokesman John Sims said Enstar can expect a minimum of 12 billion cubic feet of natural gas throughout the term of the contract and that if the second and third wells planned by the company are successful, Buccaneer will be able to deliver an additional 19.5 billion cubic feet of gas.

"Buccaneer is another new independent producer taking advantage of the incentives now being offered by the state of Alaska for exploration in the Cook Inlet region," said Colleen Starring, president of Enstar.

Buccaneer's contract with Enstar provides for the utility to pay two seasonal price ranges for a firm commitment of gas, a non-winter range from $5.75 per thousand cubic feet to $10 per thousand cubic feet, and a winter (December through February) range from $6.86 per thousand cubic feet to $10 per thousand cubic feet, Enstar said in a press release.

Under the contract Enstar will also be able to buy non-firm gas, where service is interruptible, at prices similar to what the utility is now paying two other Cook Inlet producers, Marathon Oil and ConocoPhillips.

Buccaneer is also working on a separate plan to bring a jack-up rig to Cook Inlet later this year to drill offshore leases the company holds. The state of Alaska is assisting with the project through an investment in the drill rig and separate exploration tax incentives.

Another jack-up rig was recently moved to Cook Inlet by Houston independent Escopeta Oil and Gas and is preparing to drill.

Republished with the permission of the Alaska Journal of Commerce. Tim Bradner can be reached at tim.bradner@alaskajournal.com.