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Purchase of Nicolai Creek field approved, new owner takes over
Alan Bailey Petroleum News
Aurora Exploration has now completed its purchase of the Nicolai Creek gas field on the west side of the Cook Inlet from Aurora Gas, Scott Pfoff, president of Aurora Exploration, told Petroleum News in a Jan. 3 email.
“The transaction closed effective January 1, 2018 and Aurora Exploration has taken over operations at Nicolai Creek unit,” Pfoff said.
He said that his company’s immediate focus would be on the ownership transition and conducting compressor repairs in the field. The company will then use coiled tubing to clear sand from several key wells, to boost production.
“Once these goals have been achieved, we will be in a position to pursue the numerous upside opportunities we see at Nicolai Creek unit such as development drilling, unconventional reserves, gas storage and the potential for oil exploration,” Pfoff said.
Purchased from Aurora Gas Aurora Exploration has purchased the field as part of the fallout from the bankruptcy of Aurora Gas. Although similar in name, the two companies are completely separate, each having different ownership and management.
The purchase had been delayed because of issues regarding Alaska Oil and Gas Conservation Commission requirements for surety bonding for the plugging and abandonment of the six Nicolai Creek gas wells. Initial bonding levels mandated by AOGCC ran to several million dollars, levels that Aurora Exploration said would have rendered the field uneconomic. The commission has since reduced the bonding requirement to $200,000, the traditional level for wells in Alaska, thus enabling the field purchase to move ahead.
On Dec. 18 the federal bankruptcy court in Alaska approved the sale of the field. And on Dec. 28 Alaska’s Division of Oil and Gas approved the designation of Aurora Exploration as field operator, subject to the company posting an operator bond with the Alaska Department of Natural Resources.
Plan of development Also on Dec. 28 Chantal Walsh, Division of Oil and Gas director, approved Aurora Exploration’s plan of development for the field. As previously reported in Petroleum News, the plan involves the coiled tubing cleanout of existing wells and the drilling of a new well in the field.
During the first quarter of 2018, Aurora Exploration plans to conduct cleanout operations in the NCU No. 9, the NCU No. 10 and the NCU No. 11 wells. The company has also committed to drill a NCU No. 12 development well by the end of December. The development well will be a 900-foot directional well, drilled towards the west-northwest from a surface location south of the Nos. 3 and 10 wells and targeting the productive Beluga and upper Tyonek sands.
The plan also indicates that Aurora Exploration is interested in the future possibility of converting the NCU Nos. 2 and 9 wells for gas storage operations at some time in the future. The company also plans to negotiate the purchase of some 3-D seismic data from Apache Alaska Corp., to support the evaluation of possible new exploration, development and drilling targets. Apache owns deep rights under the Nicolai Creek unit but has withdrawn from exploration in Alaska, the plan says.
Aurora Exploration has also indicated to the division that Nicolai Creek will likely become uneconomic in 2022, and that the company would likely plan for well abandonment and surface equipment removal during the summer of that year.
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