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Producers 2024: HEX/Furie moves on gas
Jack-up rig at Kitchen Lights platform drilling for more natural gas for Alaskans
Kay Cashman Petroleum News
John Hendrix's message on Oct. 3, 2024, to his fellow Alaskans: "Great day for HEX/Furie and Alaska. Jack-up rig on our platform today at 10 am!! Drilling local natural gas for Alaskans!"
The Enterprise 151, formerly named the Spartan 151, is the jack-up.
The platform is the Julius R Platform, or JRP.
The field is the 83,000-acre Kitchen Lights unit.
And long-time Alaskan John Hendrix is the owner of HEX, the parent of HEX Cook Inlet. HEX Cl is the only 100% Alaskan-owned oil and gas company currently operating in the state.
Hendrix formed the HEX companies for the purpose of purchasing Furie Operating, its sister companies and their Cook Inlet assets -- principally to switch the Cook Inlet Kitchen Lights unit from foreign and Outside ownership to Alaska ownership. He accomplished this on June 30, 2020, making the purchase from a Delaware bankruptcy court.
In addition to the Kitchen Lights unit, the assets he acquired include the JRP, a 15-mile subsea gathering line and an onshore natural gas processing facility at Nikiski on the Kenai Peninsula.
While the platform is the newest and smallest in Cook Inlet, the unit is the largest by acreage and is considered to have undeveloped potential for natural gas.
Drilling for natural gas from the JRP meets the mandatory drilling conditions of the 10th plan of development that were written into the POD by the Alaska Department of Natural Resources' Division of Oil and Gas, which stated "Furie will drill a grassroots well or sidetrack well targeting additional gas resources during the 2024 POD," which runs from Jan. 4, 2024, to Jan. 3, 2025.
HEX risked drilling even though the division had not given final approval on HEX's application for royalty reduction, which was essential to help make the unit economic. HEX risked drilling because the jack-up rig was available and there was urgent need for natural gas in Alaska.
Hendrix, owner and top executive for both Furie and HEX, told Petroleum News on Oct. 30, that "we're taking a leap of faith by drilling this well. We're just trying to prove we are committing ourselves. We're here for Alaskans. ... We're doing our part."
The Kitchen Lights platform, the Julius R, is the smallest in the inlet with space for just four well slots; that is until HEX employed the latest technology.
"We currently have ... six conventional 30-inch slots that with new technology we can put two wells in each," Hendrix told PN on Oct. 31.
"We have also contacted the original builders, engineers and divers to add additional slots to grow our well count to 12 wells," he said.
The new sidetrack, KLU A-1A, was sidetracked off one of the original four well slots.
Hilcorp owns jack-up Purchased for approximately $40 million from Enterprise Offshore Drilling by Hilcorp Alaska on May 31, the Enterprise 151 is a 150 H class independent leg, cantilevered jack-up that can drill to 25,000 feet and operate in water depths up to 151 feet.
It is the only jack-up in the region and Hilcorp said it would make the rig available to other companies operating in Cook Inlet, presumably when Hilcorp is not using it on its own properties/leasehold.
AIDEA financing On Oct. 23, 2024, the board of the Alaska Industrial Development and Export Authority, or AIDEA, passed a resolution approving a "revolving line of credit for a HEX Cook Inlet development project to increase Cook Inlet natural production and supply."
HEX had applied to AIDEA for the $50 million revolving line of credit to finance a "multi-year Julius R platform based offshore and a land-based North Kenai exploration development program and associated infrastructure development for the Kitchen Lights unit ... and on other oil and gas leases held by Furie or HEX."
In its resolution, AIDEA said that HEX has proposed "substantial new investments in drilling, including the KLU A-1A (drilled in October 2024) and A-4A sidetracks, which would bring additional gas to market, but these projects are contingent on royalty relief at commercially reasonable terms that incentivize increased production of Cook Inlet natural gas for south central Alaska."
In its resolution AIDEA said there was a "forecast supply deficit of natural gas in the Cook Inlet" and "transmission outages will happen during January and February, the highest electrical load time. Unimpeded natural gas delivery to central and northern regions for electrical generation is critical to prevent blackouts."
In an Oct. 23 memo to AIDEA board members, Executive Director Randy Ruaro said the new funding is under AS 44.88.172, the Economic Development Account, over a 5-year period.
He said economic and development benefits for Alaska include:
--Enhancing the competitiveness of Alaska's natural gas markets by broadening access and resources.
--Increase jobs to five new permanent jobs and up to 100 during development operations.
--Retention of a resident skilled workforce in Alaska's oil and gas industry.
--Increased production of essential natural gas supply from the Cook Inlet.
--Possible future expansion.
In keeping with AIDEA's mission, Ruaro said HEX is an Alaska owned company with a focus on hiring and training Alaskans for Alaska's oil and gas sector.
He noted that HEX successfully paid off the 2020 $7.5 million AIDEA loan early and has provided evidence of sufficient collateral.
Identifying gas zones In its 10th POD Furie said G&G evaluations will continue with the priority of identifying additional gas zones that are potentially reachable from the Julius R platform.
The company is continuing to monitor production from existing producing wells and to identify mechanical additions that could extend economic gas production.
In the 10th POD period, the company intends to do wireline interventions as necessary with its own wireline equipment to maintain production levels from existing wells.
Timing of drilling The timing of HEX CI Furie Operating's drilling plans were included in the two incidental harassment authorizations, or IHAs, the company received from the National Marine Fisheries Service, or NMFS.
These authorizations are effective from Sept. 13, 2024, through Sept. 12, 2025, for year 1 activities, and Sept. 13, 2025, through Sept. 12, 2026, for year 2 activities.
Per NMFS Furie is planning to conduct the following natural gas activities:
In year 1, Furie will relocate the Enterprise 151 jack-up production rig to the JRP site and conduct production drilling of up to two natural gas wells with the Enterprise 151 across 45-180 days.
During year 2, Furie will again relocate the Enterprise 151 rig to the JRP site and conduct additional production drilling.
Furie proposes to conduct the rig towing activities between April 1 and Nov. 15 each year, but if favorable ice conditions occur outside of that period, it may tow the rig outside of that period.
Permits, production The Alaska Oil and Gas Conservation Commission currently lists two drilling permits for Furie Operating in the Kitchen Lights unit: KLU A-4A permitted June 25, 2024, and KLU A-1A permitted Sept. 13, 2024.
In August 2024, Furie averaged 9.745 million cubic feet per day of natural gas from two wells at Kitchen Lights, according to recent data from AOGCC -- 5.21% of inlet gas production in that month.
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