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Leap of faith
HEX CI drills gas sidetrack from platform with 151 jack-up
Kay Cashman Petroleum News
Furie Operating, a HEX Cook Inlet company, recently drilled a sidetrack in search of natural gas using the Spartan 151 jack-up in its Kitchen Lights unit in Cook Inlet. Work on the sidetrack was being finished on Oct. 30.
HEX risked drilling even though the Alaska Department of Natural Resources, or DNR, has not given final approval on all of HEX's plans and applications.
John Hendrix, owner and top executive for Furie and HEX, told Petroleum News on Oct. 30, that "nothing has really been approved from DNR -- we're talking with them but 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. The sidetrack, KLU A-1A, was sidetracked off one of these four wells.
Purchased for approximately $40 million from Enterprise Offshore Drilling by Hilcorp Alaska on May 31, the Spartan 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. Hilcorp has renamed the jack-up the Enterprise 151. 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.
Due to the extremely small size of the Julius R. platform and its inability to accommodate the space needed for a drill rig, a jack-up rig is required to drill any new grassroot wells or major sidetracks in Kitchen Lights.
AIDEA financing On Oct. 23, 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 (just drilled) 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 is 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 directive 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 sufficient collateral.
Identifying gas zones In its 10th plan of development, or POD, filed with DNR's Division of Oil and Gas, 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 POD is in effect from Jan. 4 through Jan. 3, 2025.
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.
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