The Moquawkie Area holdings entail approximately 43,000 acres on the west side of the Cook Inlet. Most of the minerals are leased from Cook Inlet Region, Inc., which had to approve the assignments from ConocoPhillips to Aurora Gas. The surface lands are owned by the Tyonek Native Corporation, which has also approved the ConocoPhillips deal and will allow Aurora to use their existing roads and construct new roads to access various well locations. Aurora anticipates obtaining approvals on the Anadarko transaction shortly.
The acreage includes the Lone Creek No. 1 discovery well drilled in late 1998 by ARCO Alaska Inc. (now ConocoPhillips) and Anadarko. ConocoPhillips and Anadarko subsequently entered into a gas sales agreement with ENSTAR Natural Gas Company, a division of SEMCO Energy, Inc., and Aurora will take over the rights and obligations pursuant to that contract.
Aurora president, G. Scott Pfoff, stated, "Obviously, this is a very significant acquisition for Aurora Gas and another step towards our goal of becoming the premier, low-cost natural gas producing company in South central Alaska. As we have stated publicly before, we see shallow, conventional gas sands, particularly on the west side of Cook Inlet, as a real niche for our company. As with our Nicolai Creek Unit, we believe the Moquawkie Area acreage contains significant amounts of relatively shallow gas reserves, many of which had already been discovered while looking for deeper oil reserves during the exploration frenzy of the late 1960's. These reserves were either never developed, or completions were attempted with limited success utilizing technology of the day, which has subsequently improved."
Mr. Pfoff went on to say, "This acquisition enhances our position in the Cook Inlet as a major player in the energy business. We easily see two to three years of development and exploration activity ahead of us."
Andrew C. Clifford, Aurora’s Executive Vice President of Exploration stated, "In addition to the tremendous developmental potential in the Moquawkie Area, which includes the shut-in Moquawkie and Kaloa fields in addition to the Lone Creek discovery, we have identified numerous exploration prospects. We plan to shoot additional seismic, both 2-D and 3-D, to enhance our knowledge and select the best locations for drilling. We consider this to be one of the most promising areas in Cook Inlet for both oil and gas exploration."
Aurora Gas also announced that it had completed the well work associated with its 2002 Nicolai Creek Unit development program. The company successfully recompleted the NCU #2 well in three intervals from 2476 to 2916 feet and subsequently re-entered and sidetracked the NCU #1A well, which has now been designated NCU #1B. That well was completed in three zones ranging from 3191 to 3575 feet. Both wells tested commercial quantities of natural gas, but the wells will be tested more extensively before the company will release details of the results. Aurora had planned to drill a new well, the Nicolai Creek #8; however, Aurora has decided to defer that well until 2003.
J. Edward Jones, Aurora's Executive Vice President Operations, stated, "We are very pleased with the results; the flow rates and pressures observed confirmed our analysis as to the presence of significant and commercially viable natural gas reserves at the southern end of Nicolai Creek Field. We will now diligently pursue the installation of gathering lines and surface production facilities to get the gas to market. The company is evaluating several alternatives for tying these wells into the Cook Inlet Gas Gathering System and plans to have this gas on stream early in 2003."
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