In Alaska, Native wildcatters push ahead with exploration at oil and gas prospects

By Alex DeMarban, Alaska Dispatch News - November 18, 2016

Doyon Limited says a third well it drilled about 50 miles southwest of Fairbanks failed to find commercial quantities of natural gas or oil, but the company will press ahead with exploration in the frontier region outside the state’s established fields in Cook Inlet or on the North Slope.

Officials with Ahtna Inc., meanwhile, said Thursday afternoon the company was about 100 feet away from the formation it hopes will produce gas from a well near its Glennallen headquarters. The potential pay zone was expected to be reached within hours.

“Today is sitting on eggshells,” said Michelle Anderson, Ahtna president.

The announcements from the two Alaska Native corporations came on Thursday during the annual resources conference of the pro-industry Resource Development Council, where large companies such as ConocoPhillips and small wildcatters provided glimpses of upcoming plans to increase oil and gas production in Alaska.

Anderson said she would not provide more details about the Tolsona No. 1 gas exploration well in Glennallen, but hoped the company would have exciting news to share in a couple of weeks.

The Native corporations want to find discoveries that provide years or decades of oil or gas production, plus jobs, dividends and lower-cost energy to their Alaska Native shareholders.

They’re taking advantage of tax credits the Legislature extended until June for what’s known as the “Middle Earth” region, a whimsical name for the area between the Slope and Inlet in Southcentral Alaska.

Ahtna has said its Tolsona well will cost $11 million, with up to 80 percent of that potentially covered by the state under the credit program.

Doyon has said its decadelong exploration program will cost about $100 million by the end of this year, with about $60 million of that reimbursed by the state.

Aaron Schutt, CEO of Doyon, said on Thursday the results from the company’s third well in the Nenana basin, this one about 10 miles west of Nenana, did not have commercial levels of oil or gas to support production.

The well is called Toghotthele No. 1, Athabascan for “hill on the water,” referring to nearby topography. It was drilled in a partnership with Cook Inlet Region Inc., the Anchorage-based Native corporation and a 45 percent partner, Schutt said.

Two previous wells in the Nenana basin, drilled by Doyon in 2009 and 2013, also did not lead to production.

The Toghotthele No. 1 was drilled deeper than the two previous wells, to about 12,000 feet, Schutt said. The company started drilling the well in early June, about a month earlier than the previous wells.

The additional time and depth allowed Doyon to collect a “much better suite of data” this time, helping Doyon better understand the basin’s potential, said Schutt.

That extra data encouraged the company to move ahead with a 3-D seismic program in January, covering a large area about 10 to 15 miles north of where the company drilled this summer.

Doyon’s board sanctioned the decision Saturday, he said.

The company expects to have data to analyze by next spring, covering land that is half-owned by Doyon, half by the state.

“We’re hopeful the results encourage us to drill well No. 4,” Schutt said.

John Hendrix, oil and gas adviser to Gov. Bill Walker, said he’s hopeful the seismic work leads to increased oil or gas production that can generate additional tax and royalty income for Alaska.

“Exploration builds wealth so this is a good opportunity for the state,” he said.