Ahtna cites tax credits as it prepares to spud gas well
Ahtna Inc. is preparing a drill site near Glennallen to further its hunt for natural gas in the Copper River basin.
The Copper River-area Alaska Native regional corporation is building a gravel road and four-acre pad now, with first drilling of its exploration well Tolsona No. 1 scheduled for next month, according to a March 12 company release.
Tolsona No. 1 will be on state land about 10 miles west of Glennallen along the Glenn Highway.
Ahtna President Michelle Anderson said in a statement that the company is anxious to get drilling after beginning the exploration application process nearly six years ago.
“We are optimistic of a resource discover that will help address the rural energy crisis in the Ahtna region,” Anderson said. “A substantial discovery would benefit not only the Ahtna region but the state at large. It would provide a boost to the economy by putting Alaskans to work and help alleviate the high energy costs that many residents experience.”
The proposed well depth of 4,500 feet will reach the targeted Nelchina sandstone formation, according to Ahtna. Drill work will be done with a Saxon rig owned by the global drilling company Schlumberger Ltd.
Ahtna is partnering on the work with the Midland, Texas-based independent Rutter and Wilbanks, which hit gas when it drilled the nearby Ahtna 1-19 well in the mid-2000s. That well was abandoned, however, because of high-pressure water zones that were also encountered.
Ahtna conducted more that 40 miles of seismic surveys last winter, the results of which led to the decision to drill this year, according to the company.
Roy Tansy Jr., Ahtna’s executive vice president, testified to the House Resources Committee earlier this month that the company utilized the state’s Frontier Basin refundable tax credits for its seismic program and will do the same for drilling.
The state covered about $2.4 million of the $3 million in seismic costs and the company expects to recover 73 percent of its drilling costs estimated at $10 million through the tax credit program.
While Gov. Bill Walker’s proposed overhaul of the state’s oil and gas tax credit program does not touch the Frontier credits, Tansy urged the Legislature to extend them, as they are set to expire July 1, the start of the 2017 fiscal year. The Frontier Basin credits were established in 2012.
“Ahtna would not be doing this exploration if the tax credits were not there,” he said.
The Frontier Basin seismic credit can be used to cover 75 percent of costs up to $10 million for the first four surveys in the six Frontier oil and gas basins identified by the state. The drilling credit covers up to 80 percent of drilling costs up to $25 million, also on the first four wells in each of the areas.
Once drilling of Tolsona No. 1 is done in May the site will be demobilized and cleaned and the road will be available for public access to the surrounding state land.
Elwood Brehmer can be reached at [email protected].