Buccaneer hits dry hole at West Eagle gas prospect

Buccaneer Energy hit a dry hole at its West Eagle gas prospect east of Homer, the company announced Feb. 17. The rig is still at the site to safely plug and abandon the well and will be moved from the location when that is completed, most likely within two weeks, Buccaneer spokesman Richard Loomis said.

The well was drilled to a depth of 3,700 feet, and while the sandstone rock being targeted showed excellent reservoir properties there were no indications of hydrocarbons, according to a Buccaneer press release.

“After having enjoyed discoveries at the Kenai Loop and Cosmopolitan fields, the results of the West Eagle well are disappointing. The company will now focus its efforts toward Tyonek Deep and Kenai Loop,” Buccaneer CEO Curtis Burton said in the release.

Kenai Loop is an onshore gas field near the city of Kenai where Buccaneer has two gas wells in production, a third drilled and ready to produce, and more drilling is planned. Tyonek Deep is an offshore Cook Inlet prospect.

Loomis said Buccaneer is still unsure where the drilling rig, which is owned by the company, will be sent.

The unsuccessful West Eagle well will cause Buccaneer to revamp its capitalization plan. Financing extended by Meridian, which is also a Buccaneer shareholder, will be repaid by June 30, according to the release: “Discussions with major shareholders and third parties regarding financing are in progress.”

Buccaneer said it will apply to the state Department of Revenue for eligible exploration tax credit payments. The company will also seek a refund of bonds filed with the state Department of Natural Resources.

On other matters related to Buccaneer, the Alaska Oil and Gas Conservation Commission will hold a second hearing on April 8 regarding Cook Inlet Region Inc. protests of Buccaneer’s plan to bring its third Kenai Loop gas well into production.

The well was drilled last year but the AOGCC has not allowed production to begin until the issue raised by CIRI — that the well may drain gas from land it owns adjacent to Buccaneer’s lease — is resolved.

The commission is also investigating whether the two wells now producing in the Kenai Loop field may also be draining some gas from the CIRI lands. The AOGCC may also consider establishing an escrow fund to hold royalty payments until the matter is resolved.

The Alaska Mental Health Trust is now the landowner on leases at Kenai Loop and the royalties now being paid are going to the mental health trust.

11/15/2016 - 4:31pm