Doyon Ltd. resumes exploration in Nenana Basin

Doyon Ltd. has resumed exploration for oil and gas in the Nenana Basin in Interior Alaska.

The Fairbanks-based Alaska Native regional corporation has initiated a 55-square mile 3-D seismic program near where Doyon previously drilled two exploration wells in 2009 and 2013.

The work will be done in October and will help Doyon define prospective targets for a third well, Doyon vice president Jim Mery said. The earliest a third well could be drilled is in fall, 2015, because it will take time to process and analyze the seismic data now being gathered.

A primary objective is oil, Mery said, which Doyon believes is present in the 1,200-square mile basin, but natural gas is also likely to be found.

“This new data will supplement findings from our previous exploration including two deep exploration wells drilled in 2009 and 2013 and two prior seismic programs,” Mery said.

The area being explored is near Nenana, about 60 miles southwest of Fairbanks and the Trans-Alaska Pipeline System.

If the venture is successful it could open a new oil-producing region of Alaska. Currently there is oil production only from the North Slope and Cook Inlet.

Doyon’s first test well in 2009, which was drilled with three partners, was about 4 miles west of Nenana. The second test, which Doyon drilled on its own in 2013, was seven miles further west.

“Our new target area is essentially between the two wells and extending to the north,” Mery said.

“This is a geologic feature we had been before in our 2-D seismic but based on the drilling of the previous wells it now has risen in prominence,” in Doyon’s strategy, Mery said.

“If we’re successful, we believe the trap could be several times the minimum economic size needed,” to support production, he said.

A gravel road was built west from Nenana to the exploration well sites and that infrastructure, along with a bridge across the Nenana River now being built by the city of Nenana, will greatly facilitate new exploration.

The seismic now underway, contracted by Doyon to CGG Land (US) Inc. is helicopter-supported and will have little effects on the land surface, Mery said.

This is also the first 3-D seismic being done in the Nenana Basin. Previously only 2-D seismic has been done, by Doyon and others.

Three-dimensional seismic is done on a grid pattern and provides a more intensive view of subsurface geology than 2-D seismic, which is done in parallel lines. Because 3-D is more expensive than 2-D the technologies is typically used when an explorer has focused on an area of special interest.

Doyon holds 43,000 acres of state oil and gas leases in the basin and also owns subsurface rights to an additional 43,000 acres in the area. The corporation has approximately 19,000 Athabascan shareholders who live mostly in Interior Alaska region. It is also one of the largest private landowners in the U.S. with surface and subsurface ownership of about 12.5 million acres in Alaska’s Interior.

The lands were granted by Congress under the 1971 Alaska Native Claims Settlement Act.

The Nenana-Minto Basin exploration is attracting attention because previously it was thought that the sedimentary basin was too shallow for the formation of oil, and would be more prone to gas.

ARCO and Unocal drilled two shallow exploration wells in the 1980s at the southern edge of the basin that were unsuccessful. At the time it was not known that the basin extended farther north, and was deeper. Essentially, those two wells were drilled in the wrong place, Mery said.

Doyon did its own geologic reconnaissance and in the late 1990s and, with partners, did seismic in 2005 and 2013. It was  concluded the basin is much larger deeper than previously thought, possibly extending to 20,000 feet, Mery said. 

Alaska has several large Interior sedimentary basins long believed to be gas prone, but new work by the U.S. Geological Survey and Doyon has shown that some, like the Nenana Basin and the large Yukon Flats Basin north of Fairbanks, also have potential for oil.

Doyon is also exploring in the Yukon Flats where it also owns 1.48 million acres along with several local village corporations. Geochemistry has indicated the presence of oil as well as gas hydrocarbons, Mery said. Doyon has also done seismic in the Stevens Village area along the Yukon River, a region relatively close to TAPS.

The State of Alaska has extended special exploration tax credit incentives to largely unexplored “frontier” basins in Interior and northwest Alaska.

Besides its oil and gas exploration Doyon is also heavily engaged as an oil services contractor to North Slope producers. Its wholly-owned Doyon Drilling is the state’s second largest drilling contractor. Doyon Associated, a pipeline subsidiary, recently completed a 22-mile, 12-inch liquids pipeline connecting the Point Thomson gas and condensate field on the North Slope with the existing Badami pipeline and the TAPS at Prudhoe Bay.  

08/21/2014 - 8:29am