Nenana basin could hold oil as well as gas

The Nenana Basin west of Fairbanks could hold oil as well as natural gas, officials with the state Division of Geological and Geophysical Survey and Doyon Ltd., which is leading exploration company in the region, told a state legislative committee in Juneau on Jan. 30.

An analysis of source rock samples from the Nunivak No. 1 exploration well drilled in the basin two years ago by Doyon and several partners, along with data from new gravity surveys and coal samples, show the presence of substantial levels of hydrogen, an indicator that oil as well as gas is present in the Nenana Basin.

“This has changed the prospectivity of this basin,” said Bob Swenson, director of the state Division of Geological and Geophysical Surveys.

New data indicates sediments in the basin could be much deeper than previously thought, as deep as 25,000 feet, Swenson said, a depth sufficient for the basin to generate oil. 

Jim Mery, vice president of lands for Doyon Ltd., a Fairbanks-based Alaska Native regional corporation leading exploration in the region, said he believes the basin could hold 300 million barrels to 1 billion barrels of recoverable oil, most likely spread across several accumulations.

“We don’t expect these to be giant fields,” he said.

Swenson and Mery spoke before the House Resources Committee in Juneau Jan. 27.

Doyon’s primary interest is gas as a fuel for local markets, Mery said, but the presence of oil as well as gas in the basin means any gas that might be discovered could hold gas liquids like propane, which could be an important fuel for small villages in Interior Alaska.

Doyon holds exploration rights to 515,000 acres of state lands in the area, along with 43,000 acres of its own private lands that are nearby, although those lands are not included in the current exploration program.

The Fairbanks company and several partners drilled a $20 million exploration well in 2009 in the southern part of the basin, and while no commercial discovery was made, the presence of an operating petroleum system in the basin was confirmed, Mery said.

Interpretation of the well information along with new gravity surveys and seismic data that was acquired has now led Doyon to explore in the northern part of the basin, which is now thought to have deeper sediments and better chances for a discovery.

This week Doyon and its partner, independent Rampart Energy of Denver, began a 125-mile two-dimensional seismic survey in the area, the data from which will be used to plan new drilling. The work will be completed in March, Mery said.

SA Exploration, an Anchorage-based geophysical company, has been contracted to do the work, which will employ 30 to 60 people, Mery said.

Doyon has been engaged in Nenana Basin exploration for 10 years and has had several setbacks, including two changes in state tax laws that scared off potential partners and difficulties in acquiring a drill rig suitable for the well.

Rampart Energy is still a partner but two other partners involved earlier, Usibelli Energy and Arctic Slope Regional Corp., both Alaska firms, are not participating in the latest seismic work.

While the area is very prospective, Mery said there are also commercial challenges. The closest market is Fairbanks, where fuel oil is now used for space heating and power generation, but Doyon’s plans to serve Fairbanks with could be affected by a plan by Golden Valley Electric Association and Flint Hills Resources, operator of a local refinery, to build facilities to truck liquefied natural gas from the North Slope.

However, a longer-range plan for the state to assist construction of a gas pipeline from the North Slope to Southcentral Alaska could provide Doyon with other markets for Nenana Basin gas.

11/07/2016 - 1:59pm