Doyon Ltd. plans third test well in Nenana Basin for 2016

File Photo/Michael Dinneen/For the Journal

Despite the slump in crude oil prices an Alaska Native corporation is pushing ahead with a multi-year exploration program in the Nenana Basin in Interior Alaska and will drill a third test well in 2016, Doyon Ltd. CEO Aaron Schutt said Aug. 13.

Doyon will drill the Toghotthele No. 1 test well near where two earlier tests were drilled, in a area about 60 miles southwest of Fairbanks.

The corporation is the first to conduct a sustained exploration program in large undeveloped basins in the state’s Interior. Commercial oil and gas discoveries in Alaska have been so far made only in Cook Inlet and on the North Slope.

The Interior basins were long believed to be mainly gas-prone by state geologists but Doyon’s exploration has confirmed the presence of oil as well as gas in the Nenana Basin, as well as indications of oil as well as gas in the large Yukon Flats basin further north, where Doyon is also exploring.

Doyon is drilling the well with its own funds, although the state’s exploration incentive program could provide assistance. The corporation drilled the second well itself, also with the benefit of the incentives, but had partners on the first well.

The corporation drilled two wells previously in the Nenana Basin with significant shows of oil and gas. Several seismic programs have also been conducted, the most recent in late 2014, Schutt said.

Doyon holds 400,000 acres of state oil and gas leases and owns another 200,000 acres itself.

The corporation is one of the largest private landowners in the U.S. with about 12 million acres of surface and subsurface lands, mostly in Interior Alaska. Besides exploring on mainly state-owned lands in the Nenana Basin, Doyon is also exploring on its own lands in the Yukon Flats, a large sedimentary basin along the Yukon River north of Fairbanks.

Doyon’s exploration in the Nenana Basin began in 2005.

The corporation believes it is now closing in on a target with good prospects.

A primary goal of the overall program is oil but the basin is also known to be gas-charged and there are high hopes for a commercial gas deposit might be found at the third well. 

 “We are excited to begin the next phase of our exploration program,” in the Nenana Basin, Schutt said.

“Building on promising results from each of our earlier programs, we have substantially reduced exploration risks to a point that we estimate the chance developable (commercial) gas at one in two, and one in five for oil.”

According to a statement issued with the well announcement, “The results (to date) show an active hydrocarbon system throughout the basin with source rocks that produce oil and gas, world-class reservoir rocks, abundant traps, and rock types that should seal oil the traps.

“The Nunivak #2 well in 2013, while not commercial, encountered thick sections of natural gas-charged reservoir rocks. Analysis of Nunivak #2 gas also demonstrated the presence of ‘wet’ hydrocarbon fractions including propane.”

The “Arctic Fox” drill rig, which is owned and operated by subsidiary Doyon Drilling, will be used to drill the well.

Toghotthele No. 1 will be drilled about seven miles west of Nenana and two miles north of the existing Totchaket Road that was built by Doyon for its earlier exploration. New road construction to the new site will be done this winter and the well itself will be drilled in the summer because of the year-around access to the site.

Doyon’s prospects are a few miles west of existing major infrastructure like the Parks Highway, the Fairbanks-Anchorage electric intertie and the route of a proposed large diameter natural gas pipeline.

11/20/2016 - 11:39am