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Tolsona No. 1

Ahtna successfully begins drilling program


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100 percent owner/operator Ahtna began drilling Tolsona No. 1 on September 29.

Photo courtesy of Ahtna, Inc. © 2016 Judy Patrick Photography

Ahtna, Incorporated announced on September 29 that drilling had begun for the Tolsona No. 1 gas exploration well. While drilling an exploration well may seem like the beginning of the process, Tolsona No. 1 was the cumulative effort of eighteen months of work—which is a “very accelerated schedule,” says Ahtna Oil & Gas Development Manager Dan Lee. “Those things typically take years in the making, and we’ve condensed them down to a year and a half or so.”

 

Tax Credits Essential

Ahtna Netiye’, Inc. Executive VP Roy J. Tansy Jr. says that when Ahtna decided to move forward with this project, it was with the understanding that in order for the project to be economically feasible, Ahtna would need to take advantage of soon-to-expire tax credits. “The 025 Middle Earth tax basin credit [scheduled] to expire at the end of June this year put us on a very tight time schedule,” he says. “Being a company that’s not able to absorb these types of expenses easily, the board was at a point in which it was either going to receive the tax credits and drill or not get those specific tax credits and put off this operation,” Tansy says.

Beyond significantly truncating Ahtna’s schedule, this also meant the company was competing for resources with any other entities also scrambling to take advantage of the credits—resources such as industry partners, subcontractors, equipment, etc. In fact, Ahtna had originally planned to begin mobilizing a 2 million pound drilling rig, materials, and equipment much earlier this year and ultimately delayed mobilization until September 8, waiting for the rig to become available. “That’s not to say the industry hasn’t supported us,” Lee says. Tansy and Lee say that their industry partners, including PRA (Petrochemical Resources of Alaska), Cruz Construction, Lynden, MagTec Alaska, Saxon Drilling, and Schlumberger, have been instrumental for the project.

 

Regional Considerations

Ahtna faced additional obstacles because of the well’s location: “Not a lot of wells are drilled in the Glennallen area, so the services and support for an oil and gas operation really aren’t there,” says Marty Lemon, PE, of PRA, which is providing drilling support services. “The logistics definitely are a challenge,” with equipment coming from both Kenai and the North Slope.

The well itself is challenging. “It’s a relatively shallow well, but there’s high pressure water in the area,” Lemon says. High pressure water is more difficult to control in a larger hole, so Ahtna had drilled a 9 and 7/8ths inch pilot hole to a depth of approximately 1,000 feet as of September 30. “We didn’t see any water, which is what we anticipated, and now we’re in the process of opening that hole up.” The hole will be enlarged to 16 inches to “allow us to run the 13 and 3/8ths inch casing that we need to set surface,” Lemon says. “There’s this big unknown about this high pressure water,” he says. Not every well dug in the area previously hit water, but the closest well to Tolsona No. 1 did, hence the precautions. “If we hit [high pressure water] it’ll take a little while to control it, but we’re all set up to do that with the design of the well.”

At press time Ahtna anticipated that drilling would take twenty-six days with a target depth of approximately four thousand feet, which is where a gas zone is located.

Lemon says that there are approximately fifty to sixty-fix employees on site. Eleven of those are Ahtna shareholders, the majority from the region, according to Lee. Lemon says the number of people on site spikes during “flat times,” which are periods of time between drilling when work is done to maintain the drilled well such as running and cementing casings and changing out surface equipment.

 

Tom Maloney, Ahtna Netiye’, Inc. CEO with Michelle Anderson, Ahtna, Inc. President on site.

Photo courtesy of Ahtna, Inc. © 2016 Judy Patrick Photography

 

Full Project Ownership

Ahtna had originally anticipated being a one third owner of this project. Tansy explains that with the drop of oil prices, both of Ahtna’s partners backed out of the project, and Ahtna decided to move forward as 100 percent owner/operator. He says that Ahtna is interested in addressing high utility costs and the issue of out-migration. “We would like to be able to attract development. We’d like to be able to lower the cost of living out in the region, and utilities are one way to do that. We’d like to provide jobs as well, long term jobs.” Ahtna is also supporting the local economy through housing by utilizing local lodges instead of constructing a man camp, in addition to using local water carriers and other services.

Lee says, “We’re trying to utilize the basin at a local level as much as possible. Ahtna has continued to stay the course and take this project on 100 percent, and that is a straight benefit to the region.”

 

 

This article first appeared in the November 2016 print edition of Alaska Business Monthly.

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