Cook Inlet Energy brings in two new rigs

Cook Inlet Energy’s David Hall delivered good news about jack-up rigs in the Cook Inlet at Wednesday’s Kenai Chamber of Commerce lunch.


The independent oil and gas company has plans to add two rigs to the list of those available for Cook Inlet production.

Rig 34, a drill rig brought up from Tennesse earlier this year, is being upgraded for use in Alaskan waters at the West MacArthur River unit.

That unit is an area with state oil leases on the west side of the Cook Inlet, just northwest of Nikiski.

Eventually the rig will be used for shallow gas well drilling.

Hall said the modifications are needed to drill with mud, and should be done within a month.

“We’re very excited about trying to see how this rig will work,” he said.

A second rig is under construction in Houston. The company recently bought that one, named Rig 35, from Vorhees, a company that has produced other rigs for the inlet.

“I feel confident with having a known rigbuilder build our rig,” Hall said.

Hall said he expects Rig 35 to leave Houston for the Cook Inlet by the end of August.

It will be trucked to Seattle, and then put on a ship for the remainder of its journey. Hall said the rig should arrive at the Osprey platform in the Cook Inlet by the end of the year.

The rigs will enhance the company’s ability to open previously shut wells, and drill new wells.

Hall said the company is also considering renting them out to other producers in the inlet. Cook Inlet Energy has looked at modifying their schedule to help accommodate other producers wanting to use the rigs, he said.

“We want to make (Rig 34) open and accessible to other operators in the inlet,” he said.

The company opted for purchasing Rig 35 because it pencilled out to be a better financial choice than renting rigs.

“We’ve got many years of drilling that we think we can launch into,” he said.

Similar rigs have proven to have a life-span of about 20 or 30 years, Hall said.

Hall helped found the independent oil and gas company in 2009. Since starting primarily with assets from the now-defunct Pacific Energy, the company has continued to expand its acreage.

Hall said tax incentives have helped make some of the company’s projects feasible, and it hasn’t had a problem with the permitting process delaying the company’s work so far. The state’s Department of Natural Resources has been supportive, he said.

“The permitting process has actually gotten better,” he said.

The company hopes to eventually bring natural gas to market, and increase production of crude oil, Hall said.

So far, it has restored two previously shut-in wells at the Osprey platform and has a number of other wells in production.

The company also plans to develop its midstream capabilities, he said.

That means being able to handle waste disposals, and maybe even serving other companies. Right now its renting tanks as part of its efforts to develop a presence and let other companies see what it is capable of.

The company isn’t just interested in renting to other companies. Hall said Cook Inlet Energy was able to save on mobiliziation costs by sharing some seismic technology with Apache. And he was positive about other companies joining his in the inlet in general.

“It’s very exciting to see Apache and Hillcorp announce their presence,” Hall said.


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