Cook Inlet Energy has big plans for summer drilling, producing

Cook Inlet Energy may be a small company, but it has big plans for drilling and producing that are either in the works or will begin this summer, a company official told a group of industry representatives earlier this month.


David Hall, CIE’s Chief Executive Officer, spoke about the company’s plans at the Alaska Support Industry Alliance’s Kenai Industry Education Forum on Feb. 15. Hall said the company will look to drastically increase production, ramp up drilling, bid in the state’s May acreage lease sale and continue to “scour” the Cook Inlet for opportunities.

“Our plan is to not have any gaps in our drilling schedule,” he said. “Our financial backers are constantly pushing me and I can’t move fast enough, to be honest.”

CIE, which formed in 2008, is currently producing 1,200 barrels equivalent a day and has acquired 750,000 acres in the Cook Inlet basin. The company’s goal is to “more than double production in 2013,” Hall said.

“We see a huge amount of potential not only on the oil, deep oil, but also on the gas,” Hall said. “A lot of our acreage is on the huge gas reserves, which includes the Susitna Basin for not only conventional but non-conventional gas.”

The company has spent about $35 million in the last two years to bring two drill rigs to the inlet to work on wells, including drilling from the Osprey Platform.

“We are in pursuit of a third and even possibly a fourth drill rig,” Hall said, later adding the company is currently in negotiations with drilling rig contractors. “You’ll see us be more and more aggressive as time goes on.”

Hall said CIE has recently completed two wells from the Osprey Platform that hold gas — RU3 and RU4 — in order to secure gas needed for its own operations and in hopes of filling some of the looming inlet deficit predicted by Southcentral utilities.

“So as you can see from the workovers that we have had identified, the sidetracks and the new wells, we see that we are going to keep this rig on the platform drilling non-stop for in excess of three years,” Hall said.

The company is eyeing continued work on three main gas prospects this summer — Otter, Olsen Creek and the Susitna Basin — with another six in development, he said.

CIE drilled the Otter No. 1 well to a depth of 5,600 feet in June, but plans to re-enter the well to drill deeper.

“We’ve still got a lot of hopes in that field — we think it holds about 45 (billion cubic feet) of recoverable gas,” he said.

However, the well has been expensive for the company to develop due to its remote location, Hall said. To date, CIE has spent $10 million on that operation alone, he said.

“We’re a small company, but we’re spending big money,” he said.

Hall said he estimates that Olsen Creek holds about twice the amount of gas than the nearby Otter prospect. He said the company was “very excited” about the play, which likely holds deep oil potential. The company plans to spud a well there by this summer, he said.

The Susitna Basin, Hall said, has a large conventional and non-conventional gas resource — 3.5 trillion cubic feet — and the company is considering expanding and updating its seismic data in the area.

Hall said CIE has eyed five prospects in the Susitna Basin, is currently focused on three areas, and has permitted a pad and road on two of those prospects. He said he hopes to spud wells there sometime in 2013.

The area also has “huge” coalbed methane potential in that area, Hall said.

“(I’m) not sure we’re ready to dive into that just yet,” he said. “We’ll stick with the conventional gas development for the time being.”

Overall, Hall said CIE is aggressive, but “we are here for the long term, as well.”

“One thing you’ll find about our company is that we not only have a substantial acreage position, but we do have a lot of prospects — drill rig prospects — that we can put into production fairly soon after it is completed,” he said.

Brian Smith can be reached at