Company plugs, abandons Beaufort Sea exploration well

Posted: Thursday, February 13, 2003

ANCHORAGE (AP) -- The Calgary-based company exploring the McCovey oil prospect in the Beaufort Sea has plugged and abandoned an exploration well and decided not to drill a second well to probe the prospect further.

Documents filed with the federal Minerals Management Service say the well, drilled by EnCana Corp., was plugged and abandoned Feb. 3.

A spokesman for EnCana Corp. declined to comment on what the company found.

In separate documents filed by EnCana about its plans a year ago, company officials said that if the first exploration well showed potential, they might pursue the second well.

''In a dry hole scenario, the ... well would be plugged and abandoned,'' according to the documents. A ''dry hole'' is an oil industry term for an unsuccessful exploration well.

Oil and gas experts were reluctant to draw conclusions about the exploration based on EnCana's decision to plug and abandon the well.

Jim Eason, the former head of the state Oil and Gas Division, said that EnCana may be trying to tamp down expectations on a successful exploration. But he said that plugging and abandoning a well would be unusual if the company found oil.

''It's not typically done. Normally, you would think of suspending and coming back to do more work,'' Eason said. ''The temptation is to think that McCovey was a duster. Honestly, I don't know what conclusions you can draw from (plugging and abandoning).''

The Beaufort Sea has been probed for oil over the years. Several North Slope fields now producing are under the Beaufort.

The area holds billions of barrels of oil, according to state and federal estimates. But finding commercial reserves has been difficult, and the Beaufort has been the scene of numerous, high-cost gambles.

BP spent $2 billion to drill the Mukluk well in 1982. It was the most expensive dry hole in history.

Offshore oil fields in Alaska typically take longer and cost more to bring into production. Only large finds can offset high costs, Eason said.

EnCana holds roughly a one-third interest in McCovey. Chevron and ConocoPhillips also own an interest in the prospect.

Gov. Frank Murkowski touted McCovey during his campaign for governor as a likely source of new revenue in the coming years. Murkowski said McCovey could be a key source of revenue to close the state's budget gap.

''It's a field we hope will come in with as much as 300,000 barrels a day and which would provide the state with as much as $400 million a year by 2006,'' Murkowski told a statewide television audience during a debate in Fairbanks.

Murkowski's spokesman, John Manly, said, ''Obviously you are going to have setbacks along the way. We're still looking at ways to increase our oil production.''



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