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CIE restarting mothballed wells

Posted: Sunday, April 17, 2011

Buccaneer and Escopeta aren't the only independent oil and gas companies putting new drilling rigs to work in the Cook Inlet.

After receiving state approval to work on some shut-in wells in the Inlet last month, Cook Inlet Energy has rented a rig from Cudd Energy.

And they have two more rigs in the works.

The rented rig is working near the Osprey Platform, said company founder and Chief Executive Officer David Hall.

"I think Osprey has some of the biggest nuggets, as I call it, or reserves," Hall said.

The Osprey platform is an off-shore development near the west side of the Cook Inlet.

When Cook Inlet purchased their assets, the Osprey wells were mothballed. Earlier this month, the company got the rented rig out to those wells.

Hall said it should take less than two months to get the three Osprey wells back in action.

"We're excited," he said. "We spent a lot of money getting where we are today."

The company's work doesn't stop at Osprey.

A rig that the company already owns is on the west side of the Inlet, at the West McArthur River unit, getting winterized. And the company is making plans that would require renting or buying a bigger one.

The rig they already own will probably be put to work drilling for gas wells, Hall said. That could happen as early as this summer.

The other is needed for some wells that require more technical work to bring online.

Hall said the company's preference is to buy one that works for both on- and off-shore development.

Hall said the company is looking at rigs that cost $20-$24 million. There's a chance that the Alaska Industrial Development Export Authority will help with rig, but nothing is set yet.

In total, Cook Inlet has more than 500,000 acres in oil and gas leases and exploration licenses, and about 40 miles of pipeline -- some offshore, some on.

"We've got a tremendous arsenal bank of facilities," Hall said.

Cook Inlet, a subsidiary of Tennessee-based Miller Energy Resources, bought much of their acreage from the Department of Natural Resources in 2009, after it was abandoned by Pacific Energy, Hall said.

Since then, it has worked to bring various wells back online.

Mostly, the company produces oil in the West McArthur River unit. It also has a share in the three-mile creek field, operated by Aurora, which produces natural gas. The company uses that gas for its own operations, but eventually Hall said it plans to produce enough natural gas to sell some.

Hall said that the state's tax incentives helped make that development feasible.

"They are needed," he said. "It is extremely expensive to not only drill wells in Alaska but to operate."

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.



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