ANCHOR POINT -- As the tungsten steel bit below the towering Nabors Drilling Rig 273 last week chewed nearly 3,000 foot deep in the rock and mud near Anchor Point, Phillips Alaska officials said the oil company's Cosmopolitan Exploration Project has progressed smoothly since a planned 90-day drilling operation began Oct. 21.
The 152-foot-tall derrick, shipped in from Wyoming, is the largest rig operating in Alaska, according to Paul Mazzolini, statewide exploration team leader for Phillips.
While the rig is large, drilling operations and related facilities cover an area of only about 650 feet by 310 feet on the bluff overlooking Cook Inlet west of the Sterling Highway about 5.5 miles north of Anchor Point.
The drill site is called the Hansen well after landowner John Hansen, who leased the surrounding 11 acres or so to the drilling partners.
Using a technique called "extended reach drilling," the drill will grind its way down through the bluff about 6,800 feet before curving at a 45-degree angle to reach about three miles out under the inlet to seek oil.
Based on an updated computer analysis of data from two offshore wells drilled by Mobil and Pennzoil in 1967, Phillips geologist Bob Swenson believes drillers have a good shot at finding commercial quantities. Some oil was found at the 1967 Starichkof State No. 1 well, but the site was not developed, he said.
It would take about three to five million barrels of oil to make the project viable to plan production drilling and perhaps more wells on the site, Swenson estimated.
Phillips Alaska Inc. is fronting 75 percent of the cost of the exploration well, with Forest Oil picking up 25 percent and Devon Energies 5 percent, according to Phillips spokeswoman Dawn Patience.
The exploration phase is expected to cost about $18 million to $23 million, she said.
With a fresh coat of light snow blanketing the site near the Quality Asphalt gravel pit Thursday, drilling supervisors and Phillips officials showed off their new operation to reporters as the company prepared for several days of tours for invited neighbors and local officials.
Some skepticism and concern about potential traffic, noise and environmental problems surfaced last April during several community meetings project leaders held. While Phillips has drilled 15 wells this year, Mazzolini said the Anchor Point operation is the only one not on the isolated North Slope of arctic Alaska.
While saying that drilling from land, then angling under the inlet bed, offers protection from offshore oil spills, Mazzolini noted that working so close to homes along Sterling Highway is an unusual situation.
In an effort to monitor any potential effects on local water wells, 40 wells, including 21 within one mile of the derrick, were tested before drilling began, Patience said.
After about six years studying the entire basin and the possibility of exploring the old Starichkof offshore well, the Hansen test site was pinpointed based on requirements that it be 500 feet from the high-water mark and at least one-quarter mile from Stariski Creek.
"This is a lot different from most of the wells we drill in Alaska," Mazzolini said.
With most residential drinking water wells in the area tapping water 25 to 150 feet deep, he said drillers are taking the unusual step of casing the oil well with steel pipe sealed with cement down to the 700-foot level.
"That's well below where any of the neighbors get water," he said.
In addition, Swenson said four 30-foot wells were dug around the rig to regularly monitor for any potential contamination.
The 15-foot exhaust stacks from the four diesel generators that produce 5,000 kilowatts of electricity to power the 6,000 horsepower drill and other site operations were raised higher than normal to help disperse emissions in the air, Mazzolini said.
Concerning worries of blowouts of pressure from the well, Mazzolini said the focus on oil, rather than gas, plus modern pressure containment and sealing methods make the gusher-type scenes popularized in old movies highly unlikely.
Drill foreman Ray Springer said most of the 50 to 70 workers typically at the site are from the Kenai Peninsula.
Springer, a retired Arco engineer and fisher from Seldovia, now a Phillips consultant, said that 45 of his 62 workers on site last week were from the borough, with about 15 hailing from south of Nikiski.
While the directional-angled method of drilling offers environmental advantages and allows a smaller footprint for the rig, Phillips officials acknowledged there are also practical and economic advantages as well.
A mobile offshore platform that could be jacked up out of the sea water to hold a drill would be more expensive, even if there was one available.
Given the decline in offshore drilling, there are no "jack-up drilling rigs" available on the West Coast of the United States, Mazzolini said.
While oil is the target on this lease, drilling manager Marty Lemon said tests will be conducted for natural gas as the drill digs.
Paul Mazzolini, statewide exploration drilling team leader for Phillips Alaska Inc., stands in front of the 152-foot high oil rig at the Cosmopolitan Exploration Project Thursday.
Photo by R.J. Kelly
"We would like to see the gas," Swenson said, but the geologist doesn't expect commercial quantities because the drill will be going deeper than the 2,800- to 8,000-foot zone where the lighter gas tends to collect in the rock above the oil-bearing formations. "We're exploring for both, but we don't expect to see gas," he said.
Once the planned 18,500-foot drilling depth is reached about mid December, the data and samples collected will be analyzed to see if a sustained drilling operation is feasible.
That would take a separate round of federal, state and local permits, Patience said.
If results look promising, Phillips will then decide what the next step will be. Based on comments by Phillips officials in April, a pipeline north to the Tesoro refinery near Nikiski appears to be favored. An offshore loading dock or trucking the oil out are other options.
"This is an exploration operation and it's the only one planned" right now, Mazzolini said.
"I kind of look at it like running a marathon, rather than a sprint," Mazzolini said concerning the series of steps in the progress of developing the site in the future.
R.J. Kelly is the assistant managing editor for the Homer News.
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