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The agenda for Buccaneer Alaska includes drilling seven wells in 12 months to boost oil and gas production.
Buccaneer Alaska plans to ramp up its production by drilling three wells offshore and four wells onshore within the next six to 12 months in an effort to find oil and gas.
Drilling has already started on one of the onshore wells, which will all focus on natural gas, Jim Watt, president and COO of Buccaneer Alaska, told Hart Energy’s E&P. The offshore wells will target both oil and natural gas. The efforts come as the company continues to concentrate on increasing its acreage position and derisking its opportunities through further 3D seismic programs and reprocessing 3D and 2D data sets.
“For the Kenai Loop area, we’re looking to step up production to around 15 MMcf/d. We’re currently producing around 5 MMcf/d. We hope to be there by early next year,” Watt said. “In total, our 2P reserves are around 34 MMboe. We’re trying to get that into the crude-producing category and that will occur over the next couple of years.”
In the next one to two years, Buccaneer Alaska will aim to move probable reserves to the proven category. Plans also include looking at an offshore development or two, Watt said, noting the company has expressed interest in additional federal leases in the Cook Inlet. Both will be major steps for the company in terms of growth.
However, plans do not include venturing deep into federal waters – like the Chukchi or Beaufort seas – or straying from its core focus areas, about 79,000 acres onshore and in state waters and federal waters in Cook Inlet.
Buccaneer Energy entered the Alaskan market in 2010 with eyes set on reinvigorating development in Cook Inlet, which Watt said was a very active basin during the 1960s with lots of drilling and fields being discovered. But that changed in the 1970s when companies shifted interest to the North Slope, where the Prudhoe Bay field discovery – the largest in North America – was made.
“When we saw the price of crude increase as well as natural gas in Alaska, we saw a real opportunity,” Watt said, referring to the start of the company’s Cook Inlet presence. “So we started to capture our acreage position, and we just needed more support from a resources perspective of capital and manpower to move forward. Our vision was to make that happen.”
Two years later, Buccaneer Alaska has established a presence in Alaska, with plans to return a jackup rig – capable of drilling to 7,576 m (25,000 ft) in 91 m (300 ft) of water depth – to the area. “With the Deepwater Horizon incident in the Gulf of Mexico and the moratorium, that put a real hit on the jackup market,” Watt said. “We saw [that] as an opportunity to acquire a jackup, because we saw a multiyear program in the state of Alaska.”
Currently, the Endeavor–Spirit of Independence is going through final certifications to carry out the company’s offshore programs.
But the company still faces challenges.
“We are always looking for more money. We’re in a very capital intensive business, and for that reason, we’re always looking to move forward our program,” Watt said.
However, being in Alaska has its benefits.
Watt said the company sees Alaska as a pro-development state. He used the Alaska Clear and Equitable Share law as an example, saying it allows companies to get cash back for expenditures made on drilling and seismic work as a way to bring in players to boost gas production, which is needed in the state. “It’s a demonstration of being pro-development.”
Secondly, some people think operating in Alaska automatically means it’ll take longer to go to production. But that isn’t always the case. “For our Kenai Loop project, we leased, drilled, and had it on production within a year,” he said. “I think that demonstrates what you can do with a team knowledgeable on how to get things done and work within the confines of the state. It’s an area that is supportive of production and jobs.”
Lastly, the company’s acreage in Alaska is gas-weighted, he said, so the returns are better in Alaska “The current prices in Alaska are in the high $5 to $6/Mcf range, two times what is being received here in the Lower 48. It’s a win-win for the state of Alaska from the standpoint of getting more gas, more employment through our activity, and for us to be able to grow our company. I feel that Alaska is a great place to be.”
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