Alaska Native-owned oil service contractors are exploring the state's large, mostly untested interior sedimentary basins, areas long thought to be natural gas-prone but now known to also have crude oil potential.
The Trans Alaska Pipeline System runs through several of the basins being tested, which includes state-owned as well as lands owned by the Native corporations.
Doyon, which has large landholdings in Interior Alaska, has now started drilling its fourth well in the Nenana Basin west of Fairbanks with another Native American company, Cook Inlet Region, of Anchorage, as a partner.
The primary target is oil, says Jim Mery, Doyon's senior vice president for lands and natural resources. But the basin has gas potential and could supply Fairbanks, the state's second largest community about 50 miles east of the drilling location, he added.
Further south, Ahtna, which owns lands in the Copper River Basin in eastern Interior, completed a third exploration well in late spring in that area and is planning a fourth prospect, according to Ahtna's COO, Tom Maloney.
Success has been elusive so far, but this is rank wildcat country where persistence and patient capital is needed, the Native corporations say. Both Doyon and Ahtna own oil support companies active on the North Slope. Doyon Drilling, a Doyon subsidiary, is one of the state's major drilling contractors.
Major oil and gas companies were interested in the Interior basins in the 1980s but have since shifted their focus to the existing Alaska producing regions like the North Slope Cook Inlet.
That view by larger companies may be changing, however. Mery said Doyon signed a confidential exploration agreement last week with a major company interested in the Yukon Basin, a huge 1.5 million-acre area that follows the Yukon River from the Canadian border to west/central Alaska.
The identity of the company is confidential, Mery said.
Federal and state geologists had earlier thought both the Nenana and Yukon Flats basins to be too shallow for oil formation and that gas finds would be more likely.
However, work done by Doyon in the Nenana Basin shows it to be deeper than believed and recent drilling has confirmed the presence of an active oil as well as gas generating system. In the larger Yukon Flats Basin Doyon has done seismic work, and the geohemical sampling has confirmed the presence of oil.
The Native-owned wildcatters have been drilling on their own dime and mostly without industry partners. A state exploration incentive program did help fund some of the work, but that program is not shut down.
Mery said Doyon has invested about $130 million of its own funds in the program over several years and the number grows to about $150 million when partners like Cook Inlet Region are included.
Maloney said Ahtna cannot reveal its investment but he did say the corporation has applied for about $25 million in state exploration tax credits for its most recent well, which would cover at least part of the cost.
The state has delayed paying the tax credits because of budget problems, so for all practical purposes Ahtna is on its own. The corporation did find gas in two of its wells, but neither was commercial. Ahtna is pinning hopes niow on a new prospect nearby it calls Moose Creek, Maloney said.
Mery said Doyon has found good shows of oil as well as gas in all four of the wells it has drilled in the Nenana Basin. Some seemed near-misses, he said, prospects with source rock and good reservoir rock and traps but where drilling later showed incomplete "cap" rocks to seal in hydrocarbons, allowing them to leak.
At its latest drill site a 3-D seismic survey by Doyon has indicated the presence of liquid accumulations at depth, a sign that an enclosed trap exists. What is not known, but will be when the drill bit reaches the target depth in late July, is whether there is oil or gas, or water.
Another Native corporation, NANA Regional Corp., with its lands in the far northwest part of Alaska, is studying prospects for drilling a well in the Selawik Basin, south of Kotzebue, said Lance Miller, NANA's vice president for natural resources..
The basin is generally considered to be gas-prone and NANA would like to find gas to supply local communities where its Inupiat shareholders live, Miller said.
That may not be enough to attract a company to do exploration, so the corporation may fund drilling on its own as Doyon and Athna have done, he said.
However, a major customer may be NANA itself for the Red Dog Mine, a large, producing lead and zinc mine in the region that NANA owns and which annually uses about 30 million gallons of fuel oil to power mining operations.
