Linc Energy Ltd. expects a big year in Alaska in 2015.
The Australian independent has completed early engineering for a potential development at the Umiat field and is moving toward commercialization of its Cook Inlet gas supplies.
Linc said it has wrapped up the first phase of "select engineering" at Umiat, which "identifies and analyses road options, pipeline routes, and environmental assessments of various development options," according to a recent annual report from the company.
Environmental studies are in their fifth year, according to the company, which seemingly includes work performed before Linc acquired Renaissance Umiat LLC in 2011. Those studies will support a future environmental impact statement, a crucial component of any future development plans. Because Umiat is partially located in the National Petroleum Reserve-Alaska, Linc must file the plan with the U.S. Bureau of Land Management.
The development plan remains a ways off, but Linc said in the annual report that initial development could include as many as 70 wells. Given the size and isolation of Umiat, Linc has been entertaining "inquiries concerning possible joint ventures or acquisitions."
Earlier this year, Linc completed Umiat 23H well, the first horizontal well ever drilled and flow-tested at the known oil fields in the foothills of the Brooks Range.
The results -- a peak rate of 800 barrels per day and a sustained rate of 250 barrels per day -- convinced the company to progress toward development. The drilling capped off three winters of exploration work, which happened to coincide with debates over revisions to the tax code that became law as the More Alaska Production Act.
Linc credits the law with increasing the value of Umiat by $1 billion -- from a PV-10 value of $1.5 billion in July 2012 to a PV-10 value of $2.5 billion September 2013. The PV-10 value is the present value, minus expenses and discounted at 10 percent annually.
The legislation became law in May 2013.
Cook Inlet
As it proceeds at Umiat, Linc continues to pursue underground coal gasification opportunities in the Cook Inlet basin, which is what initially attracted the company to Alaska. The appraisal program aims to synthesize natural gas underground by injecting heat and oxygen into deep coal seams to "create" methane using the carbon contained in coal.
The company believes there is 35 billion cubic feet of local demand for synthesized natural gas in the region "with the potential for export in the form of liquefied natural gas further increasing demand." This coming year, Linc expects to finalize a commercial pathway for a proposed synthesized natural gas hub in the region and to enter "several supplier agreements" to provide both synthesized natural gas and carbon dioxide.
Over the past year, Linc sold some $65.2 million in state production tax credits for approximately $54.4 million. The state issues tax credits for certain exploration work.
This story originally appeared in Petroleum News and has been republished with permission.