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Coal Bed Methane - Kircher Well
FOG FOWLER OIL & GAS CORPORATION Alaska Office CBM GAS PROJECT IN ALASKA COOK INLET BASIN June 1, 2008 Bob Fowler 907-745-6638 Rnfowler57@gmail.com www.fowleroilandgasalaska.com EXECUTIVE SUMMARY COOK INLET BASIN CBM NATURAL GAS PROJECT Who is Fowler Oil & Gas? Fowler Oil & Gas Corporation is a locally-owned oil and natural gas exploration and production company with offices in Palmer Alaska. The Fowler Family came to the Valley in the mid-fifties and purchased the Broostrom homestead on Farm Loop Road from the Buzby Family. Both the Fowler children, Bob Fowler and Ann Jamieson Fowler went to high school in Palmer. This property is still in the Family. Bob Fowler is the Chairman and CEO. The Fowler Oil & Gas Mission Our mission is to create a new industry for Alaska that produces a clean fuel, is eco- friendly, reduces fuel and power costs, creates local jobs, creates a new tax base and helps to ensure the future prosperity and well-being of all Alaska residents. CBM Gas in Alaska and the Cook Inlet Alaska contains over 50% of the coal reserves in the USA and the Cook Inlet alone contains over 1.5 trillion short tons of coal. In the Cook Inlet Basin there exist multiple stacked coal seams with a net thickness varying from 100’ to 1200’ according the USGS DDS-77 Report. And the gas content ranges from 250 – 424 cubic feet per ton according the Alaska DNR Cbm 94 Report and other private studies. The Montgomery Barker Cbm Report estimates that the Gas in Place (GIP) in the Cook Inlet Basin is 245 trillion cubic feet. Drilling Technology Fowler Oil & Gas has assembled a variety of new patented technologies to meet the special requirements of drilling and producing cbm gas in Alaska This includes minimal surface impacts, horizontal drilling technology, elimination of noise, down-hole water management and total protection of the water table. This technology produces significant flow rates not seen in traditional cbm wells in the Southern 48. Our Pilot Project The Kircher #1 is our pilot project located on 840 acres of private land in the core valley area. The landowners also own their mineral rights. The project is fully leased, permitted and bonded as of May 15, 2008. The elusive Borough permit was issued on Oct 1, 2007 and the State permit was issued on May 15, 2008. The construction work on the access road and drill pad commenced on June 1, 2008. Drilling is scheduled for the summer, and production for the fall, of 2008. Our Development Plans From this giant cbm resource, we intend to supply, on a replacement basis, the demand in the Cook Inlet Basin as the supply of conventional gas dwindles. Once this demand is satisfied, we intend to export gas to other areas of Alaska (if feasible), export the surplus as LNG and then eventually export via the AGIA spur pipeline into the Trans-Canada pipeline to the Chicago Hub. What this Means to Alaska The development of this new industry will benefit the State, Boroughs and Cities via the creation of a new tax base coupled with royalty income on their lands. The Alaska people will benefit from royalties on land owned, preservation of farms, reduced power and natural gas costs, possibility of using compressed natural for flex-fuel cars, and new jobs. Palmer, Alaska April 9, 2008 FOWLER OIL & GAS CORPORATION PRESS RELEASE OUR CONTRIBUTION TO A BRIGHT FUTURE FOR ALASKA RESIDENTS Fowler Oil & Gas (Fog) would like to inform Alaska residents about our plans for contributing to your future prosperity and well-being. Alaska is very dependent on oil revenue at the present so Fog wants to start a new industry in Alaska that can provide an additional source of revenue. This industry is coalbed methane natural gas (Cbm). Cbm gas is the purest form of natural gas that is considered a “clean” fuel and exists in huge quantities in the coal formations that cover the entire Cook Inlet Basin. It will be extracted using eco-friendly technologies that conform to all of the Borough and State regulations. There is enough Cbm gas in the Cook Inlet Basin to ensure a future supply for our needs. Fog will sell gas to the utilities at a price that will reduce natural gas and power costs to our residents and businesses. And there will be large amounts left over to export at higher prices as LNG. These export earnings will return to Alaska. Fog’s policy is to pay generous royalties to the owners of mineral rights and also to surface owners. The State, Boroughs and Cities also own land that can generate royalty income. This new future industry will provide many local jobs through our Alaska First hire policy. These jobs will pay good salaries, with good benefits and participation in a company Profit Sharing Plan. A solid tax base will be created for State and Local government that will supplement their annual budgets, and contribute significantly to our children’s’ quality of education. In summary, Fog is planning to create a new industry for Alaska that produces a clean fuel, is eco-friendly, reduces fuel and power costs, creates local jobs, creates a new tax base and helps to ensure the future prosperity and well-being of all Alaska residents. Bob Fowler CEO & Chairman www.fowleroilandgasalaska.com Location and Coal Type for Cook Inlet Coal Basin Matanuska Valley PILOT PROJECT SUMMARY Name: Kircher #1 Location: Corner of Bogard & Trunk Roads in the Matanuska Valley See attached map. Acreage: 840 acres of privately owned surface and mineral estates Permits: Matsu Borough permit issued Oct 1, 2007 Historic first-ever cbm permit AOGCC State permit issued May 15, 2008 Bonds: Both Borough and State bonds have been posted Site Prep: Access road and pad construction started June 1, 2008 See attached photo Drilling: Summer 2008 Production: Fall 2008 DEVELOPMENT PLAN Phase I • Years 1-3 • 50 cbm wells in production • North Cook Inlet onshore • Production of 350 billion cubic feet per year • Supply, on a replacement basis, the demand of the Cook Inlet Basin as the conventional gas supply dwindles. • Supply the gas to the utilities at a price that lowers natural gas prices to 2007 levels Phase II • Years 4-6 • 100 cbm wells in production • North Cook Inlet and West Cook Inlet onshore • Production of 1 trillion cubic feet per year • Construct an LNG facility at Point McKenzie • Continue to supply the Cook Inlet demand • Explore the feasibility of supplying other regions of Alaska • Export the surplus via the LNG plant • First priority is export to West Coast LNG receiving facilities when constructed • Second priority is export to other countries Phase III • Years 7 onwards • Continue to expand cbm wells in production • Entire Cook Inlet basin onshore and offshore • Production exceeding 2 trillion cubic feet per year • Continue to supply Cook Inlet demand • Supply the demand in other areas of Alaska if feasible • Continue to export LNG • Commence export to Chicago via the AGIA spur pipeline Providing coverage of Alaska and northern Canada's oil and gas industry May 2007 Vol. 12, No. 18 Week of May 06, 2007 New approach to Mat-Su Valley CBM Fowler Oil & Gas plans horizontal drilling and patented separation technology to avoid environmental problems Alan Bailey Petroleum News It’s been three years since an attempt to develop coalbed methane resources in Alaska’s Matanuska-Susitna Borough collapsed amid an acrimonious argument involving the would-be developer, the local residents, the borough and the state. But a new company, Fowler Oil & Gas Corp., believes that it has the answer to developing coalbed methane without the concerns about land access and possible pollution that plagued the previous effort. Fowler Oil and Gas CEO Bob Fowler, a graduate of Palmer High School and longtime Alaskan, told Petroleum News May 2 that he fully understands the concerns of the residents of the Matanuska and Susitna valleys. “Our family has been in the Valley for over 50 years and so I’m very familiar with the issues up in the Valley and how people would like to see economic development but also coupled with environmental protection,” Fowler said. Fowler Oil & Gas is a publicly traded company founded in 2005 to pursue oil and gas opportunities in Alaska. Sister company, Native American Energy Group, is engaged in the development of oil and other minerals in Montana. Fowler Oil & Gas shares technical staff, including geologists and operations managers, with Native American Energy Group. On private land Fowler Oil & Gas is pursuing 11 separate coalbed methane sites, all on private land, in Southcentral Alaska, Fowler said. “We’re working with private landowners who own their own mineral rights,” Page 1 of 3New approach to Mat-Su Valley CBM - May 06, 2007 - Petroleum News 5/4/2007http://www.petroleumnews.com/pnarchpop/070506-18.html Fowler said (part of the 2003-04 controversy stemmed from required access to privately owned surface land to drill into state-owned subsurface). The first of these sites, the Kircher unit in 840 acres of forest and farmland at the corner of Bogard Road and Trunk Road between Wasilla and Palmer, has reached the permitting stage. Negotiations with landowners are still in progress at the other sites. Fowler Oil & Gas has applied for permits from both the Matanuska Borough and the Alaska Oil and Gas Conservation Commission for drilling and development at Kircher. “We’d like to be drilling in mid-summer to late summer,” Fowler said. Production from Kircher would hook into an Enstar Natural Gas Co. pipeline, Fowler said. Horizontal drilling One key element in Fowler Oil and Gas’s approach to coalbed methane development is the use of horizontal drilling technology. The drilling contractor will drill a single vertical well to a depth of about 4,000 feet from a central location in a coalbed methane unit. Perforated horizontal wells sidetracked from that central well will then thread out perhaps 2,500 feet through each coal seam penetrated by the vertical well. “With that one vertical well bore we might have eventually 100,000 feet of perforated pipe in the coal,” Fowler said. And the huge length of perforated pipe will eliminate the need to frac the coal to sustain adequate gas flows, he said. The drilling technique effectively eliminates the need for a profusion of surface wellheads. It will also eliminate the need to drill additional wells from the surface when earlier wells run short of gas. “We’re draining 600 to 1,000 acres off of one well bore,” Fowler said. Not only that. The specially designed coalbed methane drill rig has a mast just 60 feet high, but a capability of drilling laterally out to about a mile, Fowler said. And once a coalbed methane site goes into production, the wellhead production facilities will be hidden inside a single 20-foot barn-like enclosure. “They won’t even see that it’s a well,” Fowler said. “… We’re in and out on the drilling in about one month.” Fowler Oil & Gas plans to deliver gas to the Enstar transmission pipeline without any compression, thus eliminating any possible compressor noise. No surface water Patented technology will eliminate the water disposal problems that have often plagued coalbed methane production in the past, Fowler said. This technology will entail using the bottom part of the vertical well, below the level of the coal seams, to dispose the water into relatively deep sandstone formations. Thus, no produced water will reach the surface or enter the water table. Page 2 of 3New approach to Mat-Su Valley CBM - May 06, 2007 - Petroleum News 5/4/2007http://www.petroleumnews.com/pnarchpop/070506-18.html Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583 circulation@PetroleumNews.com --- http://www.petroleumnews.com --- S U B S C R I B E “We have a downhole separator which separates the gas from the water,” Fowler said. “The gas flows up (the well). The water flows down into some special pumps that pump it into lower sandstone formations below the coal.” Downhole monitoring equipment will ensure that the disposed water meets state standards, Fowler said. To prevent contamination of any water wells in the region around the production site, no coal beds less than 1,000 feet below the surface will be tapped. That will ensure that all production occurs below the depth of the water table, Fowler said. And sealed well casing, cemented to prevent water migration around the pipe, will also protect the water table. EPA approved Fowler said that the U.S. Environmental Protection Agency has approved the downhole separation of gas and water and that the technique has already been permitted in Texas and Kansas. And he said the drilling contractor, Scientific Drilling, has experience of drilling more than 3,000 coalbed methane wells, including horizontal wells. Great Northern Engineering is designing the production facility, Fowler said. But what are the chances of finding economic quantities of coalbed methane in the Kircher unit? “The Cook Inlet basin is a river of coal that comes all the way down from Talkeetna and up around Chickaloon, all the way down to Homer, onshore and offshore,” Fowler said. The coal is very thick; the seams are abundant and continuous throughout the area; and the coal contains large quantities of gas, he said. And who might purchase the gas? “We’re talking to a number of buyers,” Fowler said, adding that he would prefer to see use of the gas in the Cook Inlet area rather than supplying the gas for export. Page 3 of 3New approach to Mat-Su Valley CBM - May 06, 2007 - Petroleum News 5/4/2007http://www.petroleumnews.com/pnarchpop/070506-18.html adn.com | matsu : Company prepares to drill for methane http://www.adn.com/news/alaska/matsu/v-printer/story/9089364p-9005... 1 of 3 6/29/2007 9:21 AM Bob Fowler, chief executive of Fowler Oil and Gas, stands on the edge of 840 acres of farm land and forest near Trunk and Bogard roads near where his company proposes to place a pilot well for coal bed methane. The property is owned by four families who support the company's plan. (EVAN R. STEINHAUSER / Anchorage Daily News) Bob Fowler, chief executive of Fowler Oil and Gas (EVAN R. STEINHAUSER / Anchorage Daily News) Print Page Close Window Company prepares to drill for methane COLLABORATION: Oil man says surface owners left out of equation in past efforts. By ZAZ HOLLANDER zhollander@adn.com (Published: June 29, 2007) WASILLA -- Coal bed methane is back. Four years ago, Evergreen Resources sparked a firestorm of protest with plans to drill wells for the lucrative gas locked into coal seams across the Matanuska-Susitna Borough, even beneath private property. Scores of angry landowners packed town hall meetings, spooked over perceived threats to drinking water and private property rights, of clanking industry in backyards and neighborhoods. Effigies of local legislators -- former state Sen. Scott Ogan, an Evergreen consultant, and state Rep. Vic Kohring, who sponsored legislation Evergreen helped write -- hung outside one especially charged meeting in Sutton. Ogan later resigned, saying accusations he represented Evergreen over his constituents distracted him from his duties. Amidst the fury, the borough enacted what at the time were the strictest coal bed methane laws in the country. Evergreen ultimately left the state without sinking a single commercially viable well for methane, the chief component in natural gas. Now longtime Valley resident Bob Fowler wants to drill the first of at least five coal bed methane wells in the Valley in a hay field along Trunk Road . What makes Fowler think he can pull off what a big company like Evergreen couldn't, not to mention avoid all that controversy? Technology and tactics. "We incorporate the surface owners into our equation," he said. "They precluded them from their equation." The Palmer High School grad moved with his family to Farm Loop Road in the 1950s. Fowler always kept a home here. And he just put those local connections into play. Fowler Oil and Gas Corp. hopes to drill a single pilot well in the Mat-Su on 840 acres owned by Fowler's friend Henry Kircher and three other local families. The four own subsurface mineral rights, too. adn.com | matsu : Company prepares to drill for methane http://www.adn.com/news/alaska/matsu/v-printer/story/9089364p-9005... 2 of 3 6/29/2007 9:21 AM So they stand to make some money through royalties if the well pans out. Evergreen, on the other hand, leased some 300,000 acres of state subsurface rights first, then started dealing with landowners. Many residents above the leased area did not hold mineral rights below, though the company's first pilot wells did not face that problem. A SUBTLE PRESENCE The field sits along Trunk Road, near Bogard Road. From Trunk, all drivers will see is a gravel road where a grassy track is now, and a windowless Colony barn replica, according to documents filed with the borough. Computers will monitor the action. A security system will preclude the need for fencing. Fowler hopes to start sinking the well casing in September. But first, the borough planning commission must approve a conditional-use permit. A public hearing is scheduled for Aug. 20. So far, reaction has been quiet, compared to the last time around. Still, this well site sits not far from the Colony schools and within a mile of 1,300 people notified by the borough. Of 15 comments received as of Thursday morning, five nearby residents voiced support. Merri Dias was among them. She and her husband, David, live along Trunk Road within a mile of the proposed well. "Maybe he can come up to my 15 acres and make me rich, too," Dias joked. "We'd have to really look at it. We have mineral rights." A Springwood Drive resident named George Taylor filed a "letter of non-objection" and said while he remained reluctant to support coal bed methane development in the rapidly growing core area, he had been impressed by Fowler's straight-shooting manner. CRITICS FEAR POLLUTION The other 10 comments expressed avid opposition, including several that simply read "NO!" The state is too big to allow a potential polluter in a populated area, said Doreen Toller, who lives about a mile from the well site. Toller and her husband run a cabin rental and tour company. "If it's proven and somebody can show me where it's proven there's no contamination, I might feel better," Toller said. "But I'm not thrilled about being a test subject in any manner." Borough law prevents developers from drilling without a signed surface-use agreement from a property owner. The law also requires quarter-mile setbacks from homes, hospitals and schools. Fowler has filed an application promising to comply. Among other things, the company also filed the requisite emergency response plan, a plan for reclaiming the site once gas extraction ends and plans for a methane gas monitoring system. Typical coal bed methane operations bring a warren of drill pads and roads, noisy compressors and millions of gallons of water wrung from coal seams and potentially contaminated. adn.com | matsu : Company prepares to drill for methane http://www.adn.com/news/alaska/matsu/v-printer/story/9089364p-9005... 3 of 3 6/29/2007 9:21 AM Fowler's company will use a patented technology to avoid much of that, he said: First, crews will sink a vertical drill casing about 3,500 feet into the ground, with extra protection for the water table down to 1,000 feet. Then a company using a horizontal drilling technique will bore into coal seams sideways. Typically, companies fracture seams chemically to free methane; Evergreen used hydrochloric acid in Colorado. No water will be brought to the surface because it will be treated and injected below the coal seam into a sandstone layer. The relatively low-pressure methane won't require noisy compressors. FUTURE POTENTIAL The company hopes to use the same strategy in the future at five other methane operations around the borough, at least, including one near Hatcher Pass, Fowler said. No permit application has been filed. A self-described visionary, Fowler is not an oil-and-gas guy; rather, he honed his skills in business. He serves as chairman and CEO of Fowler Oil & Gas Corp. The company just brought on a new president: Arlen Ehm, a petroleum geologist involved in Alaska's oil and gas industry since the early 1960s. Fowler Oil & Gas shares some owners with a sister company called Native American Energy Group, which rejuvenates oil wells on reservations in Montana as well as uranium mining and conventional gas drilling. Fowler doesn't know for certain what he'll find in that well. But based on a century of geological research, Fowler said, he is confident. More than 25 coal seams 4- to 30-feet thick lie beneath those hay fields, according to corporate predictions. Over 50 years, Fowler hopes to recover 85 to 90 percent of the estimated 382 billion cubic feet of gas trapped by water in the seams. The gas would be piped into a nearby Enstar line. "We want this to be built on a real solid foundation," Fowler said. "So everyone is as happy with the 10th well as they are with the first one." Find Zaz Hollander online at adn.com/contact/zhollander or call 352-6711. Print Page Close Window Copyright © 2007 The Anchorage Daily News (www.adn.com) http://juneauempire.com/cgi-bin/printit2000.pl1 of 26/24/2007 6:26 PMClick here to return to the original storyMat-Su residents warm to coal bed methane planCompany proposes pilot well on private land near Palmer ANCHORAGE - A proposal to drill for coal bed methane in the Matanuska-Susitna Borough is getting a warmer reception than a plan three years ago that cost a Palmer state senator his job.Fowler Oil and Gas has proposed placing a pilot well on an 840-acre unit.The land near Trunk Road and Bogard Road in Palmer is owned by four families who support the company's plan.Bob Fowler, the company's chief executive officer, said his proposal is muchdifferent from one by Evergreen Resources in 2003."It's like comparing the driving a '52 Chevy with leaded gasoline, spewingpollution in the air to a Toyota hybrid with flex fuel," Fowler said. "There's just no comparison."His horizontal drilling technology has no surface impact, no noise and noeffect on water, he said. All three were concerns raised with Evergreen's multiple well plan.The Evergreen proposal caused a strong public outcry and left landownerswho held surface rights wondering how someone could use their property.State Sen. Scott Ogan, R-Palmer, worked as a consultant for Evergreen untilthe fall of 2003. In the face of a recall effort the next year, in which detractors http://juneauempire.com/cgi-bin/printit2000.pl2 of 26/24/2007 6:26 PMclaimed he worked harder for the company that for his constituents in pushing for development of coal bed methane, Ogan resigned from the Senate.In Fowler's application, the surface landowners also own subsurface rightsand are willing to participate.The plan has the preliminary support of Kathy Wells of the group Friends ofthe Mat-Su."What a difference a few years make," Wells said. "(I'm) cautiouslyoptimistic. Mr. Fowler met with us about a year ago, much unlike previous developers - he's not afraid of getting his permits."The Matanuska-Susitna Borough sent 1,300 letters to residents who livewithin a mile of the proposed test drill. They have 45 days to submit comments.The borough now has in place some of the strictest regulations for coal bedmethane exploration and drilling in the country. Municipal officials hope Fowler's plans are as good as they appear on paper."At first blush it meets all the criteria that we've established within our permitprogram. The application has been deemed complete," said borough planning director Murph O'Brien. "Now it's just a process of a more detailed review by our third-party engineering group. If it works it's going to be a tremendous resource development for the borough."Fowler's proposal will be introduced at a borough planning commissionmeeting Aug. 6. A public hearing is scheduled for Aug. 20. Click here to return to story:http://juneauempire.com/stories/062007/loc_20070620017.shtml Environment Group Support The project has received the support of the Friends of the Matsu, a powerful local environment group. Kathy Wells is their executive director. Mimi Peabody, their project coordinator, testified in support of our drilling applications in front of the Matsu Borough Planning Commission and the AOGCC commissioners. NEW CBM INDUSTRY FOR ALASKA BENEFIT ANALYSIS HOW DOES THE STATE BENEFIT? • Royalty Income: 12.5% on state owned land leased out for cbm development • New tax base • Potential for revenue sharing for schools • Gas-fired co-generation for state facilities at reduced rates • Reduced natural gas rates for state facilities • New jobs HOW DOES THE MATSU BOROUGH BENEFIT? • Royalty Income: 7.5% on borough owned land leased out for cbm development • New tax base • Potential for revenue sharing for schools • Gas-fired co-generation for borough facilities at reduced rates • Reduced natural gas rates for borough facilities • New jobs • Potential LNG export facility located at Pt. McKenzie HOW DO THE CITIES OF PALMER & WASILLA BENEFIT? • Royalty Income: 7.5%-20% on city owned land, i.e., their respective airports, leased out for cbm development • New tax base • Gas-fired co-generation for city facilities at reduced rates • Reduced natural gas rates for city facilities • New jobs HOW DOES AN ALASKAN BENEFIT? • Royalty Income: 7.5%-20% on private owned land leased out for cbm development • Preservation of farms • Reduced electricity rates due to lower natural gas costs • Reduced Enstar natural gas rates due to lower natural gas costs • Possibility of using compressed natural gas for flex-fuel vehicles at low rates • New jobs