Saturday, January 14, 2012

Record number of drilling permits in Arizona in 2011

The Arizona Oil & Gas Conservation Commission reports that 75 drilling permits were issued 2011, setting a record for the number of permits issued in a single year. All but two permits and all wells drilled were stratigraphic tests for potash in the Holbrook area. The two non-potash permits were for obligation wells at the St. Johns Gas Unit, according to Oil & Gas Administrator Steve Rauzi.

Three companies drilled a total of 67 stratigraphic tests in 2011. Southwest Exploration/Passport Potash drilled 31 wells at its potash project west and southwest of Petrified Forest National Park [right, credit Passport Potash]. HNZ Potash drilled 24 stratigraphic wells southwest and east of the Park. American West Potash drilled 12 wells at its project area east of the Park. All 3 companies finished their 2011 drilling programs and have plans to permit and drill additional wells in 2012, according to the annual report that will be presented to the AZOGCC next Friday, January 20 at its quarterly meeting in Phoenix. The companies are required to permit the potash test wells with the Commission because the holes penetrate the Coconino Sandstone, which is a potential helium reservoir in the region.

In other drilling news, El Paso Natural Gas Co. plugged and abandoned it AG 1-21 stratigraphic well in the Picacho basin in December. El Paso drilled the well in 2006 to test the feasibility of storing natural gas in subsurface salt caverns. The company found sufficient salt to create the storage caverns, but reportedly concluded that the market conditions were not economical for them. [Another Houston-based company is currently seeking FERC approval for a similar project in the same area.]

The proposal by Kinder Morgan CO2 Co. to purchase Enhanced Oil Resources (Ridgeway Arizona Oil Corp.) carbon dioxide properties between St. Johns and Springerville and in adjacent New Mexico, is now expected to be completed by January 31.

The Arizona Geological Survey provides all the technical and staff support for the Oil & Gas Conservation Commission, as the Commission has no staff of its own.

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