Evergreen says test methane wells a bust

ANCHORAGE - The only active coal bed methane wells in the Matanuska-Susitna Borough probably are not capable of commercial production, according to developer Evergreen Resources Inc.

• Photos

Now the Denver-based company is directing its attention to a vast swath of ground north of the Castle Mountain Fault - an area that's likely to be the heart of Evergreen's coal bed methane operations in Alaska.

Evergreen always has put more faith in the ability of the coals north of the fault to produce gas than in the test wells to the south, chief executive Mark Sexton said during a third-quarter teleconference to stock analysts and investors Thursday morning.

Spurred by soaring gas prices, Evergreen posted record results this quarter, even as the company acquired Carbon Energy Corp. of Denver and Calgary, Alberta, and announced a major expansion into Kansas.

The company plans to explore for coal bed methane across 230,000 acres in Alaska, north of the fault that bisects the Mat-Su region.

Within that area, Evergreen plans to drill five geologic study holes by December and hopes to drill six new pilot wells in the next year, Sexton said.

Evergreen originally planned to start its Alaska exploration north of the fault three years ago, he said.

But that plan was stalled when three competing developers who had filed applications for the same acreage sued the state.

In the meantime, Evergreen acquired the Pioneer Unit test wells to the south from Ocean Energy and Unocal in 2001.

Company officials said this week that those wells - four near Wasilla and four near Houston - probably don't meet commercial viability.

The company doesn't have the technology to extract the lucrative methane, the main component in natural gas, from coal seams nearly 4,000 feet underground, company spokesman Jack Ekstrom told the Anchorage Daily News.

The company likely will remove the surface drilling equipment but leave the gravel pads and roads in place in case new technology comes along, he said.

But all along, Evergreen has been waiting to tap into a potentially more productive methane reservoir trapped by water in the seams of coal north of the fault.

Last month, Evergreen got rights to those 230,000 acres of subsurface leases after the company intervened to settle the lawsuit.

Then another delay came up. Concerns by local residents led the state Department of Natural Resources to announce a gas-leasing moratorium earlier this month to give authorities time to develop new guidelines for coal bed methane drilling.

Until the guidelines are ready, officials will not approve any new leases and will delay work on 13 pending lease applications, including 11 Evergreen applications covering nearly 57,000 acres.

The delay gives Evergreen time to do some geologic sleuthing, Sexton said Thursday.