Exploration eyed in Arizona's Holbrook, Great Basin areas

Sept. 21, 2009
Exploration is planned in eastern and northwestern Arizona in the Holbrook basin and in a subbasin of the Basin and Range Province.

Exploration is planned in eastern and northwestern Arizona in the Holbrook basin and in a subbasin of the Basin and Range Province.

An oil, gas, and helium exploration program with capital spending of as much as $29 million is on tap in eastern Arizona's Holbrook basin.

And explorers will look for oil and gas in northwestern in Arizona southeast of Las Vegas, Nev., in a subbasin west of Kingman.

Both programs involve acreage farmed out from PetroSun Inc., Scottsdale, Ariz.

Arizona's oil and gas production comes from Dineh-bi-Keyah field and several small fields in northern Apache County in the Four Corners area.

June's production totaled 4,126 bbl of oil, 93% of which is from Dineh-bi-Keyah, and 58.8 MMcf of gas, 73% of which came from the large field.

Arizona, which also has produced helium in the past, has produced no carbon dioxide since July 2003.

A commercial discovery in the Holbrook or Sacramento areas would breathe new life into exploration in the state.

Holbrook exploration

PetroSun signed a deal with Energy Southwest LLC, also of Scottsdale, that contains a drilling and development obligation under which Energy Southwest will explore PetroSun's 985,000 acres in the Holbrook basin.

The first exploratory wells will be drilled on the Manuel Seep and Meteor Crater prospects.

The Manuel Seep well, 35 miles south of Holbrook, will be drilled to basement at roughly 4,600 ft to test all prospective oil, natural gas, and helium zones.

The Meteor Crater well, 8 miles east of Meteor Crater road, will be a direct offset to the Holbrook Energy 26-1 well that discovered an oil-bearing sand in the Fort Apache member of the Permian Supai formation at 1,632-44 ft. The Meteor Crater offset will test the Fort Apache for potential commercial crude oil production, PetroSun said.

State records show the well, in 26-19n-13e, Coconino County, close to the famed astrobleme feature about midway between Flagstaff and Holbrook, was reentered, tested, and plugged in October 2004. Townsend Oil first drilled it in 1995.

"The agreement with Energy Southwest allows PetroSun to test the Holbrook basin structures for commercial oil, natural gas, and-or helium reserves and will provide the company with the means to retire our outstanding debt," said Gordon LeBlanc Jr., PetroSun chief executive officer.

Sacramento Valley

Forest Gate Energy Inc., Montreal, signed an agreement to acquire a 70% equity interest in all Arizona oil and gas leases held by Vanterra Energy Inc., a private Calgary firm.

On completing the deal, Forest Gate would issue to Vanterra 2.69 million Forest Gate common shares, 5.25 million subscription receipts convertible into Forest Gate common shares without further consideration, and 7.3 million warrants at an exercise price of 25¢/share. The warrants would expire on the second anniversary of issuance.

Vanterra is owned by Don Vandergrift, a Calgary petroleum engineer. The company targets oil in the Sacramento Valley Neogene subbasin generally west of Kingman, Ariz., part of the multistate Basin and Range Province.

Forest Gate noted that the Railroad Valley Neogene subbasin of the Basin and Range Province in Nye County, Nev., 250 miles northwest has produced more than 42 million bbl of oil.

Forest Gate and Vanterra plan to drill an 11,000-ft well targeting Jurassic Navajo sands at 6,000 ft, Mississippian carbonates at 9,160 ft, and Devonian carbonates at 10,160 ft. They chose a drillsite based on a seismic program acquired by Phillips Petroleum Co. in 1981 and later licensed to Vanterra.

Vanterra ran geochemical and geoelectromagnetic surveys covering 50 stations over the southern part of the prospect area in 2008.

Geochemical sampling tested for methane, ethane, propane, butane, ethylene, and propylene and confirmed an active hydrocarbon system in the vicinity. The geoelectromagnetic survey consistently showed direct hydrocarbon indicators at depths consistent with interpreted depths for Devonian and Mississippian carbonates, Forest Gate said.

The area is accessible for drilling equipment and has been approved for drilling by federal and state land agencies.

The Mohave County holdings include 100% interest in 7,800 acres of federal land with a 10-year term ending in July 2017, 100% interest in 3,200 acres of state lands with a 5-year term ending in February 2012 and renewable by request, and 90% interest in 12,800 acres of freehold lands with a 5-year term ending in August 2011 and renewable by request.

Vanterra is negotiating for a further 10,784 acres of freehold minerals.

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