By Andrew Hobbs

DRILLING of a second well on Australia-listed 88 Energy’s Icewine project in Alaska is set to start early next year, with the company hoping to reconfirm early positive discoveries from its Icewine 1 well.

Speaking with Oil & Gas Australia, 88 Energy managing director David Wall said the company was in the process of planning for its next well, with the tender process to begin in early July.

“We will negotiate and select contractors by the end of August to early September – that is the point in time by which we will have a very firm handle on costs,” he said.

“Then we can lock in the price of the next well, finalise a small funding gap between then and March when we are going to spud the well, and then there will be a big ramp up in the start of drilling.”

Mr Wall said while projects in Alaska typically cost about 40 per cent more than in more temperate and less remote climates, a fall in global oil prices had seen costs decrease.

Buoyed by this as well as their confidence in the future success of the permit, 88 Energy had acquired roughly 170,000 acres of new land to explore, surrounding its existing permit area – taking its total land holding to 271,119 gross acres.

“After paying for the acreage and the rental payments, that was about US$900,000 for the rentals, and US$4.2 million for the acreage payments,” Mr Wall said.

“After payment for that we have about A$20 million in the bank and we should have between US$10 and US$12 million in the bank by the end of the year, which is pretty close to covering our costs for the drilling of Icewine 2H.”

The new well will be drilled from the same gravel pad where Icewine 1 was drilled, with Mr Wall saying permitting was simpler as much work had already been done, with the design, landing zone and stimulation design also largely complete.

Drilled horizontally, the well will test the production potential of the HRZ liquids rich play, which a recent study by DeGolyer & MacNaughton revealed a hydrocarbon liquid resource of 985 million barrels of oil equivalent (mmboe) of hydrocarbon liquid resources, though internal 88 Energy studies put the figure at 2,602 mmboe.

“What we are trying to do here is similar to what we did before,” Mr Wall said.

“We don’t want to spend a lot of money on a well and find out that it doesn’t work. We would rather have the most efficient test that we can do.”

Results from a 2D seismic survey carried out across 750 line kilometres, set to be available in August, will also help the company identify potential prospectivity in other fields, the company added.

“So hopefully that will add a string to the bow in case the Icewine 2H well is unsuccessful, so there are a few bites of the cherry here,” Mr Wall said.