Friday, October 28, 2011

Repsol applies for 98,852-acre Qugruk unit; 4 wells this winter

—Kristen Nelson

Repsol E&P USA Inc. has applied to the Alaska Department of Natural Resources for formation of the 98,852-acre Qugruk on the North Slope.

Repsol, 70 & 148 LLC and GMT Exploration Co. LLC jointly proposed formation of the unit. The three together hold 91.5 percent of the working interest within the proposed unit area.

Other leaseholders in the proposed unit are: Pioneer Natural Resources Alaska Inc., Anadarko Petroleum Co., ConocoPhillips Alaska Inc., Paul L. Craig and Peter G. Zamarello. The unit agreement has been executed by Repsol, 70 & 148 and GMT. Repsol said it has offered the other leaseholders the right to join the unit and is awaiting their response.

The proposed unit, in somewhat of a “T” shape, is between the Colville River unit to the south and west, the Oooguruk unit to the south and east and the proposed Placer and South Miluveach units to the south. The northern limit of the proposed unit is the boundary between state waters and the federal outer continental shelf.

One-year plan

The initial plan of exploration is for one year and includes four wells. Repsol proposed a bond payable to DNR to ensure that work begins, with DNR to release the bond to Repsol when the first exploration well spuds. Repsol said the unit working interest owners agree to having the unit terminate if the first well is not drilled during the 2011-12 drilling season.
Prospective intervals to be tested by the exploration program include — but are not limited to — the Cervelo, Judy Creek, Nechelik, Nuiqsut and Alpine sandstones within the Jurassic Kingak shale, and the Cretaceous Kuparuk C sandstone (Kup “C”), Torok formation and Nanushuk Group.

The four planned wells are the Qugruk 1 in section 28 of township 13 north, range 6 east, Umiat Meridian, with a proposed true vertical depth of 7,100; the Qugruk 2, in section 25 of township 13 north, range 6 east, UM, with a proposed TVD of 7,000 feet; Qugruk 3, in section 31, township 12 north, range 6 east, UM, with a proposed TVD of 7,150 feet; and Qugruk 4, in section 15 of township 13 north, range 4 east, UM, with a proposed TVD of 8,300 feet.

Repsol said the sequence in which the wells are drilled may be changed and the location and drilling depth of subsequent wells may be adjusted following drilling of prior wells.

In its permitting paperwork Repsol has indicated that it may drill one vertical well and as many as two sidetracks at each location. It is also permitting the Kachemach exploration well farther south — outside of the proposed unit area — and just east of the Meltwater participating area of the Kuparuk River unit.

Kingak, Kup “C”, Nanushuk group

There have been many exploration wells drilled in the area surrounding the proposed unit, including six wells within the proposed unit, beginning in 1966 and extending through to 2008, Repsol said in its unit application.
Primary objectives for the proposed unit are “sands within the upper portion of the Jurassic Kingak Shale, the Cretaceous Kup ‘C’ sand and several sands within the Cretaceous Nanushuk Group.” Two sands in the J-2 interval of the Kingak shale are informally termed the Cervelo and Judy Creek sands, the Nechelik sand, the Nuiqsut sand and the Alpine “A” and “C” sands. Within the Nanushuk group the sands are the Nanushuk 3, Nanushuk 2 or Qannik sand, Nanushuk 6 and Nanushuk 7.

There is both 2-D and 3-D seismic over the area of the proposed unit, Repsol said.

While proprietary 3-D seismic exists over most of the proposed unit, Repsol said the primary 3-D seismic it has licensed over the proposed unit are the 2000 Fiord 3-D, the 1997 Kalubik 3-D and the 2007 Big Island 3-D. The company said that variably spaced 2-D lines (half a mile to 2-mile spacing) acquired from the 1970s to the 1990s were used in areas with no 3-D coverage.

Existing seismic “allows detailed mapping of fault patterns, truncation of individual Jurassic sands by the Lower Cretaceous Uncomformity (LCU), and amplitude anomalies associated with sands,” the company said.

Productive

Because of production in adjacent areas, Repsol provided DNR with an extensive analysis of what it considers to be analogous production.

The Nuiqsut sand is productive in the Oooguruk unit to the east of the proposed Qugruk unit, Repsol said, while the Nechelik, Alpine “A” and Alpine “C” sands are producing in the Colville River unit to the west of the proposed unit.

“All the zones are being developed by horizontal laterals with alternating producing and injection wells.”

The Kup “C” sand is a major North Slope reservoir and is produced most notably from the Kuparuk River field southeast of the proposed unit, Repsol said.

“Structure at the Kup ‘C’ level consists of an extremely large, roughly circular, four-way closure known as the Colville High,” Repsol said, and the lands proposed for the Qugruk unit are “on the northwest flank of the structure but are still nearly entirely within the area of closure.”

The Nanushuk group is divided into nine zones within the area proposed for the unit, including the Nanushuk 2, equivalent to the Qannik sand that is being developed within the Colville River unit, where Qannik sand production is south of the proposed Qugruk unit. There are six producing Qannik wells and three injection wells, with oil ranging from 27 to 32 degrees API gravity.

“To date the Qannik sand is the only sand that has been tested within the Nanushuk Group, however reservoir properties for the other Nanushuk sands are anticipated to be similar.”

Madrid-based Repsol took a position in state acreage when it picked up a 70 percent working interest in 494,211 acres assembled by Armstrong Oil and Gas of Denver (bidding as 70 & 148 LLC) and northern Alaska acreage held by GMT Exploration LLC.

Under the deal, announced in early March, the remaining 30 percent is split 75:25 between Armstrong and GMT.

Repsol’s previous interests in Alaska were in federal outer continental shelf acreage in the Beaufort and Chukchi seas.