Wednesday, November 23, 2011

Gearing up for winter; Companies move forward on what could be bumper exploration season

Alan Bailey & Kay Cashman
Petroleum News

The snow has been falling and the ground freezing in Arctic Alaska, and the various companies planning exploration wells for the coming winter season are lining up for what looks like being one of the busiest ever exploration seasons on the North Slope. The annual freeze-up has yet to reach the point where Alaska Department of Natural Resources can open up state land for off-road travel, but the department said on Nov. 18 that it had been approving the pre-packing of ice roads for a number of projects in its western coastal area, and also for a winter road between the North Slope Haul Road and the lower foothills area.

Brooks Range pre-packing snow

At the Resource Development Council annual conference on Nov. 17, Bart Armfield, chief operating officer of Brooks Range Petroleum Corp., said that his company had just starting pre-packing snow for an ice road that will run from the southwest corner of the Kuparuk River unit to the company’s North Tarn No. 1 well. Brooks Range found oil when drilling this well last winter but it now plans to use the Nabors 7-ES rig to further deepen the well through the Kuparuk C zone and do some flow testing. The company also plans to drill two appraisal wells, the Mustang No. 1 and Mustang No. 2, with these wells and the North Tarn well all being in the newly formed Southern Miluveach unit. In anticipation of what the company calls its “Mustang development” in the unit, this winter the company will also explore for sources of gravel for future roads and pads, Armfield said.

Repsol has largest program

Spanish major Repsol YPF is running by far the biggest exploration program on the North Slope this winter — the company plans to use five drilling rigs at five locations in a partnership with Armstrong Oil & Gas and GMT Exploration Co., drilling multiple wells in their 494,211 acres of state lease holdings.

Repsol’s Alaska operations manager Bill Hardham told the RDC conference on Nov. 16 that his company has been extremely busy gearing up for its winter drilling and that the company will access its drill sites from a network of ice roads originating at the Palm and Meltwater fields.

Four of the drilling locations are in an area of the Colville River Delta where the company has applied for a new Qugruk unit, and the fifth location is called Kachemach, south of the Meltwater field.

Including sidetrack wells, Repsol is permitting a total of 15 wells and five pads, but Hardham anticipates completing about 12 wells, and carrying out two or three drill stem tests.

The company is leasing an office in Anchorage for the winter, as well as establishing a camp office in Deadhorse. And, given the intensity its exploration activity, Repsol has contracted with Alaska Airlines for two flights per week to the North Slope from Anchorage, Hardham said.

He said Repsol’s aggressive approach to exploring in its leases reflects the fact that the leases are set to expire within just six years, although establishing oil production in Alaska as part of the company’s worldwide portfolio is also very important.

According to State of Alaska records, 84 of the company’s leases expire in 2012, 2013 and 2014.

Five wells for Linc at Umiat

Australian independent Linc Energy plans to drill up to five wells in the undeveloped Umiat oil field, on the border of the National Petroleum Reserve-Alaska, to the south of the central North Slope, Corri Feige, Linc general manager for Alaska, told the RDC conference.

The company wants to conduct oil flow testing from three or four of the wells, to obtain data for a field development plan, she said. Permitting for this winter’s drilling is well under way.

Linc will also be installing air quality and weather monitoring equipment this winter, to obtain data needed for future air quality permits for oil production, she said.

The known oil resource at Umiat occurs at shallow depths — Linc also sees possibilities for finding additional oil and gas in deeper structures at Umiat and anticipates starting drilling into those horizons in 2012, Feige said.

Access to Umiat will be by a 90-mile snow-packed road from trans-Alaska pipeline pump station two on the Dalton Highway, she said.

On Nov. 21 Linc spokeswoman Colleen Richards told the Anchorage Chamber of Commerce that the company is still working on securing a rig for its drilling program.

Farther south in Alaska Linc is embarking on another program of exploration drilling, seeking locations for underground coal gasification developments in the company’s state exploration license acreage in the Healy area of the Alaska interior and in the Cook Inlet area. The company has started drilling its first test hole near Beluga on the west side of Cook Inlet and is acquiring some 2-D seismic data for its exploration program, Feige said. The company anticipates drilling four more underground coal gasification wells by the middle of 2012, she said.

Underground coal gasification involves using a controlled underground coal burn to generate synthetic gas for power generation, or for conversion to natural gas or other products.

Anadarko and Pioneer

Back in northern Alaska, Linc will co-locate a portion of its snow packed road to Umiat with a road that Anadarko Petroleum plans to build for access to its Chandler No. 1 gas well. Anadarko plans to conduct some rig-less testing of the Chandler well this winter.

North Slope producer Pioneer Natural Resource plans to drill two wells in its Nuna development on the eastern side of the Colville River, in the southern part of Pioneer’s recently expanded Oooguruk unit.

Savant working on rig deal

Savant Alaska wants to drill a new well on the crest of its Red Wolf prospect in the Badami unit but is still trying to obtain a drilling rig for this project.

In a Nov. 18 email Savant Vice President Greg Vigil told Petroleum News that he expected the drilling project to move ahead this winter and that Savant was currently working a rig deal.

The Red Wolf well will target the Kekiktuk formation, the formation that contains the oil reservoir for the Endicott field, west of Badami.

Rig less likely for UltraStar

UltraStar, a small independent Alaska explorer, has also been looking for a rig to drill the North Dewline No. 1 well, the second well in the Dewline unit, on the coast north of the Prudhoe Bay unit.

At the beginning of November the company notified Alaska’s Division of Oil and Gas that, owing to the lack of an available drilling rig, it was very likely that the company would have to defer its planned drilling into 2013, UltraStar Managing Member Jim Weeks told Petroleum News in a Nov. 20 email. However, the company asked the division to continue processing its permits in case a rig comes available at short notice, should another company change its plans.

Great Bear waiting on permits

Great Bear Petroleum, the company pioneering the possibility of source rock, shale oil development in Alaska, hopes to drill its first test wells on its North Slope acreage in the coming winter.

Ed Duncan, Great Bear’s president and COO, told Petroleum News Nov. 21 that he is considering several rig options, including the possibility of bringing a more modern rig from the Lower 48 that Great Bear thinks may be better suited for drilling in source rock plays; a rig that will have to be made Arctic ready.

Duncan said that he is not going to contract the use of a rig until he is certain of securing all of the permits he needs for his year-round exploration and evaluation program. Permitting is progressing well, he said.

The company has formed a joint venture with oilfield service company Halliburton, in which Halliburton will do some of the test drilling within a limited area of Great Bear’s leases.

Great Bear is permitting six wells on six gravel pads along the Dalton Highway, intending to run short tests on at least four wells before deciding to sanction a pilot plant. It will use a combination of rig mats and existing surface infrastructure at each site, Duncan said.

In Nov. 1 testimony to a special meeting of the Alaska Legislature’s House Resources Committee, Duncan said Halliburton and Great Bear each plans to drill as many as three vertical wells and a lateral from each of those wells.