Thursday, December 8, 2011

Busy winter exploration season planned for North Slope

Tim Bradner
Alaska Journal of Commerce

It will be a busy exploration season on the North Slope.

New drilling by Repsol is driving the pace of exploration with four to five drill rigs under contract but Brooks Range Petroleum, Linc Energy and Great Bear Exploration also plan drilling, employing one drill rig each. In addition Anadarko Petroleum is going back to test a natural gas find in the foothills region of the southern North Slope.

Linc Energy’s Umiat project is not technically exploration since the oil accumulation there has long been known, but the company is planning to drill five wells and to do flow tests of three to four to assess the productivity of the shallow Umiat reservoir.

The company is developing a 90-mile snow road from the Dalton Highway to Umiat to move a drill rig and other major equipment. Anadarko will also use the road for part of the distance to move equipment it will need to test its well, although a drill rig will not be required.

There is an estimated 1 billion barrels of oil resource estimated to lie in the shallow sandstone reservoir at Umiat, much of it actually in the permafrost, according to Corri Feige, Linc Energy’s Alaska manager. Only a part of this will be produced, however. The oil is very good quality, however, measured at 37 degrees API, Feige said.

Linc Energy is studying a small crude oil pipeline that would be built parallel to a gravel access road the state of Alaska is planning to build to the area.

Brooks Range Petroleum, which is exploring on behalf of several independent companies, will return to its North Tarn 1-A well drilled last year to deepen and test the well, said Bart Armfield, Brooks Range’s chief operating officer. When that work is completed the rig will move to the company’s nearby Mustang prospect to drill. An exploration project to search for gravel will also be done.

An ice road will be built from a production pad in the southwest part of the Kuparuk River field, with the Nabors 7ES rig and two camps capable of housing 100 people moved to the exploration site.

If a commercially viable project is developed Brooks Range will move to the design of a production facility and procurement and construction in 2013 with a possible start of production in 2014. Capital costs for the Mustang project are estimated at $597 million. If an extension of the prospect to the north, called Appaloosa, is also developed, a further $454 million in capital investments will be required.

The planning now assumes a 10,000 barrels-per-day production facility with 15 wells, including seven producers and eight injection wells.

Great Bear plans to drill six test wells at locations adjacent to the Dalton Highway south of Prudhoe Bay to test its concept that oil can be produced from shale source rocks, according to Great Bear President Ed Duncan. The shale formations are known to be the sources for oil that accumulated over time in several of the large producing fields to the north of Great Bear’s leases. The company hopes that substantial amounts of oil remain in the shales.

What is planned, if the theory holds, is a production project similar to that being done to extract shale oil in North Dakota and Texas. The production plan involves horizontal wells and multiple fracturing, a procedure similar to that used in the shale oil projects of the Lower 48.

Repsol, a medium-sized integrated company based in Madrid, Spain, acquired a 70 percent interest in 500,000 acres of North Slope onshore leases last March in a deal with Denver-based independent Armstrong Oil and Gas. The company planned an aggressive program to test prospects because of impending lease expiration deadlines, its project manager, Bill Hardham, said.

Drilling will be at prospect locations north and west of the Kuparuk River field and south of Kuparuk near the Meltwater production pad. Four to five rigs will be employed, and the activity will be so intense that the company has chartered an Alaska Airlines Boeing 737 for twice-weekly flights to the Slope.

This article appears in the AJOC December 11 2011 issue of Alaska Journal of Commerce

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