Saturday, March 10, 2012

Ups, downs for explorers; Repsol resumes drilling at Kachemach 1; Brooks Range pleased with Mustang results

Kay Cashman
Petroleum News

Independent Brooks Range Petroleum finished its Alaska North Slope exploration drilling at the end of February with a smile, per company executive Bart Armfield, who confirmed March 7 that Brooks Range is “very happy” with the results of both its Mustang 1 well and the North Tarn No. 1-A sidetrack, which was started and suspended last year.

Furthermore, Brooks Range’s release of Nabors 7ES drilling rig allowed Savant Alaska to grab the rig for drilling at its eastern North Slope Badami unit, in hopes that its drilling permit for the Red Wolf No. 2 exploration well will be approved by the Alaska Oil and Gas Conservation Commission in time to drill during this winter’s short exploration season.

According to Savant executive Greg Vigil, Nabors 7ES is “currently performing a rig work over on the B1-21 well” at Badami. “When complete it will move to the B1-16 well to conduct another rig work over. Both wells need artificial lift installations to be placed on production into the Badami plant.”

The not-so-good news from Brooks Range is it learned enough about its Mustang prospect from Mustang 1 and the North Tarn sidetrack that it doesn’t need to drill a second well this winter, cutting the anticipated North Slope 2012 exploration well count from a possible high of 27 to 26. The Mustang prospect, which is in the Southern Miluveach unit west of the Kuparuk River unit, was initially a discovery well called North Tarn. The prospect name has since been changed to Mustang.

And there’s good news from Repsol E&P USA: On March 8 the company restarted drilling operations at its Kachemach 1 ice pad.

Both the Q-2 and K-1 drill sites are on Alaska’s North Slope, but K-1 is farther south and not geologically similar to Repsol’s three Qugruk drill sites, which lie near the mouth of the Colville River.

Repsol had stopped drilling operations at Q-2 and K-1 when it had a gas blowout at Q-2. Drilling had not yet begun at the Q-1 ice pad or at Q-4, an ice island, which as of March 7 was 74 percent complete, and the ice road to it 83 percent complete.

Repsol’s decision to suspend all its North Slope exploration activity after the incident (see related story on page 1 of this issue), was in fulfillment of a promise made by the Spanish major to the people of Nuiqsut prior to the start of its winter exploration program.

According to Petroleum News sources, Repsol’s decision to move forward with K-1 drilling came after making sure the village leaders of Nuiqsut, the North Slope Borough and the Alaska Oil and Gas Conservation Commission did not object.

The company, which was testing blowout preventer equipment on Nabors 9ES at K-1 as this issue of Petroleum News went to press, had hoped to drill a total of nine wells from three ice pads and one ice island during this winter’s exploration season, but the likely loss of two potential wells at Q-2 dropped that number to seven, especially since AOGCC has withdrawn all the Qugruk drill site well permits and asked Repsol to reapply for them, a process that will chop at least 14 days from the already short exploration season.

But in the interest of safety, company officials don’t appear to be complaining.

AOGCC permits applied for last

AOGCC drilling permits are often the last permits applied for by operators because other authorizations and permits have to be in place first and because they are rig-specific.
That’s likely why Alaska’s first shale player, Great Bear Petroleum, which can drill year-round from gravel pads in an existing transportation corridor, does not have its 8-12 drilling permit applications into the agency for drilling start-up in May: Great Bear does not yet have a rig under contract.

Following is the status of AOGCC exploration well drilling permits.

Permits issued by AOGCC as of March 8, 2012:

1. Repsol, Qugruk 4 (on hold following Feb. 15 Q-2 incident)

2. Repsol, Qugruk 4a (on hold)

3. Repsol, Kachemach 1

4. Repsol, Qugruk 1 (on hold)

5. Repsol, Qugruk 2 (on hold, likely will not be drilled this winter)

6. Repsol, Qugruk 2a (on hold, likely will not be drilled this winter)

7. Brooks Range Petroleum, Mustang 1 (well completed)

8. ConocoPhillips, Shark Tooth 1 (well completed)

9. Pioneer Natural Resources, Nuna 1 (well completed)

10. Pioneer Natural Resources, Sikumi 1 (well being drilled)

Pending/or yet-to-be-filed permits:

11. Savant applied for its Red Wolf permit the week ending Feb. 10. It is reportedly receiving additional scrutiny as a result of the Feb. 15 incident at Q-2.

12, 13, 14. Repsol has six permits approved, five of which are on hold, but it should have three more applications in.

15-26 Great Bear (8-12 wells, including laterals)

According to AOGCC, it cannot confirm pending permit applications because of “regulation 20 AAC 25.537.”

Subtracting Repsol’s planned Q-2 wells brings the total North Slope exploration well count down to 24.

But Great Bear executive Ed Duncan has said he doesn’t expect to need to drill more than eight wells for his proof of concept program, so 20 is likely the top number for 2012.

If Repsol gets its Qugruk permits reissued.

If Savant gets its Red Wolf permit in time.

And if Great Bear is issued its permits.

Stay tuned.