Thursday, September 20, 2012

Exploration up; Plans call for 10-20 wells; higher number reliant on funding or weather

Kay Cashman
Petroleum News

The upcoming winter oil exploration drilling season on Alaska’s North Slope is shaping up to be busier than last winter, but with fewer companies involved — four versus six.

However, the total exploration well count during the coming short winter season will likely be higher — somewhere between 10 and 20 oil wells versus the seven that were completed last winter.

The companies planning exploration drilling onshore or nearshore on the North Slope during the coming winter exploration season are Repsol, Brooks Range Petroleum, Linc Energy and UltraStar Exploration.

One of the companies not drilling an exploration well this winter, Pioneer Natural Resources, plans to drill an appraisal well, the Nuna No. 2, based on last year’s successful drilling of the Nuna No. 1 exploration well, with the intention of shoring up the resource for a proposed Nuna development plan, which it will submit to Pioneer’s management committee. That committee will look at a number of factors, including well results and Alaska’s production tax take, before it decides to sanction Nuna.

Another dropout from last year’s winter exploration drilling, ConocoPhillips, recently announced an oil find at its Shark Tooth prospect on the fringe of the Kuparuk unit, which it drilled this past winter.

The company declined to offer details about the results of the Shark Tooth No. 1well, but a notice on its website says, “This area is being evaluated to assess further development potential.”

Another company, Brooks Range Petroleum, is moving forward this winter with development of a discovery at its Mustang prospect in its Southern Miluveach unit, adjacent to the Kuparuk River unit, that was confirmed with an exploration well last winter. Mustang is expected to be in production in early 2014, with peak production of 14,000 barrels of oil a day reached in 2016.

The company also plans at least one exploration well in its Tofkat unit.

Two other companies, Linc and UltraStar, did not drill last winter but plan to drill this winter.

Savant Alaska drilled an exploration well last winter, but appears to have no plans to do any exploration drilling this winter.

Under its Placer unit agreement with the state of Alaska, ASRC Exploration was expected to reprocess and reinterpret newly licensed seismic data shot across the unit by the end of the year, which it has done, and drill and log a new exploratory well, or re-enter and test the Placer No. 1 well, by June 30, 2013. But the company has submitted new unit paperwork, including a revised plan of operations, to the state’s Division of Oil and Gas.

According to division Director Bill Barron, “ASRC, as part of the application to expand the Placer unit, requested to amend the POE and defer the well obligation by one year, until June 30, 2014. The basis for the unit expansion application is the modeling and analysis of this seismic set.”

Division and ASRC staff were expected to meet Sept. 13 about the application.

Placer lies between the Kachemach and Southern Miluveach units.

Great Bear pulled from report

Excluded from the above well and company counts for both North Slope winter exploration seasons is Great Bear, the company that is pioneering the possibility of oil production on the North Slope using the hydraulic fracturing techniques in source rocks that have proved so successful elsewhere in North America. Unlike other North Slope onshore and near shore explorers, Great Bear is able to drill year-round because its first six proposed test wells are in an existing transportation corridor of the Dalton Highway and the trans-Alaska oil pipeline.

To date the company has drilled one vertical test hole and is in the process of drilling another, both spud this past summer and both reportedly yielding core samples from all three of northern Alaska’s source rocks, the Shublik, lower Kingak, and an assemblage called the Hue shale and HRZ or GRZ.

Once the first two vertical wells are finished, Great Bear has said it will immediately go back and do a lateral well at the first site.

Great Bear wants to complete the two vertical wells and two horizontal wells, and to drill another vertical well at a third site before the end of 2012, when it has to turn Nabors Drilling Rig 105AC over to Repsol for its winter drilling program.

Great Bear President Ed Duncan has not recently discussed the company’s plans for 2013 in great detail. But on July 31, in response to a question about near-term expectations, Duncan said the company could be producing hydrocarbons by the end of the year.

“We expect to be testing and producing and … selling produced hydrocarbons potentially by the end of the year, and certainly early next year,” Duncan said.

Sans Cook Inlet, Nenana basin, Chukchi and Beaufort wells

Also excluded from this North Slope winter exploration report are Southcentral Alaska’s Cook Inlet basin wells, the Nenana basin well Doyon hopes to drill in Interior Alaska, and Shell’s drilling in its federal Burger and Sivulliq prospects in the Chukchi and Beaufort seas, respectively. All of Shell’s holes will be completed during the Arctic Ocean’s open water season before the North Slope exploration season onshore and in nearshore state waters gets under way in the last half of December.

Brooks Range’s plans

“In regard to upcoming exploration, we plan a delineation well and one or two sidetrack(s) offsetting our Tofkat No.1 Kuparuk discovery close to the NPR-A boundary in the Tofkat unit. These wells will test Brookian 3D anomalies, confirm the size of our Kuparuk discovery and test the deeper Jurassic offsetting two high flow rate Jurassic wells in ConocoPhillips’ Nanuq field area,” Brooks Range told Petroleum News in a Sept. 13 email. The company was in negotiations for a drilling rig. Beechey Point unit drilling had been moved to winter 2014 per an extension from the state.

Telemark drilling was also deferred to 2014 “pending negotiations for a joint drilling agreement with Savant Alaska in the adjoining Badami unit,” Brooks Range said.

There is a possibility one or two exploration wells will be drilled in the company’s Kachemach unit.

“Decisions on proceeding … will be made in the next few months and will be based on working interest owners’ technical and capital budgeting priorities,” Brooks Range said.

Linc aims for 5 wells

Linc Energy (Alaska) plans to drill five wells at the Umiat field on the border of NPR-A this winter, using the Kuukpik No. 5 drill rig, including a disposal well. The other four wells are three vertical, two shallow and one deep, and a horizontal well in to the Lower Grandstand formation.

Repsol finishes last winter’s program

This winter Repsol will essentially complete the five-pad program it initially proposed for last winter.

Using three rigs (Nabors 105AC, 99AC, 9ES), the company plans to get at least one vertical well drilled at Qugruk 1, Q6 and Q3 ice pads. Q2, where last winter’s shallow gas kick occurred, has been renamed Q6 and given a slightly different bottom hole location.

Repsol expects to get a well test on Q1 and Q6, drilling a vertical and a horizontal hole on both, and testing the horizontals. Depending on how much time it has before the season closes, the company might try to sidetrack those locations.

At Q3 it hopes to get a vertical test well drilled in the upcoming season.

UltraStar looking at one well

Earlier this summer, UltraStar executive Jim Weeks was optimistic the Alaska-based independent would be able to drill the North Dewline No. 1 well in the first quarter 2013.

But a final decision is not yet available from the company.