Saturday, March 7, 2015

Mustang under way; Alaska company drilled initial injection well in January, planning two more

Alaska Contract Staffing
Eric Lidji
For Petroleum News

The Mustang development is under way. Brooks Range Petroleum Corp. began drilling its first development well at the North Slope field in early January using Nabors rig 16E. The approximately 9,300-foot SMU-M02 well is a directional injection well to support Southern Miluveach unit production.

The well is the first in a three-well development program planned for this winter. The next two, SMU-M03 and SMU-M04, will be horizontal production wells. The Alaska Oil and Gas Conservation Commission issued a drilling permit for SMU-M03 on Feb. 13.

The Mustang field is the initial development project at Southern Miluveach, which sits along the southwestern border of the Kuparuk River unit, north of the Tarn satellite.

The program is aimed at bringing the field into production by April 2016. In a plan of development submitted to the Alaska Division of Oil and Gas in the latter half of 2014, Brooks Range Petroleum described plans to drill as many as 13 wells during 2015.

The Mustang project includes a gravel pad, a gravel access road connecting to the existing road grid at the Kuparuk River unit and a standalone production facility. The road and pad were completed last year. Construction of the facilities is running concurrently with the initial drilling operations. The Alaska Industrial Development an Export Authority is helping to finance both the early infrastructure and the facilities.

The all-season road means Brooks Range Petroleum can continue work beyond winter.

The company expects the approximately 40 million barrel oil field to initially produce between 8,000 and 10,000 barrels per day, which would leave considerable room at the 15,000-barrel-per-day processing facility to accommodate future developments nearby.

Last year, a joint venture comprising Thyssen Petroleum USA, the JK Group and Magnum Energy Partners acquired ownership of Brooks Range Petroleum from Alaska Venture Capital Group LLC and Ramshorn Investments Inc. The joint venture also acquired with a 90 percent interest in the Alaska holdings of the two former owners.

Fairway under way

The Mustang development will be the first in the region between the Kuparuk River unit and the Colville River unit, which is colloquially known as “the billion-dollar fairway.”

The optimistic name reflects the advantages of operating in a region with considerable transportation and processing infrastructure, which is a rarity on the North Slope.

A standalone processing center in the region could improve the economics of other projects in the fairway. Brooks Range Petroleum operates the nearby Putu and Tofkat units and, until its recent termination, the Kachemach unit. ASRC Exploration LLC operates the Placer unit. Repsol E&P USA Inc. is exploring on leases to the north. Royale Energy Inc. intends to drill exploration wells on leases to the south as early as 2016.

Quick turnaround

After more than a decade of exploration activities, including three prolific drilling seasons, Brooks Range Petroleum farmed-in the North Tarn prospect in early 2010.

Over the 2011 and 2012 exploration seasons, the company drilled the North Tarn No. 1 exploration well, the North Tarn No. 1-A sidetrack and the Mustang No. 1 delineation well. The wells tested the Brookian formation and deeper Kuparuk formation.

The company initially expected to find some 6 million barrels of oil in the Kuparuk formation. Instead, the wells proved an estimated 44 million barrel resource, according to an independent audit by the global consulting firm DeGolyer and MacNaughton.

The larger discovery prompted the company to seek alternative ways to finance a development program, including AIDEA and the recently formed joint venture. The region is also thought to hold considerably reserves in the Brookian formation, although the more complication geology will likely delay development for some time.

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