North Slope bustling with projects of all sizes
With the aid of stabilized oil prices, North Slope operators are ramping up activity on prospects in all stages of development.
In all, industry observers note that the numerous projects beyond simply the exploration phase could incrementally add nearly 400,000 barrels of production on the Slope.
ConocoPhillips is leading the way with startup of its roughly $1 billion Greater Mooses Tooth-1 oil project scheduled for later this year, other projects in permitting and plans for another robust winter exploration season.
The oil major is focused on the western edge of Slope activity; most of its greenfield work is in the federal National Petroleum Reserve-Alaska. When production commences at GMT-1, it will be the first commercial oil to flow from federal Slope acreage. GMT-1 is expected to peak at up to 30,000 barrels per day.
However, the company has also identified additional potential for oil on the southern flanks of its large Alpine and Kuparuk River fields on state lands. Plans are to drill into the Cairn and Putu prospects in the remainder of 2018, ConocoPhillips Alaska Vice President Scott Jepsen said Sept. 10 during a joint meeting of the House and Senate Resources committees.
The Cairn prospect in the southwest corner of the Kuparuk field will be drilled from an existing drill site and the third Putu well — after a main well and sidetrack were drilled last winter and found oil — will target another nearby area identified by a seismic survey, according to Jepsen.
Located just about three miles from the Native Village of Nuiqsut, the first Putu well and sidetrack were drilled from an ice pad near the community after ConocoPhillips agreed to extensive impact mitigation protocols. The third well will be spud from the CD-4 drill site in the Alpine field.
Overall, the company plans to drill between six and eight exploration and appraisal wells this coming winter and additionally conduct at least that many tests on wells in its 100,000-plus barrels per day Willow prospect in the NPR-A utilizing two drilling rigs, Jepsen told legislators.
“As we move into the (February-April) exploration season we want to focus really on Willow. We’re going to be drilling some horizontal wells out there to better understand what the productivity might look like for the type of wells that will be used to develop it,” he said.
ConocoPhillips initiated permitting for Willow, which could cost up to $5 billion to fully develop, in August with the Bureau of Land Management. Jepsen said Willow alone could add several thousand construction jobs and several hundred permanent Slope jobs once it is complete.
The company is also likely to sanction its Greater Mooses Tooth-2 project this year as well, presuming it receives a favorable record of decision from BLM in the coming weeks, Jepsen added. The company recently increased its peak production estimate for GMT-1 from 30,000 to 38,000 barrels per day.
Pikka, Oil Search: Meanwhile, the U.S. Army Corps of Engineers continues to work on the final environmental impact statement for the Pikka project, also from the Nanushuk formation, which Australian producer Oil Search took over from Armstrong Energy in July and has estimated production of 120,000 barrels per day.
Nanushuk, 88 Energy: A consortium of small independents led by Australian-based 88 Energy is planning to drill an exploration well into the Nanushuk formation near the Putu wells and other successful Armstrong Energy exploration wells early next year as well.
Mustang, Brooks Range Petroleum Corp.: Brooks Range Petroleum Corp. has also promised state Division of Oil and Gas officials that its Mustang oil project on the west edge of Kuparuk should begin producing around the New Year, according to regulatory filings with the state.
Brooks Range has opted for small-scale, modular production facilities to expedite the long-delayed project, which has the potential to produce up to 6,000 barrels per day until permanent facilities are installed, at which point the production could double.
Nikaitchuq, Eni: Just to the east and a little offshore from Alpine, Italian major Eni is in the midst of a four-well exploration program based from the company’s Nikaitchuq development. Eni started drilling the first long-reach well in December 2017 from its manmade Spy Island dill site in state waters. The wells are targeting prospects identified underneath federal waters further offshore.
In 2017 the Bureau of Ocean Energy Management approved the company to drill up to four wells — two main bores and two sidetracks — through March 2019.
According to documents filed with BOEM, the main wells in the Nikaitchuq North project were planned to depths of about 7,500 feet and 8,300 feet with the offshoots extending more than 20,000 feet to reach the targeted areas in the federal leases.
An Eni spokesman declined to provide details on the progress of the drilling, but said via email that the company intends to resume drilling at the start of 2019 to reach the target depths. The approvals from BOEM give the company flexibility to re-enter the well bores for appraisal drilling and tests if needed.
The company currently produces about 20,000 barrels of oil per day from the Nikaitchuq field.
On Aug. 29 Eni also revealed it has acquired about 350,000 acres of state leases south and east of Prudhoe Bay from Caelus Energy. A release announcing the deal states “Eni will apply its business model and experience through a fast-track exploration with a short time to market of the potential new discoveries;” however, a spokesman said the company does not plan to conduct any seismic surveys or exploratory drilling on its new acreage this coming winter.
Hilcorp, Milne Point and Liberty: Back onshore, Hilcorp Energy is almost done installing production facilities at its $400 million Moose Pad project in the Milne Point Unit. As soon as the facilities are complete Hilcorp will begin lots of drilling and first oil from the Moose Pad is expected in the first quarter of next year, according to Hilcorp Alaska spokeswoman Lori Nelson.
The project has space for up to 70 wells and production is expected to peak at 16,000 to 18,000 barrels per day.
Hilcorp also has an ongoing polymer flood pilot project at Milne Point in hopes of increasing recovery of heavy, viscous oil.
Adding polymers to injected water increases the water’s viscosity and helps it “push” oil out of the reservoir more effectively by preventing the heavier oil pool from dispersing and comingling with the water as easily.
“Experts have estimated that polymer use on the Slope could enhance recovery from an average rate of 15 percent up to 35 percent,” Nelson wrote.
Hilcorp’s major Slope project — a 50-50 partnership with BP — is awaiting a record of decision after BOEM released the offshore Liberty manmade island oil development EIS Aug. 23. Liberty is expected to peak at up to 70,000 barrels per day.
“I don’t think we’ve seen this much potential activity in decades,” Jepsen commented of the North Slope to legislators Sept. 10.
In Cook Inlet, where Hilcorp is the dominant operator, the company is within weeks of wrapping up its $75 million-plus cross-Cook Inlet oil pipeline project, Nelson wrote in an email. She said the pipeline being converted from a gas pipeline to an oil line should be operational early in the fourth quarter.
The project will extend the life of oil production in the Inlet and eliminate the need for Hilcorp to transport oil via tanker from its west Cook Inlet facilities to the now-Marathon refinery in Nikiski.
Elwood Brehmer can be reached at [email protected].