ALASKA`S EXPLORATION AND development scene is undergoing a late-life revival.
As 1997 drew to a close, new contracts and commitments indicated that the number of drilling rigs on Alaska`s North Slope could jump to 35 in the 1998-99 drilling season from 20 at the start of the 1997-98 season.
Much of the focus of this renewed activity was on satellite development in the heart of Alaska`s upstream sector, the North Slope`s main producing area centered on supergiant Prudhoe Bay and Kuparuk River oil fields.
Just as the U.K. North Sea had evolved into a satellite play in the shadow of giant fields, the North Slope exploration and development (E&D) focus in 1997 was on small-to-medium sized accumulations once thought uneconomic in this high-cost theater, near the Prudhoe/Kuparuk infrastructure and the starting point of the Trans-Alaska Pipeline System (TAPS).
Just a few years earlier, Alaskan North Slope operators were fretting that the venerable pipeline-which for 2 decades had supplied as much as 25% of the U.S. oil supply-might be facing a shutdown early in the next century. Now, satellite accumulations, together with cost-cutting that help to render viable the slope`s previously uneconomic giant fields, promise to keep TAPS humming perhaps for another couple of decades.
BP Alaska estimates the North Slope has sufficient potential to add as much as 5 billion bbl of reserves in the next decade.
Meanwhile, while the petroleum industry pressed the fight to open the Coastal Plain of the Arctic National Wildlife Refuge east of Prudhoe Bay to E&D, the U.S. government eyed a revival of leasing in the National Petroleum Reserve-Alaska (NPR-A), to the west.
The resurgence was felt in Alaska`s other producing area, the Cook Inlet region, where an infusion of fresh capital and ideas was coming from aggressive players mostly new to the state-independents.
Satellites in play
Satellite accumulations that can be devloped at little cost and produced through existing North Slope facilities were the focus of revved-up exploratory drilling activity on Alaska`s North Slope.
ARCO Alaska in mid-1997 said it had identified 50-60 small-to-medium prospects of this type and planned to drill 10-12 such prospects each year for 5 years.
The company estimated that these oil accumulations range from 10 million bbl to 100 million bbl, with a total combined potential of 1 billion bbl of oil reserves.
At the same time, ARCO Alaska remained committed to exploratory drilling away from the North Slope infrastructure, said ARCO Alaska Pres. Ken Thompson, noting a departure from the traditional emphasis on exploration of prospects with a postulated potential in the 500 million-1 billion bbl and up range.
"Today that (emphasis) is changing because our new cost structure enables us to pursue development of 100 million bbl fields in areas away from existing infrastructure. This is important, because the statistical probability for finding new North Slope fields in the 100-300 million bbl range looks very promising."
Point McIntyre oil field serves as an excellent example of the contribution of satellites to North Slope production, according to ARCO. Point McIntyre was developed with an existing processing plant, designed for 100,000 b/d, in nearby Lisburne field. Lisburne`s peak late in the 1980s at 40,000 b/d opened a door not only for Point McIntyre but also for satellites Niakuk, West Beach, and North Prudhoe Bay State. By 1997 the satellites had joined declining Lisburne production in putting about 200,000 b/d of oil through enlarged Lisburne facilities.
Advanced technology, notably 3D seismic, helped shift the emphasis to satellite development on the North Slope by pinpointing upper and lower sands not being produced in the Prudhoe-Kuparuk sector as well as fault blocks outside field limits.
This lowered the risks of exploration on the North Slope. Accordingly, ARCO had planned to shoot a record of more than 500 sq miles of 3D seismic survey on the North Slope in 1997.
Satellite drilling in 1997
Here`s a rundown of North Slope satellite drilling in 1997:
- ARCO/BP Alaska 2 Tarn proved a new field discovery well off the southwestern flank of Kuparuk River field. It flowed more than 2,000 b/d of 38° gravity oil from a sandstone reservoir at 5,200 ft. Two appraisal wells-one with a sidetrack-found oil. Reserves are estimated at 50 million bbl of oil.
- BP/ARCO continuted to evaluate 1 Pete`s Wicked wildcat in Gwydyr Bay off the northern edge of Prudhoe Bay field.
- ARCO 1 Goldhill, a deeper-pool test in the southwestern corner of Kuparuk River field, was dry.
- ARCO/BP slated the 1 Cache well to test three prospective horizons below the Kuparuk reservoir.
- ARCO/BP 1 Tabasco, a follow-up to a well drilled and tested in 1995 that suggested the shallow Tabasco zone might be commercial, was to test a separate Tabasco accumulation identified by 3D seismic.
- An ARCO directional well was to test a fault block beyond existing production in the East Niakuk area.
- An ARCO well in the West Niakuk area was slated to have an extended reach of more than 20,000 ft from the onshore drill site, a North Slope record.
- BP started permitting efforts late in 1997 for the 1 Sam exploratory well to a bottomhole location just north of the Prudhoe Bay Unit (PBU) and east of 1 Fawn Lake, a wildcat BP drilled in 1990 to 8,360 that it plugged and abandoned.
- BP sought to drill two delineation wells to test undefined oil pools in PBU: the 1 SB from S pad and the 2SB from W pad.
- Other satellite prospects on tap for drilling in 1997 were Schrader Bluff, Shearwater, Stampede, and Niakuk New, among others.
Other exploratory drilling
Outside the Prudhoe Bay infrastructure, ARCO had spudded its 1 Warthog exploratory well, which the company described as its most significant exploratory well in 1997. Early in 1998, ARCO reported the well dry.
The 100% ARCO well was a rank wildcat in 15-20 ft of water in Camden Bay 3 miles off the northern boundary of ANWR and 30 miles east of the Canning River. While the drillsite for the well was on a federal tract, it bottomed 5,000 ft away on an ARCO state tract.
In early 1998, ARCO had ordered a vertical seismic well profile of 1 Warthog in a program that would include less than 5 miles of downhole seismic after the well was to be drilled to total depth.
ARCO early in 1998 started permitting efforts for four North Slope area exploratory and delineation wells to be drilled in the 1997-98 season and the following season.
The company planned to drill as many as two wells on the Kalubik prospect northwest of its 1 Kalubik discovery, which is offshore west of Thetis Island. In 1992, ARCO`s 1 Kalubik flowed 1,200 b/d of 26° gravity oil from one interval and 410 b/d of 21° gravity oil, after hydraulic fracturing, from a second interval.
ARCO planned three wells near the proposed Tarn development between the Colville River delta and the western boundary of the Kuparuk River Unit (KRU). The 1 Iceberg, lying partially within the unit, was about 2 miles southwest of the 1 Colville wildcat, drilled in 1965. ARCO`s 1 Arete wildcat, also lying partially within KRU, was just north of the Tarn development. And the 1 Cairn would probe a prospect south of Tarn and southwest of KRU, near where ARCO drilled the Cirque wells in 1992.
BP received a permit in 1996 but failed in 1997 to drill its Northwest Eileen prospect south of its Cascade development in the far northwestern corner of PBU. Late in 1997, it unveiled plans to drill as many as four wells from two ice pads, possibly with two rigs. At least three of the wells were to be drilled in the 1997-98 season; a fourth could follow, depending on results from the first three. The two wells from the 1 NW Eileen location were to target the Kuparuk reservoir, and the 2 NW Eileen well was to probe Kuparuk, Ivishak, and Sag River pay. BP said earlier drilling and seismic data indicated "significant potential for recoverable oil." If the delineation wells were successful, BP would propose a development plan that would incorporate the exploratory and delineation wells.
Other developments
West of Kuparuk River field, ARCO in 1997 was developing Alpine field for itself, Anadarko Petroleum Corp., and Union Texas Petroleum Alaska.
At midyear, ARCO boosted its estimate of reserves for Alpine field to 365 million bbl of oil from 250-300 million bbl.
It mapped out a $650-750 million development plan expected to result in production start-up in 2000 of 40,000 b/d and peak output of 70,000 b/d in 2001.
That put the three partners in an enviable position should the U.S. Department of Interior proceed with plans to resume leasing in NPR-A, adjoining the Colville River delta area where Alpine was being developed. Environmental studies were under way in 1997, and a sale could occur as early as fall 1998.
Another prospect for development was the Liberty discovery east of offshore Endicott field, where BP drilled an appraisal well from an artificial island. Results had not been disclosed, but if the well proves up commercial reserves, BP would have another development opportunity within reach of existing infrastructure.
BP, in partnership with Chevron U.S.A., also planned two exploratory wells in the Point Thomson area for the 1997-98 winter drilling season. One could be drilled near the Sourdough discovery as an appraisal of that find. A second well could be drilled from one of three sites farther north in the Point Thomson unit; one site candidate was outside the unit; the other two were within the unit.
The discovery was made by the 2 Sourdough, drilled in 1994 to 12,600 ft. After a confirmation well proved successful, BP said Sourdough could contain about 100 million bbl of recoverable oil.
West Sak
The long-awaited commercial development of the North Slope`s West Sak heavy oil accumulation, which overlies Kuparuk River field, finally got under way late in 1997.
Operator ARCO started production near yearend from Phase I of West Sak development. Initial development plans called for drilling 50 wells and installing associated facilities. Phase I will develop 51 million bbl of new reserves and produce 7,000 b/d. ARCO and BP are investing $92 million in the project.
Total development of the West Sak core area could require more than 500 additional wells and yield incremental output of 62,000 b/d.
Lower costs of developing and operating Alaskan oil fields prompted the go-ahead decision on West Sak. If Phase I is successful, ARCO plans to proceed with West Sak additional drilling. Phase I represents the first step in a pay-as-they-go plan to develop West Sak`s estimated 400 million bbl of potential reserves.
West Sak development had been on the back burner since 1989, and interest in reevaluating development was revived in 1995. Oil in place is estimated at more than 15 billion bbl. To hold costs down, development of West Sak will make extensive use of existing Kuparuk River drill sites, pipelines, and processing centers.
Cook Inlet prospects
A pair of aggressive independents rejuvenated E&D in the Cook Inlet region in 1997.
One of them, Anadarko Petroleum Corp., Houston, in September 1996 formed a strategic alliance with ARCO Alaska to explore the Upper Cook Inlet.
Anadarko manages an Anchorage-based exploration team of geoscientists from both companies. It serves as operator and will earn a 50% share of ARCO`s working interest in Cook Inlet leases by conducting new seismic surveys, completing other geological and geophysical studies, and drilling exploratory wells.
The 2-year agreement covers 127,000 acres of ARCO`s Upper Cook Inlet leasehold but does not include the Sunfish prospect or Beluga River gas field.
Anadarko and ARCO added to the alliance`s leasehold at Alaska`s Sale 85A Cook Inlet Exempt in December 1996, when they teamed to win 10 tracts covering 38,763 acres.
The other independent, Forcenergy Inc., Miami, Fla., joined the Alaskan E&D fray in October 1996, when it acquired eight leases from Danco Exploration, Houston, covering the Redoubt Shoal prospect in Cook Inlet. The leases were to expire in 1998. Forcenergy planned to drill an exploratory well before that deadline that might finally put Redoubt Shoal field in the producing column, the first time in the 30 years since its discovery. The discovery flowed 1,400 b/d of oil but had been shut-in since 1968.
After the Danco acquisition, Forcenergy agreed in December 1996 to acquire from Marathon Oil Co. producing oil properties in Cook Inlet and Prudhoe Bay. In addition to oil interests, the sale included Marathon`s equity in the Cook Inlet pipeline and Drift River terminal on the west side of Cook Inlet. Involved were Marathon`s working interests in the oil producing properties in PBU and in offshore McArthur River field in Trading Bay Unit and offshore Trading Bay field in Cook Inlet.
Forcenergy then followed that acquisition with an alliance with Unocal Corp. that called for it to spend $30 million over 5 years on lease acquisition and development and on exploratory drilling of prospects generated by the alliance. In return, Unocal`s contribution consisted of Cook Inlet infrastructure and expertise as well as access to the company`s database in the Cook Inlet basin. The database includes about 43,000 miles of 2D and 3D seismic data.
The Unocal and Forcenergy combine was the biggest spender at State Sale 85A, bidding $1,737,831.51 in high bids for 17 tracts covering more than 72,000 acres. Plans called for the alliance`s first exploratory well, an onshore project, to spud sometime in 1998.
Elsewhere in the Cook Inlet regoin, Phillips Petroleum Co. in 1997 spudded a directional well from Platform Tyonek in an effort to make commercial the discovery made 11/2 miles southwest of the platform in 1991 by ARCO`s 1 Sunfish. That 12,160 ft wildcat yielded 1,100 b/d of 42° gravity oil and 1 MMcfd of gas through a 24/64 in. choke from Tertiary pay that underlies earlier discovered gas pay. When extension tests of the Tertiary pay proved noncommercial, the prospect was put on hold.
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Vibroseis truck generates energy for a seismic survey in the Cook Inlet region of Alaska for operator Anadarko Petroleum Corp., Houston. Anadarko in first quarter 1997 completed two seismic surveys in the region and expected by early 1988 to have ready a list of exploratory drilling prospects. Photo courtesy of Anadarko.
