NEWS BULLETIN

May 04, 1998 --- Vol. 4, No. 22May 1998

Chevron to build pipeline to eastern Beaufort Sea; hopes for Point Thomson, Sourdough development by 2003 to serve as receiving point for Kuvlum, Hammerhead production

Chevron U.S.A. Inc., the new operator for the federal offshore Kuvlum and Hammerhead units, was granted a five-year suspension of production by the U.S. Minerals Management Service on April 30 to allow for the design, permitting and construction of a pipeline and related transportation facilities to the eastern North Slope to facilitate the development of Kuvlum and Hammerhead. The two units sit side by side in the Beaufort Sea north of the eastern part of the Arctic National Wildlife Refuge and approximately 10-15 miles north/northwest of Flaxman Island and the northern boundary of the Exxon operated Point Thomson unit, which contains the Sourdough prospect.

Chevron said it will continue to encourage development of the Point Thomson and Sourdough areas by planning to participate in the design, permitting and construction of a pipeline for the eastern North Slope by 2003. Chevron said in its work plan that it hopes to prove up sufficient economic recoverable reserves in the Point Thomson or Sourdough areas by 2003 to allow development of infrastructure that could serve as the receiving point for Kuvlum and Hammerhead oil production.

Chevron was named operator of the two units after an agreement was made between Shell Frontier Oil and Gas and Union Texas Alaska LLC giving Chevron 60 percent of both units and Shell and Union Texas an undivided 20 percent working interest ownership in each lease in both units. Chevron’s five-year work plan filed with MMS said, “The increased drilling and development activity in Badami and the Point Thomson and Sourdough areas we hope will serve to extend pipelines, facilities and infrastructure into the eastern North Slope, and by virtue of being an owner in the Point Thomson and Sourdough areas, Chevron expects to be able to reduce facility fees and capital risks, thereby further reducing the capital risks of developing the Kuvlum and Hammerhead units.”

Chevron’s work program for 1998-99 includes plans to participate or attempt to initiate, a study with BP Exploration (Alaska) Inc., the American Petroleum Institute and the Alaska Oil and Gas Association to review API standard RP2N for sub-sea buried pipelines in the Arctic environment. By the end of 2000 Chevron plans to participate in an OBC seismic program in state of Alaska waters, which should extend into a portion of the outer continental shelf between the Canning River and the BP operated Badami unit.

A 3-D seismic in one or both of the Kuvlum and Hammerhead units will be initiated by the year 2003. A presentation will be made to the MMS on the geological, geophysical and engineering studies done by Union Texas and Shell in the Kuvlum and Hammerhead units.

BP to boost Endicott oil production

BP Exploration (Alaska) Inc. said May 4 that a $37 million enhanced oil recovery project begun at Endicott this year will add 22 million barrels of recoverable oil reserves and will ultimately boost oil production by about 5,000 barrels a day.

Endicott, which lies about 15 miles northeast of the Prudhoe Bay field, currently produces about 58,000 barrels a day.

The planned EOR project will use gas from the Endicott reservoir to produce more oil. A gas-based solvent will be manufactured, compressed, distributed and injected into the reservoir in order to flush more oil from pores in the reservoir rock, BP said.

The EOR project, reported by PNA in April, will use hydrocarbons currently burned as fuel to make the injectant. A new compressor train, manifolds and well tie-ins on the main production island and satellite drilling island and a pipeline between the two islands will be required.

BP said that eight truckable modules are being built in Anchorage by Alaska Petroleum Contractors and will be transported to the North Slope in July. Alaska Petroleum Contractors will also install the modules on the main production island.

Final testing of the facility is planned for late summer; startup is scheduled for October.


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