NEWS BULLETIN

February 03, 2005 --- Vol. 11, No. 13February 2005

MMS re-appraises the Burger gas discovery on the Chukchi shelf

The Minerals Management Service has issued a revised appraisal of the gas accumulation discovered in the Chukchi Shelf at the Burger well. The Burger well was one of a group of five exploration wells that a consortium of companies led by Shell drilled in the Chukchi Sea between 1989 and 1991.

An MMS 1993 assessment estimated 2 trillion cubic feet to 10.5 tcf of conventionally recoverable gas in the Burger prospect, with a mean estimate of 5 tcf. MMS has now increased this estimate to a range of 8 tcf to 27 tcf, with a most likely estimate of 14 tcf. According to MMS, “Burger could represent the largest hydrocarbon discovery to date on the Alaska OCS.”

MMS did this re-appraisal in 2001 and decided to release it to the public now because an outlook for sustained high oil and gas prices improves the economics of Chukchi prospects. In addition there have been some industry enquiries about the upcoming Chukchi Sea lease sale.

The increased estimates result from new models for the way in which gas may fill the Burger reservoir, MMS geologist Kirk Sherwood told Petroleum News this morning.

“We … allowed for a more robust or complete filling in the prospect,” Sherwood said.

The dome-shaped Burger structure is about 25 miles in diameter with reservoir sand mostly about 100 feet thick, but with some thicker down-faulted areas on the west side.

There is insufficient information to determine the level of the gas-water contact in the reservoir so the scientists at MMS have used three different gas fill models to analyze possible ranges of gas volumes. The new appraisal assumes a median model where the base of the gas sits at the point at which the pressure gradient in the well changes and a maximum fill model that assumes that gas completely fills the reservoir. The original appraisal used the pressure gradient change for its maximum fill model.

MMS has done some economic modeling using an assumed production scenario for Burger. The production scenario involves subsea completions feeding to a single, concrete production platform; an 80-mile subsea export pipeline to the shore; and an onshore pipeline taking a direct route through NPR-A to near pump station 1 at the northern end of the trans-Alaska pipeline.

Using this production scenario MMS has calculated that sustained natural gas prices in the range $4.63 per thousand cubic feet to $8.00 per mcf, in year 2000 dollars, would make the development of the Burger prospect viable. The point within this range at which development becomes viable depends on factors such as gas price trends in relation to inflation, discount rates and the potential to sell condensate. The lowest price assumes a growth in gas price one percent above the rate of inflation while the highest price results from an assumption that gas prices will remain flat.

The MMS report on the re-appraisal and a spreadsheet with the economic model can be found at http://www.mms.gov/alaska/re/BurgerReserves/Burger Fact Sheet.pdf

Editor’s note: See complete story in Feb. 13 issue of Petroleum News.

Alpine hits one-day production of 128,363 barrels

January North Slope production was down 3.4 percent from December, averaging 947,621 barrels per day, but Alpine hit a new high on Jan. 1 of 128,363 bpd, and averaged 119,385 bpd for the month of January, up 3 percent over December.

ConocoPhillips Alaska and Anadarko Petroleum have been expanding the production facilities at Alpine, which came online in November 2000 with a capacity of 80,000 bpd and was de-bottlenecked to a capacity of 100,000-105,000 bpd beginning in 2001. Last summer’s work added some 5,000 bpd in capacity and when the expansion work is completed next summer the Alpine facilities will have a peak capacity of 140,000 bpd.

Part of the North Slope production drop was due to bad weather Jan. 8-11, including high winds, which forced production reductions. In addition, Northstar had a compressor seal failure which dropped production at the field early in January, followed by a complete power outage Jan. 13, which cut production by more than half. Alpine had a six-hour shutdown Jan. 26 caused by a power outage.

Editor’s note: See complete story in Feb. 6 issue of Petroleum News.


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