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March 15, 2005 --- Vol. 11, No. 28March 2005

Kerr-McGee success in Alaska continues with latest well, talking joint development of Nikaitchuq, Tuvaaq

Kerr-McGee announced this morning the successful test of the Schrader Bluff reservoir at its Nikaitchuq No. 4 horizontal appraisal well on Alaska’s North Slope.

“The well tested at rates of up to 1,200 barrels of oil per day during periods of the initial test. The oil tested at 16 to 17 degrees API,” the company said in a press release. Kerr-McGee operates the Nikaitchuq unit with a 70 percent working interest. Armstrong Alaska holds the remaining 30 percent.

The company said it has encountered the same Schrader Bluff interval approximately three miles to the west of the Nikaitchuq No. 4 appraisal well at its Tuvaaq unit exploration well. Based on the results, the company is drilling a sidetrack, the Kigun well, to earn additional acreage in Tuvaaq from Armstrong. (Tuvaaq is adjacent to Nikaitchuq’s eastern border.)

Kerr-McGee will operate Kigun, which is in the northernmost part of the ConocoPhillips-operated Kuparuk River unit, with a 55 percent working interest upon completion of the drilling operations. Armstrong has the other 45 percent. Kerr-McGee did not say if the well would remain in the Kuparuk unit should the well proved successful.

Kerr-McGee also has increased its stake in Tuvaaq by acquiring an additional 40 percent working interest from Pioneer Natural Resources, effectively buying Pioneer out of that unit. As a result of the transaction, Kerr-McGee now holds an 82 percent working interest in the Tuvaaq unit. Armstrong holds the balance of the unit.

“We are encouraged with the results we’ve seen thus far in Alaska,” said Dave Hager, Kerr-McGee senior vice president responsible for oil and gas exploration and production. “Although we still need to complete the appraisal program, based on initial evaluations, it appears the Schrader Bluff interval might be developed throughout much of our 36,000 acres in the Nikaitchuq and Tuvaaq area.”

Kerr-McGee’s North Slope 2005 drilling program includes two appraisal wells at Nikaitchuq and the exploration well at Tuvaaq. Nikaitchuq No. 4 tested the Schrader Bluff interval, while the Nikaitchuq No. 3 horizontal appraisal well is currently being drilled to test the Sag River formation.

In 2004, the company announced successful exploration and appraisal wells at Nikaitchuq. The Nikaitchuq No. 1 vertical well tested at rates more than 960 barrels of oil per day of 38 degree API from the Sag River formation. The Nikaitchuq No. 2 well was drilled 9,000 feet southeast of the discovery well and successfully extended the accumulation down dip.

Earlier this year, Kerr-McGee announced it had acquired a 50 percent working interest in the Two Bits prospect from Armstrong, taking over as operator and renaming the prospect Ataruq. The company plans to drill the initial exploration well at Ataruq following the Nikaitchuq appraisal drilling.

Editor’s note: See full story in March 20 issue of Petroleum News.

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