Vol. 16, No. 6 Week of February 06, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

An explorer, alone

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BRPC, partners prepping North Slope’s only exploration well for 2010-11

Eric Lidji

For Petroleum News

A multi-company joint venture led by Brooks Range Petroleum Corp. has announced plans to drill what will likely be the North Slope’s only exploration well this winter.

The Alaska-based independent plans to start drilling at the North Tarn prospect in early March. The North Tarn No. 1 well site is about two miles west of the Kuparuk River unit.

BRPC plans to drill the well using Nabors rig 9ES.

“We are excited to get started at the North Tarn well and feel that with the signing of the 9ES rig contract, we now have all the contracts in place to effectively execute a successful season,” said Bart Armfield, vice president of field operations for BRPC.

The 6,300-foot well would test targets in the Brookian formation and the deeper Kuparuk formation. The Brookian is the same formation producing at Tarn, the Kuparuk satellite to the south, while the Kuparuk is the main formation producing at the Kuparuk River unit.

BRPC estimates that the Brookian reservoir could contain some 35 million barrels of oil and that the Kuparuk reservoir could contain an additional 6 million barrels of oil.

Dedicated processing planned

If they make a commercial discovery, BRPC and its partners would likely build a dedicated micro-processing facility to bring their crude oil to sales quality, but the location of North Tarn near the Alpine pipeline greatly improves its economics.

“It’s a common carrier pipeline and we’re less than a mile away from it,” Jim Winegarner, vice president of land and external affairs for BRPC, told Petroleum News on Jan. 28.

North Tarn doesn’t need to be huge to be economic. “We think we could get there with a discovery in the Kuparuk at that 6 million barrels number,” Winegarner said.

Although the Kuparuk is deeper and smaller than the Brookian, BRPC sees it as a better bet because of the compartmentalized geology of the Brookian, notorious for causing challenges across the North Slope from Tarn to Badami. “The Brookian formation would be a great upside to have, but that’s a lot riskier prospect,” Winegarner said.

Work under way

Work is already under way to build an ice pad at the drilling site and a four-mile ice road connecting the pad to drill site 2M within the Kuparuk River unit. The companies expect the well to take about 40 days to complete, from construction to the end of drilling.

The joint venture farmed-in six Eni Petroleum leases at North Tarn in January 2010 and recently applied to form the Southern Miluveach Unit, covering 56,460 acres over the leases. “This well that we’re drilling is going to be the first work commitment that we’re proposing in the Southern Miluveach unit,” Winegarner said. “Overall, we have a four-well commitment that we’re proposing for that unit, plus a seismic program.”

The unit application is still pending with the Alaska Division of Oil and Gas.

BRPC operates a multi-company joint venture on behalf of TG World Energy and Ramshorn Investments. The group is responsible for some of the most active exploration campaigns on the North Slope in recent winters. The joint venture also owns the Tofkat prospect west of North Tarn, the Beechey Point unit in the Gwydyr Bay area north of the Prudhoe Bay unit and the Slugger prospect south of the Point Thomson unit.

BRPC is the operating arm of the Kansas-based Alaska Venture Capital Group.

Still eyeing other prospects

Over the past five years, BRPC and its partners have been among the most active exploration companies on the North Slope, and among the largest leaseholders as well.

In addition to North Tarn, the companies hold the Tofkat and Slugger prospects, and the Beechey Point unit, as well as many smaller exploration blocks across the North Slope.

Tofkat is less than 10 miles west of North Tarn, but Winegarner said that the distance between the prospects and the location of Tofkat along the Colville River mean the two prospects are not automatically candidates for joint development. However, because the leases at Tofkat start to expire next year, BRPC is considering applying for a unit soon.

Slugger is a prospect south of the Point Thomson unit where the joint venture wants to shoot a seismic program. Winegarner said BRPC would be looking for potential partners for that program at the upcoming North American Prospect Expo in Houston.

Since arriving in Alaska more than a decade ago, the various companies involved in the joint venture have spent most of their time and energies on what is now the Beechey Point unit. The unit is in the Gwydyr Bay region at the delta of the Kuparuk River.

The companies have conducted most of their existing exploration work on the west side of the Kuparuk delta and now want to explore several known oil accumulations on the east side of the delta, hopefully as soon as the winter of 2011 and 2012, Winegarner said.

JV likes tax revisions

The joint venturers are the only explorers on the North Slope this winter, but Winegarner believes more would be working if Gov. Sean Parnell’s new oil tax passes into law.

“We could be drilling multiple wells this season instead of just one,” he said.

In particular, Winegarner likes the provision that would extend a Cook Inlet tax credit on “well lease expenditures,” or intangible drilling costs, to explorers on the North Slope.

The credit would cover drilling expenses that aren’t for material objects, like surface facilities. “In an exploration well, that’s a majority of our costs,” Winegarner said.

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