Vol. 9, No. 29 Week of July 18, 2004
Providing coverage of Alaska and northern Canada's oil and gas industry

Kerr-McGee plans to drill up to six North Slope wells

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Exploration drilling offshore Milne Point unit will evaluate Nikaitchuq discovery

Kristen Nelson

Petroleum News Editor-in-Chief

Kerr-McGee Oil & Gas Corp. has filed an operation plan with the state of Alaska to drill up to six exploration wells this winter offshore the Milne Point unit, three miles north of Oliktok Point, from two to three locations, using two, and possibly three, drilling rigs.

Operations Manager Todd Durkee told Petroleum News July 14 that the company included all of the options — from a single well to six wells — in its operations plan. He said the company has not committed to any rig yet.

Kerr-McGee told the state the operations will be “nearly identical” to those in the same area last winter, with access by sea ice roads from Oliktok Point to ice pads on and adjacent to Spy Island.

Kerr-McGee will solicit bids for project management from local firms. Durkee said, he and Charles Summers alternated managing operations in Alaska last winter, and a similar rotation is planned for this winter, although Summers has retired and Kerr-McGee is in the process of finalizing who will alternate with Durkee this winter.

The Kerr-McGee (70 percent), Armstrong Oil & Gas (30 percent) Nikaitchuq unit is at Spy Island, north of Oliktok Point and the Kuparuk River unit and northwest of the Milne Point unit. Armstrong Oil & Gas’s Tuvaaq unit is immediately to the west of Nikaitchuq, and Pioneer Natural Resources-Armstrong Oil & Gas Oooguruk unit is immediately to the west of Tuvaaq (see story in June 13 issue of Petroleum News).

Sag River discovery made last winter

Kerr-McGee drilled two wells in what is now the Nikaitchuq unit last winter, and the company said in April that the Nikaitchuq No. 1 production tested more than 960 barrels per day of 38 degree API oil from the Sag River formation. The company said that if the prospect is developed “horizontal wells would most likely be utilized, which would be expected to produce at higher flow rates than the vertical well.” The Nikaitchuq No. 2, drilled 9,000 feet southwest of the No. 1 well, “successfully extended the accumulation down dip,” the company said, although the second well was not tested.

“This plan is to fully evaluate the Sag River this year, to know whether we have something to go ahead with or not,” Durkee said.

“We either make a decision to move forward after this year’s drilling season or not,” he said.

“We intend to fully evaluate the Sag River formation discovery the company made last winter season.”

The internal goal, he said, is to have a decision “as soon as possible so we can go out to our vendors.” Durkee said he thinks a decision on the Alaska winter program should be made “in the October timeframe.”

New work to begin in December

Kerr-McGee told the state it expects ice road and pad construction for this winter’s wells to begin as early as Dec. 10, and drilling to begin on or before Jan. 20.

The main ice road will run north from Oliktok Point toward the south side of Spy Island. Mostly seawater and ice chips will be used for the road and drill pads, and will be built up until grounded ice is obtained. Pads on the island will be built in a similar fashion. The ice pads on grounded ice (in approximately two to three feet of water) will be built up so there is two to three feet of freeboard.

Approximately four miles of ice roads will be constructed in water depths ranging from one to eight feet and another six miles will be built on or immediately adjacent to Spy Island. Of five proposed pad locations, wells may be drilled from as many as three this winter. Nikaitchuq No. 1 was drilled from location No. 2 near the middle of Spy Island last winter; Nikaitchuq No. 3 and No. 4 may be drilled from an ice pad at that location this winter.

Nikaitchuq No. 2 was drilled from location No. 3 near the eastern end of Spy Island last winter; Nikaitchuq No. 5 and No. 6 may be drilled from an ice pad at that location this winter; Nikaitchuq No. 7 and No. 8 may be drilled this winter from location No. 5 off the western end of Spy Island.

Pad sizes would be approximately 400 feet by 800 feet at locations No. 2 and No. 3, and 400 feet by 400 feet at location No. 5.

“All construction will take place on the Beaufort Sea ice in state waters or on Spy Island,” Kerr-McGee said in its operations plan.

In addition to exploratory drilling, the company said it may also do vertical seismic profiles to confirm geologic structures, tests which would typically be conducted at the end of drilling, as they entail placing a seismic source such as an air gun beneath the ice near the well and measuring sound returns in the bore hole.

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