Providing coverage of Alaska and northern Canada's oil and gas industry
January 2007

Vol. 12, No. 3 Week of January 21, 2007

KUPARUK ANNIVERSARY: ARCO begins in-state module building

Early West Sak pilot project concluded; major 3-D seismic shoot at Kuparuk, largest ever done by ARCO in U.S.

Kristen Nelson

Petroleum News

1987 at Kuparuk began with announcement of conclusion of a two-year West Sak pilot project.

Operations at the pilot facilities were suspended at the end of December.

Harold Heinze, president of ARCO Alaska, said the pilot project demonstrated that conventional recovery methods can be used to produce oil from West Sak. Efforts would not focus on a plan to recover the oil economically, he said.

“In addition to solving the technical problems, it’s obvious that oil prices will have to improve, with some assurance of continuing at a higher level, before our company would commit to development of the West Sak,” Heinze said.

The company said ARCO employees involved in the West Sak pilot have been transferred to other operations at Kuparuk.

1987 safety goal a 20% improvement

ARCO Alaska workers at Kuparuk exceeded their safety goals for 1986, the company said in early 1987, making them the leaders in safety performance for all producing operations for ARCO Alaska.

“These accomplishments were achieved while reaching record field production levels and during a period of aggressive cost reductions,” said Jim Weeks, Kuparuk operations manager.

Employees at Kuparuk worked for 1.3 million man hours without a lost time injury, improving the safety record there by 65 percent over the previous year. A lost time injury is one which keeps a worker off the job.

Process modules to be built in Alaska

For the first time, ARCO Alaska awarded a contract for fabrication of process modules in Alaska. The contract went to VECO; the modules, for small scale enhanced oil recovery, will be fabricated in Wasilla.

“Historically, the oil industry has fabricated modules in the Pacific Northwest,” said Lee Moench, ARCO’s manager of facility engineering and construction. “We’re delighted to manufacture these modules within the state.”

New production record in ‘88

Kuparuk set a new production record of 320,069 barrels a day Feb. 15. Larry Morse, Kuparuk field manager, attributed the high production to additional wells which have been drilled in the field, and to the effects of a field-wide waterflood project.

“Cold weather also helps,” he said. “We get more efficiency from our gas-fired turbines when it’s cold.” Temperatures at Kuparuk had been as low as minus 37 degrees Fahrenheit.

Thirty-six new development wells were drilled at Kuparuk in 1988.

ARCO Alaska President Bill Wade said in February that ARCO Alaska would invest more than $7 billion in Alaska over the next 10 years, with more than $3 billion going to development of known reserves. At Kuparuk that would include more wells, along with a small-scale enhanced oil recovery project with facilities under construction in Wasilla.

Wade said that over the next 10 years the project could be expanded to cover the entire Kuparuk field.

The $7 billion also included “initial development of the West Sak field,” he said. Although West Sak sands are shallow and contain heavier oil, Wade said: “Given the right investment climate, we will find the way to produce West Sak.” The first phase of full field development at West Sak could cost more than $2 billion and begin the early to mid-1990s, he said.

Major seismic shoot at Kuparuk

ARCO said March 1, 1988, that it has started work on the largest three-dimensional seismic program every undertaken in Alaska.

The seismic was to be shot in Kuparuk.

Jerry Dees, ARCO vice president of exploration, said the 3-D exploration program is larger than any ARCO has done in the U.S.

The three year program, to be completed in May of 1990, was over a 270-square mile area, with more than 40 million seismic readings expected to be taken during the study.

Dees said the 3-D seismic program would help in the on-going development and delineation of Kuparuk.

Reserve pit study under way

In response to new regulations from the Alaska Department of Environmental Conservation, promulgated in September 1987, ARCO Alaska submitted plans to DEC to outline two procedures it proposes to use to comply with the reserve pit portion of the regulations.

Update: ARCO environmental news, reported that the new regulations were a consensus of several years of work by state government, environmental groups and industry.

The reserve pit regulations require that new pits be open no longer than one year after use is complete and that they be maintained in a manner to prevent leakage.

One-third of the 114 Kuparuk reserve pits will be closed out over a three-year timeframe. A water management plan and monitoring program has been developed for the remaining pits, which also will have synthetic membrane liners installed in the barrier berms.

Water in the pits will be trucked to disposal and waterflood wells.

“The water in most of our pits generally meets drinking water standards,” said Rod Hoffman, Kuparuk River unit permits director.

Ancient site found at Kuparuk

A site which served early arctic hunters was discovered in the Kuparuk oil field in the summer of 1988, Update: ARCO environmental report said in the fall of 1988.

The site could prove to be as old as 6,000 years, according to John “Jack” Lobdell, an archaeological consultant to ARCO Alaska.

Lobdell discovered a similar site in 1982 — the oldest recorded site in the coastal Arctic, dating back some 6,000 years. The 1982 site provided the first evidence that the peoples of the arctic coastal plain used the wet tundra region close to the Beaufort Sea coast. The only known bone tools from that period were also uncovered by Lobdell’s team.

Lobdell said the new site has not been excavated, but surface indicators suggest it was originally used as a hunting station for ancient caribou hunters who traveled on foot pursuing the migratory herds. “Two of the artifacts suggest a high proficiency of stone-working technology,” he said.

The new site also appears to have been occupied by Eskimo hunters at the turn of the century. Lobdell found a blunt arrow point with a wooden shaft that was used to hunt waterfowl. He also uncovered a rifle cartridge dating before the 1900s.

The newly discovered site, like the 1982 site, is on a collapsed pingo. Pingos are the result of ice wedges in the wet tundra surface and rise above the otherwise flat surface of the coastal plain.

1989 West Sak test suspended

ARCO Alaska suspended a 25 well drilling and production test program at the West Sak oil field in June after changes in Alaska’s severance tax laws.

Bill Wade, ARCO Alaska president, said the action means delay of full-field production from West Sak, which had been scheduled to begin in the mid-1990s. Full-scale development will require a multi-billion dollar investment by industry.

Wade said changes in the economic limit factor, ELF, were aimed at increasing severance taxes at Prudhoe Bay and Kuparuk, but West Sak is also affected because it overlies Kuparuk and plans call for producing both fields through the same facilities. Changes in the ELF mean West Sak production would be penalized by higher taxes if it is combined with Kuparuk production.

“The West Sak project cannot afford higher taxes,” Wade said, “nor can it afford the cost of installing a duplicate set of facilities.”

Wade said ARCO would also defer some drilling at Kuparuk. ARCO had planned to add a drill rig at the Kuparuk field late this year, but those plans have been cancelled, he said.

1989 record temperatures

For six weeks in 1989, temperatures soared on the North Slope, with caribou seeking refuge from the heat and mosquitoes in the shade of the production facilities, while oil field workers perspired in their rooms and slept on their sheets.

Oil production declined as temperatures rose—the turbines that compress natural gas for reinjection work better in the cold. Officials estimated that daily production rates fell by as much as 10 percent.

“I’ve been at Kuparuk for six years and this year, the hot weather has lasted a lot longer than ever before,” Richard Pulley, facility supervisor at CPF-2, told the Alaska Spark, the company newsletter. “Instead of two weeks, we’ve had six weeks of really warm weather.”

On Aug. 8, Kuparuk was the hottest place in Alaska. The temperature — 250 miles north of the Arctic Circle — was a scorching 80 degrees.

1990: 30 more Alaska modules

In July 1990, ARCO Alaska announced plans to build some 30 modules in Alaska over the next 16 months for projects at Kuparuk and in Cook Inlet, with work expected to start in October.

Jerry Pollock, engineering manager for the Kuparuk and Cook Inlet fields, said the projects will include 22 modules for two new well site production facilities at Kuparuk, other modules to make environmental improvements to Kuparuk’s flare system and modules to expand production at existing Kuparuk well sites.

1991: Alaska-built modules to North Slope

ARCO Alaska began transporting 11 Alaska-made drill site production modules from Anchorage to the North Slope in February 1991, and said travelers on the Parks or Dalton highways may notice extraordinarily large vehicles on the road.

The 11 modules are destined for a new drill pad in the Kuparuk field.

“This is the first time that all of the facilities for a new Kuparuk drill pad have been constructed in Alaska,” the company said.

ARCO Alaska first built two Alaska-made modules in Wasilla in 1988. Since then additional Alaska-made modules have been built for both the Kuparuk and Prudhoe Bay fields.

“Alaska companies employing skilled Alaskan workers have proven they can build these modules at a cost that is competitive with companies in the Lower 48,” said Kathleen Schoen, Anchorage fabrication manager for ARCO Alaska. “This project provided work for 90 Alaskans. We’re committed to Alaska hire. And we’re committed to building these modules in-state.”

ARCO Alaska said it planned to build an additional 50 modules in Alaska over the next two years for two new drill sites at Kuparuk as well as expansion of existing Kuparuk and Prudhoe Bay drill sites.

Kuparuk: the 10th anniversary

The Kuparuk River field marked its 10th anniversary in December 1991 with new production records.

Dec. 15 saw a single-day production record of 352,950 barrels of oil.

March 1991 saw a single-month production record of 10,068,358 barrels.

The field set new monthly production records — highest average daily rate ever produced for a given calendar month — in nine consecutive months in 1991, February through October.

Kuparuk was also expected to set a new annual average daily production rate record of up to 309,000 barrels per day in 1991, an increase of 8,000 bpd over the old mark, set in 1988.

“The performance of the Kuparuk field has been exceptional,” said ARCO Alaska President H.L. “Skip” Bilhartz. “Production is at record levels because of investment in new wells and facilities by the owner companies, and because of the efforts of the ARCO employees who engineered, built, operate and maintain the field.”

“Continuing investment should allow us to keep production near present levels for the next four years,” Bilhartz said.

When the field went online in December 1981, engineers expected production to peak at 250,000 bpd with ultimate recovery of 1.2 billion to 1.5 billion barrels of oil. Today, the company said, reservoir engineers expect to recover up to 1.8 billion barrels.

As of Dec. 1, 1991, Kuparuk had produced 827 million barrels of oil.

At startup in 1991 Kuparuk was producing from a 20-square mile area in which ARCO owned all the leases. The field had one major production facility, five gravel drill sites, 40 producing wells and a 26-mile, 16-inch pipeline capable of delivering 80,000 bpd to Pump Station 1.

In 1991, the unit encompassed more than 200 square miles, had three major processing facilities, the seawater treatment plant, 40 gravel drill sites, 367 producible wells, 285 injection wells and a 24-inch pipeline capable of moving 300,000 bpd.

In early 1983 Kuparuk became the first North Slope field to use waterflooding to increase oil recovery. Waterflooding is expected to account for 1 billion barrels of the anticipated 1.8 billion barrels recovered.

In 1991 the owner companies were evaluating new methods of enhanced oil recovery and drilling additional wells on the periphery of the field.

Kuparuk wins big in stamp out waste

An article in the December 1993 issue of Kuparuk’s Crude Gazette by Jennifer Huvar and Barb Byrne congratulated Dick Hunt and Dick Grief, equipment support coordinators, and Doug DeVore and Ray Quesada, fire chiefs, for winning the ARCO Alaska “Stamp Out Waste” awards for significant environmental contributions; the chiefs also won one of 10 $2,000 awards at the corporate level.

DeVore and Quesada, with the help of local staff and summer interns, converted the fire training props from diesel-burning to natural gas-burning apparatus. Natural gas, as a by-product of the field, has no cost and is much safer to use because the person operating the valves during training can completely shut the gas off to extinguish the fire immediately.

Hunt and Grief saved the company $39,280 by replacing one-time use oil filters in Kuparuk’s fleet of pickups and heavy equipment.

Shakley: Costs rising, output falling

Larry Shakley was Kuparuk field manager from 1991-1994.

“When I went to Kuparuk in 1991, costs were rising and production was declining,” Shakley, now doing consulting work from Branson, Mo., said in an early 2007 e-mail.

“Working closely with the Engineering Department, we developed a program to extend the economic life of the Kuparuk field called the ‘Kuparuk Challenge.’ Over the next few years, costs were brought under control and Kuparuk production increased,” he said.

“Each department and work group made positive contributions to finding innovative ways to improve profitability and productivity at Kuparuk. The Kuparuk Challenge was a clear demonstration of what can be accomplished when everyone understands what needs to be done and works together to meet the objectives,” he said.

And what was memorable about Kuparuk?

“The people—they were some of the most innovative individuals I have had the pleasure of working with in my career at ARCO. They did not shrink from a difficult situation, but worked together to find solutions to problems that some people did not think were possible. They had a great sense of humor and always enjoyed showing the Anchorage executives they could do the impossible.”

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