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Division approves Schrader Bluff PA Eni gets first participating area on royalty-modified leases at near shore Nikaitchuq unit, expected to bring field online soon Eric Lidji For Petroleum News
The Alaska Division of Oil and Gas has approved the formation of the Schrader Bluff participating area at the Eni Petroleum-operated Nikaitchuq unit effective Jan. 1.
The new Schrader Bluff PA covers three leases at the nearshore unit.
The participating area covers an area of land and water believed to overlie the portion of the Schrader Bluff formation that Eni plans to target first as it develops Nikaitchuq.
The three leases in the new participating area all received royalty modification from the state in January 2008. To improve the economics of Nikaitchuq, the state will collect a lower royalty rate in times of lower oil prices during the first 25 years of production.
The Italian major expects to bring the unit into production eminently.
Reservoir discovered in 2004 The Division of Oil and Gas credits Oklahoma-based Kerr-McGee with discovering the Schrader Bluff formation at Nikaitchuq by drilling the Nikaitchuq No. 1 well in 2004, following up on exploration work by Denver-independent Armstrong Oil and Gas.
Kerr-McGee drilled the well to test a primary target in the Sag River formation and a secondary target in the Kuparuk formation. The well didn’t encounter reservoir quality sand in the Kuparuk, but well logs showed prospective sands in the shallower Schrader Bluff formation. Kerr McGee confirmed the presence of oil and gas later that year and drilled another six wells between 2005 and 2007 to delineate the Schrader Bluff sands.
Eni took over the project in 2007 and began mapping the geology of the sands.
Within the Nikaitchuq unit, the Schrader Bluff formation includes three Cretaceous sands: OB, OA and N. The main reservoirs are in the OA and N sands. Eni is basing its development of Nikaitchuq on the OA sand in particular, but might expand to include the N sand and Sag River formation in the future. Within the participating area, the top OA sand is present between 3,000 and 4,300 feet below the sea floor.
Within the participating area, the OA sand is between 30 and 40 feet thick.
120-200 million barrels Eni estimates the original oil in place in the OA sand is between 800 million and 930 million barrels. Eni expects to recover between 120 million and 200 million barrels of that, about 30 million to 45 million through primary recovery and the rest through waterflood.
Because of the compartmentalized nature of the OA sand, Eni is planning a water-injection enhanced oil recovery project with 26 horizontal production wells and 21 horizontal injection wells, plus two disposal wells and three water source wells.
The wells will run between 4,000 and 8,500 feet horizontally through the reservoir and will be arranged end-to-end in alternating rows of producers and injectors.
Eni is developing Nikaitchuq through a combination of onshore and offshore facilities.
The company has built an onshore drill site at Oliktok Point and an offshore drill site near Spy Island, as well as a new 40,000-barrel per day production facility and a 10-inch sales quality crude oil pipeline that connects the Nikaitchuq facilities to the Kuparuk Pipeline.
The Alaska Oil and Gas Conservation Commission approved the Nikaitchuq Schrader Bluff Oil Pool Rules in November and the Regulatory Commission of Alaska approved the pipeline interconnection in December.
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