Pioneer looks at onshore pad north of Prudhoe

Would be on Gwydyr Bay area lease, in vicinity of BP’s ’97 Pete’s Wicked discovery

Kristen Nelson

Petroleum News Editor-in-Chief

Pioneer Natural Resources has four North Slope prospects it has drilled or hopes to drill soon, Ken Sheffield, president of Pioneer’s Alaska subsidiary, told the Alaska Support Industry Alliance in late May.

The company plans to shoot 3-D seismic at its Storms prospect south of Prudhoe Bay this winter and to sanction development in the fourth quarter of the year at the Oooguruk prospect in Harrison Bay, where the company made discoveries in the winter of 2002-03. Pioneer has another offshore prospect, Caribou, “north of Point McIntyre on trend with (BP’s) Northstar,” he said.

Sheffield also mentioned a fourth prospect, onshore at Gwydyr Bay, and Pioneer had preliminary discussions with state and federal agencies in early July on a plan to develop a small pad at the company’s Gwydyr Bay prospect, north of the Prudhoe Bay unit.

Pioneer’s plans have not yet reached the application stage, but the company is looking at a small, three-acre pad, and a corridor running south to T Pad in the Prudhoe Bay unit.

Pioneer acquired four leases at Gwydyr Bay, some 6,440 acres, three on the edge the Prudhoe Bay unit, in the state’s 2003 Beaufort Sea areawide lease sale. It paid $27.27 an acre for the most northerly of the leases, the one of the four not adjacent to Prudhoe, $55.14 an acre for each of the two leases on the northern edge of Prudhoe, and $85.07 an acre for a tract just to the southeast, which is also on the Prudhoe border.

A number of wells have been drilled in the Gwydyr Bay area and on and surrounding the Pioneer leases there are oil discoveries, never developed, some dating from the 1960s.

BP Exploration (Alaska) tried to develop an accumulation it discovered on what are now Pioneer leases in the late 1990s, and Pioneer, which has done no drilling on the just-acquired leases, is presumably looking at finding an economic way to bring these small known accumulations into production.

Pioneer looking for step change

Alaska is “a great place to find oil, but sometimes it’s not such a great place to make money,” he said.

Because of that, Pioneer is focused on achieving lower-cost operations on the North Slope: Sheffield said one of the company’s goals in Alaska is to “achieve a step change in the North Slope cost structure.”

Gwydyr Bay is probably going to require such a step change, as companies have drilled there for decades — including BP in the late 1990s — but there has never been production from the area.

Pete’s Wicked

BP tried to find a way to put the Pete’s Wicked accumulation on production, and said in a proposal to state agencies in 1998 that the directional exploration well was plugged and abandoned “after the reserves were found too small to justify a conventional development (i.e., involving a gravel road, pad and a pipeline on vertical support members … extending from T Pad to the Pete’s Wicked location).” BP said that the situation was similar for two other small accumulations, also Sagavanirktok/Ivishak discoveries, the Kuparuk River Delta and Point Storkersen wells.

These were earlier wells, in the same general area, although not on the Pioneer leases.

Hamilton Brothers Oil Co. drilled the Point Storkersen well in 1969. That well, in section 7, township 12 north, range 14 east, Umiat Meridian, east of the Pioneer leases, was almost vertical, with a total depth of 11,473 feet and a true vertical depth of 11,470 feet. It flowed 315 barrels per day of oil in a Sadlerochit sand test at 10,577 to 10,640 feet.

Hamilton Brothers drilled the Kup Delta 51-1 well in 1970 in section 11-T12N-R13E, UM, west of the Pioneer leases, to a depth of 11,200 feet. A drill stem test flowed 2,200 bpd at 7,131 to 7,171 feet, described as Upper Cretaceous sand. The well was sidetracked later in 1970, and oil was recovered in drill stem tests at the sidetrack.

Re-useable pipe considered in late ‘90s

Another well indicated on maps as having found oil is Conoco’s 1980 Gwydyr Bay State No. 1, an 11,102-foot vertical hole drilled in section 9-T12N-R13E, UM, also on lease ADL 390425.

When BP looked at developing Pete’s Wicked, it was considering development without a gravel pad, with just three 10-12 foot diameter well cellar/house combinations. The company was also considering using flexible pipe for the project — pipe developed for undersea use. BP said the pipe had been in common use in the Gulf of Mexico for more than 15 years, and said flexible pipelines with high-density polyethylene liners have been used on the North Slope at two Prudhoe Bay drill sites “for well tie-in lines for the past three years and have worked well in the Arctic.”

The company proposed a four-inch diameter line for the Pete’s Wicked development. That diameter line, BP told regulators, is available in one-mile continuous lengths, and would require only three or four joints. With the continuous high-density polyethylene liner, the company said, the lines would be completely corrosion proof.

And after depletion of the Pete’s Wicket accumulation, the line could be spooled up and reused in other applications.

BP proposed placing some of the line directly on the tundra. Part of the line, through a critical caribou crossing area, would be raised on seven-foot vertical support members, and in other areas the line would be raised one foot above the tundra on plastic or wooden blocks to allow drainage and movement by flightless molting waterfowl, shorebirds or broods.

BP considered a second Pete’s Wicked exploration well in the late ‘90s, farther to the east at Gwydyr Bay, but neither the second well nor development of the discovery occurred, and the surface and bottomhole leases at Pete’s Wicked were acquired by Pioneer last year.