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TG World positive on NS exploration BRPC JV partner spells out some details of seismic and drilling program across the North Slope; sees value of exploration credits Alan Bailey Petroleum News
As the only outfit engaged in exploration onshore or offshore northern Alaska this winter, Brooks Range Petroleum Corp., operator for a joint venture of small independents, looks like having a lonely time out on the frozen tundra. But TG World Energy, one of the joint venture members, feels pretty bullish about its prospects, according to a TG-World Nov. 25 news release and investor presentation.
The joint venture is seeking modest-sized oil accumulations close to infrastructure on the North Slope and TG World confirmed previous reports of a plan to drill two wells this coming exploration season in the Beechey Point unit, in the Gwydyr Bay area, on the northwest side of the Prudhoe Bay field. The joint venture is also considering drilling a third well, this time in the Tofkat area to the southwest of the Kuparuk River field, although the drilling of that well would likely not commence until at least late 2010, TG World said.
BRPC is in the process of securing a Nabors drilling rig for use in the upcoming winter drilling season, with the rig likely to be mobilized in early January 2010, depending on ice-road conditions, TG World said.
Besides TG World, the members of the joint venture are BRPC’s owner company, Alaska Venture Capital Group; Ramshorn Investments; and Dana Petroleum.
Attractive fiscal regime An “attractive fiscal regime” is one of the incentives for exploring on the North Slope, the investor presentation says. The State of Alaska returns as cash 45 percent of drilling and development costs, and 65 percent of seismic costs; there is a tax exemption on the first 12,000 barrels per day of net production for a small company, it says.
In the Gwydyr Bay area, BRPC drilled the North Shore No. 1 and the Sak River No. 1 wells in the winter of 2006-07, before returning in the following winter to test 2,000 barrels per day of high quality crude oil from the Ivishak formation in North Shore No. 1. In August 2009 Alaska’s Division of Oil and Gas approved the formation of the Beechey Point unit — BPRC wants to fast-track development of the North Shore find, perhaps using trucks to transfer the oil to a tie-in with the Kuparuk pipeline.
In the winter of 2007-08 BRPC found oil in the Kuparuk formation when it drilled the Tofkat No. 1 well, to the southwest of the Kuparuk River field. The company subsequently drilled two Tofkat sidetracks, to find the edge of the oil reservoir, and also acquired 3-D seismic over the prospect.
A lawsuit between Alaska Venture Capital Group and TG World, when TG World decided to postpone its drilling and development programs in the wake of the world economic crisis, caused BRPC to cancel its planned drilling program for the winter of 2008-09. But, with that lawsuit now settled, drilling is back under way.
Sak River first The first well in this winter’s program will be the Beechey Point unit Sak River No. 1a well, drilled out from the wellbore of Sak River No. 1 and designed to test a Kuparuk C2 sand exploration prospect that was identified from proprietary 3-D seismic data, TG World said. A seismic technique known as amplitude variation with offset indicates that the C2 sand is porous with a hydrocarbon charge, the investor presentation says. And the seismic data ties the C2 sand at Sak River into the C2 sand in the Northstar No. 3 well, in the nearby BP-operated Northstar field. The C2 sand in Northstar No. 3 is 10 feet thick, has a porosity of 22 percent and contains 39 API oil, the investor presentation says.
Depending on the results from the Sak River No. 1a well, TG World may participate in a second BRPC 2010 exploration well, the North Shore No. 3, to try to find additions to the oil pools previously penetrated by the North Shore No. 1 and the Pete’s Wicked No. 1 wells. BP drilled the Pete’s Wicked well in 1997, to the east of the current North Shore well site, identifying some 65 feet of oil pay in the Ivishak using well logs.
BRPC will drill North Shore No. 3 into a prospect in the form of a four-way closure, identified from 3-D seismic, to test oil-bearing Ivishak and Sag River sands, the investor presentation said. The well will be drilled from the same pad as was used for North Shore No. 1
“This prospect has two potentially productive intervals, the Sag River and the Ivishak,” TG World said. “Should this well be successful, the joint venture participants believe that the additional reserves will exceed the threshold required for the proposed North Shore development project, allowing the project to be completed on a standalone basis, without requiring volumes from the potential Sak River discovery.”
The principal risks for North Fork No. 3 are the local characteristics of the Sag River reservoir. However, if the well proves successful, a side track will be drilled horizontally into the Sag River sands to “demonstrate flow properties,” the investor presentation said.
Multiple prospects Overall, the joint venture’s gross 245,000 acres in North Slope leases has relatively low exploration risk, with the potential for 150 million barrels of oil in multiple prospects, including 100 million barrels in “reserve potential” identified in the Gwydyr Bay area, the investor presentation says.
The total potential of 100 million Gwydyr Bay barrels comes from 25 Triassic prospects, six Kuparuk prospects and one base Cretaceous prospect in five exploration blocks, the presentation says. Among those prospects, oil discoveries at North Shore No. 1 and Pete’s Wicked are estimated at 2 million barrels and 3 million barrels respectively, with estimates of undiscovered oil at Sak River No. 1a of 11 million barrels, and with another 4.5 million barrels estimated at North Shore No. 3.
In addition to the drilling in the central North Slope, the joint venture is interested in exploring its South Thomson acreage, also known as the Slugger prospect, south of the Point Thomson gas condensate field, immediately west of the Arctic National Wildlife Refuge. Exxon’s development activities at Point Thomson and new exploration drilling in the Badami unit, immediately west of South Thomson, both provide new encouragement for South Thomson exploration — the joint venture may shoot some 3-D seismic in South Thomson in the winter of 2010-11, the investor presentation said.
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