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FEX focus on evaluation, new seismic After 3 years of NPR-A drilling, Talisman subsidiary works to identify drillable targets for 2009-10, shooting seismic in Smith Bay Kay Cashman Petroleum News
After three years of drilling wildcats in the National Petroleum Reserve-Alaska, Talisman Energy’s Alaska subsidiary FEX LP will spend the next couple of years evaluating its five project areas in northern Alaska with the goal of identifying drillable prospects for the 2009-10 winter season. Tim England, senior manager of exploration for Calgary-based Talisman, told Petroleum News July 20 that FEX will also be acquiring new 3-D seismic in the Smith Bay area, onshore and offshore, this coming winter.
Might drill sooner There is a chance, England said, that FEX could drill its next northern Alaska wells the year after next in the 2008-09 winter drilling season, but it’s “unlikely” because the company doesn’t expect to get the results of its Smith Bay seismic until May 2008.
“It will still have to be evaluated, so we won’t be drilling in the Smith Bay area in 2008-09, although it is possible we might drill one of our other projects.”
The company’s decision, England said, would be partly driven by whether or not the U.S. Bureau of Land Management gets back on track with its NPR-A lease sales.
Three years ago Fortuna Exploration, which has since been renamed FEX, was a partner in the Caribou well drilled by Total in the Northeast Planning Area of NPR-A. Over the past two winters FEX operated its own wells in this undeveloped part of northern Alaska, drilling four wildcats in the Northwest Planning Area of NPR-A, onshore south of Smith Bay.
Because of short drilling seasons across northern Alaska the last two winters, the company was unable to test the four wells — Aklaq-2 and a sidetrack drilled in the winter of 2005-06, and Aklaqyaaq-1, Amaguq-2 and Aklaq-6 drilled in 2006-07. FEX suspended three of the wells and plugged and abandoned Amaguq-2, which it said was “subcommercial given current infrastructure.”
But in May the company revealed it had encountered more than 225 feet of net hydrocarbon-bearing sandstones in several formations in the two wells it drilled and suspended this past winter. Based on log analysis and “strong gas and oil shows, including oil staining and free oil in the drilling mud in one of the wells,” it said the “initial estimate of contingent resources present” in the formations of the two suspended wells was “300-400 million barrels” net to FEX, which has a 60 to 80 percent working interest in the leases with Petro-Canada Alaska.
The news was good, but the cost of the NPR-A exploration program was high. FEX, England said, wants as much data as possible before choosing where it will drill next amongst its five northern Alaska projects.
“Once you’re out of the field in the spring you only have about four weeks to decide if you’re going to keep the equipment out there and go back in the following winter,” England said, noting that “even if you just go out to test wells the costs are still very high … because so much of what you’re paying for is fixed costs … for maintaining a presence in the area. You have to have similar equipment out there no matter what you’re doing, drilling or just testing.”
FEX has had “an active drilling project in the Northwest Planning Area for the last two seasons. Coming out of that project we are very encouraged by the discoveries that were made. The results indicate prospective and contingent oil in large structures that extend into areas where we have only partial seismic data coverage. So we need to fill in the blanks and determine how far these structures extend. Drilling so far from infrastructure is very expensive in Alaska. Before we spend additional money on drilling and testing we need to complete our seismic data, because we want to be sure we are drilling in optimum locations,” England said. (The closest FEX well in NW NPR-A is about 150 miles from oilfield infrastructure.)
$25 million Smith Bay seismic program FEX has a “two-fold” purpose for the $25 million seismic program it plans to shoot next winter on and offshore Smith Bay, England said. “One, we’re looking to complete our subsurface coverage over existing discoveries and, two, if we get a good ice year, we’ll continue to shoot into Smith Bay,” where the company has State of Alaska leases.
When asked where FEX was most likely to drill next, he said, “It’s difficult to know without a crystal ball, but the focus of our effort is currently in NW NPR-A. We need to complete our evaluations of the other areas as well and build up the subsurface picture to recommend the next phase in exploration of those leases. That may be acquiring more seismic or going straight to the drilling stage. In the exploration game we develop the rationale and the arguments to support a proposal to drill and then the company acts on it” if the investment stacks up against opportunities elsewhere in the world.
England said FEX is “very excited about getting back to the area” with testing and drilling equipment. “We’re very excited about Smith Bay, but that doesn’t preclude drilling in other parts of NPR-A or the North Slope.”
Five project areas FEX’s five project areas in Alaska include the following: Smith Bay area on shore in NW NPR-A; Smith Bay offshore in state waters; Caribou area in NE NPR-A; Harrison Bay offshore NPR-A, where the company shot 3-D seismic the winter of 2005-06 and; onshore state acreage near the trans-Alaska oil pipeline in the central North Slope, which FEX recently won in a lease sale. To date, FEX has invested $185 million in drilling and seismic and acquired more than 950,000 net acres in northern Alaska since entering the state.
The company’s Smith Bay seismic program will “provide 60 to 70 jobs, mostly to contractors,” England said. “During drilling this past winter we had about 220 people, mostly in the field working for contractors.”
During the coming year’s evaluation phase, he said FEX would continue to employ five full-time employees in its Anchorage office.
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