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December 2009

Vol. 14, No. 49 Week of December 06, 2009

Logistics also an issue at Pioneer’s Oooguruk

Point Thomson isn’t the only North Slope field to face logistics challenges.

Getting supplies to Oooguruk was one of the issues addressed by Ken Sheffield, president of Pioneer Natural Resources Alaska, Nov. 18 at the Resource Development Council annual conference.

There is no easy oil left on the North Slope, Sheffield said, “and whether you’re an independent like Pioneer or a major integrated oil company, Alaska projects face stiff competition for investment dollars.”

North Slope resource development “is getting progressively more challenging,” he said, with new projects “located in remote areas.”

As the North Slope matures, reservoirs at new developments are smaller and of lower quality, with progressively heavier oil types, Sheffield said.

Reservoirs being developed today “require more wells, require horizontal wells and in some instances require hydraulic fracturing in order to make them economic. This takes more time and more money for the producers,” he said.

Oooguruk faces those challenges.

“We put in the infrastructure; we’re battling tough logistics; and we’re drilling high-tech wells and completions to commercialize the resource.”

Tough logistics

The production island at Oooguruk is complete, Sheffield said, but “we face day-to-day tough logistics.”

“In the open-water season we have to resupply our island with people and supplies with barges; in the depths of winter we can build ice roads — that’s actually our easiest time of year to operate, when we can take heavy loads out to the island fairly easily. But in the shoulder seasons in the spring and fall we have to use helicopters — not very efficient to move people and materials,” he said.

In 2009 Pioneer drilled and fracture stimulated five horizontal wells into the Nuiqsut formation. In the third quarter production averaged 9,000 barrels per day.

This winter the company will drill “some prolific Kuparuk wells.”

The ultimate goal is to develop net resource potential in excess of 120 million barrels.

“And in order to achieve a number like that we’re going to have to grow this project beyond the sanctioned development,” Sheffield said.

He said the goal is to grow the project vertically by developing shallower oil deposits and horizontally by reaching outfarther from the island. Pioneer expects to drill “some pretty significant extended-reach” wells that go out laterally about 18,000 feet to a depth of about 8,000 feet with undulating horizontals through the reservoir.

Competition for funding

Sheffield said it is tougher for Alaska to compete for investment dollars.

In 2000, when the company came into Alaska, it saw its greatest U.S. opportunities as Alaska and the Gulf of Mexico.

“But as the unconventional gas technology began to evolve in the Lower 48 the big new player is of course shale gas — huge resources and very fast growing production. It is a real game changer in U.S. gas supply; it’s a major focus for all large independent oil companies.”

Pioneer is involved in two shale gas plays, the Barnett shale and the Eagleford shale.

While Alaska has resource potential, it “really doesn’t fare so well” as far as profitability goes, Sheffield said.

The remaining North Slope resources “are going to be very difficult to develop,” he said, and while Pioneer continues to work at growing its business in Alaska, “our Alaska projects face stiff competition for investment dollars with all our other business units and the opportunities that they have.”

“And Alaska must continue to focus on its competitive position with regard to access, regulatory regime and fiscal policy.”

—Kristen Nelson






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