|
Brooks Range Petroleum applies to form Beechey Point unit Unit would cover 25 leases in the Gwydyr Bay region north of Prudhoe Bay, site of previous oil discoveries hampered by economics; first oil from 52,877-acre area could be as early as 2013 Eric Lidji Petroleum News
A joint venture of independents is proposing to form a unit north of Prudhoe Bay.
Brooks Range Petroleum Corp., the local affiliate of Kansas-based Alaska Venture Capital Group, filed an application with the state Department of Natural Resources on April 27 to form the Beechey Point unit from 25 leases in the Gwydyr Bay region.
The proposed 52,877-acre unit would cover state land and water long known to hold several smaller oil deposits, but previously considered uneconomic because of high costs.
“Development of just one of these reservoirs would be uneconomic, however, developing more than one at the same time from the same pad and infrastructure offers synergies which allow a group of them to be developed economically,” BRPC wrote in filings.
The company said it expects to recover between 5 million and 10 million barrels of oil from the various reservoirs, figures that could increase with future exploration success.
BRPC is asking the state to divide the proposed Beechey Point unit into five separate blocks. In a plan of exploration accompanying the unit application, the company is proposing to drill a well in each of the five blocks between July 2011 and July 2019.
The company anticipates first production could come as early as January 2013.
BRPC is still learning about the region. The company is permitting the North Shore No. 3 exploration well, which it plans to drill in the winter of 2010. “If successful, the proposed North Shore Development Project can be sanctioned for development,” BRPC wrote.
The company is currently involved in legal proceedings with a partner that could delay drilling and development work. The company wrote, “If working interest owner approval is not obtained for the drilling said well in 2010, then the well will be drilled in 2011.”
Oil long known in region Developing Gwydyr Bay means solving a riddle almost as old as North Slope production.
At least 15 wells have been drilled in the area around the proposed Beechey Point unit, starting with Point Storkersen No. 1, drilled in April 1969 by Hamilton Brothers, and ending with North Shore No. 1, drilled by BRPC in 2007 and tested in early 2008.
BRPC said previous wells tested at “respectable” rates up to 3,500 barrels per day, but “a cost structure founded on drillsites capable of producing 100,000 bopd was not suitable for ‘marginal’ areas, particularly with commodity prices in the $20 to $30 price range.”
“As a consequence, these accumulations lay dormant for many years.”
The current attempt to develop Gwydyr Bay can be traced to 1995, when BP Exploration, ARCO Alaska and Exxon formed a partnership to explore the area north of Prudhoe Bay.
In 1997, BP drilled the Pete’s Wicked No. 1 well to the south of the proposed Beechey Point unit. The next year, BP and ARCO permitted a development plan for the region around Pete’s Wicked, but the companies canceled the effort after a drop in oil prices.
Pioneer Natural Resources picked up leases around Pete’s Wicked in 2003, and began permitting a development plan in 2004, but soon suspended the project. Last summer, Pioneer sold its three leases around Pete’s Wicked to the joint venture led by BRPC.
AVCG began looking at Gwydyr Bay soon after being founded in 1999.
The company partnered with BP in 2001 to form the Sakonowyak River unit in Gwydyr Bay, but disbanded the unit in late 2003 before drilling an exploration well. At the time, the company said it couldn’t find partners to help it understand the unique prospect.
AVCG found the partners by mid 2006, creating Brooks Range Petroleum Corp. and hooking up with three other independents to create a joint venture for exploration.
The companies drilled North Shore No. 1 and Sak River No. 1 in early 2007. Sak River turned out to be a dry hole, but subsequent work at North Shore yielded test rates greater than 2,000 barrels per day of “high quality crude” from the Ivishak formation.
BRPC would operate Beechey Point on behalf of partners TG World Energy Corp. and Ramshorn Investments Inc. AVCG recently acquired the working interest of partner Bow Valley Alaska Corp., which is in the process of being acquired by Dana Petroleum.
TG World and AVCG/BRPC are in court over a contractual dispute.
BRPC said the companies have spent more than $60 million exploring Beechey Point.
| 