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End of the start of Badami restart Savant nears completion of first Badami well, outlines strategy for restarting plant, praises ACES credits, touts cooperation Eric Lidji Petroleum News
Savant Alaska hopes to finish its first well at the Badami unit by the end of April.
The local subsidiary of Denver independent Savant Resources is drilling the B 1-38 exploration well at the North Slope unit, Greg Vigil, executive vice president and chief executive officer, told members of the Alaska Support Industry Alliance on April 9.
The well, named after a slot at the existing gravel pad at Badami, is also known as Red Wolf, the name of the prospect Savant is exploring on behalf of unit operator BP.
Red Wolf is targeting the Kekiktuk formation, a deeper and older geologic formation than the shallower and younger Brookian formation where previous Badami development occurred. Unlike the Brookian, oil from the Kekiktuk formation does not contain much paraffin, a waxy substance that makes development more challenging, Vigil said.
Prior to this season, BP placed Badami in “warm shutdown” because of low production rates at the eastern North Slope field. The decision late last year to farm out the unit to Savant was a way to not only increase production, but also expand to new prospects.
The ultimate goal of the program is to try to restart the existing Badami facility.
Vigil said if drilling is successful this winter Savant could accelerate development of the Badami unit by going after another oil pool alongside the Brookian formation.
“If we have success, you’d see a faster pace of development,” Vigil said.
If the well is unsuccessful, though, Savant would have to attempt to restart Badami production using primarily the oil prospects in the Brookian formation. “We need to prove up some technologies before we could really commit to do that,” Vigil said.
Savant is drilling the Red Wolf prospect using Doyon Rig 16.
North Slope setbacks Savant faced several hurdles this year. Winter storms cracked an ice road the company built to access the Badami pad. Vigil said the company lost 20 days to cold and wind.
“I think we had unprecedented winds on the North Slope this year,” he said.
Also “unprecedented,” Vigil said, was polar bear activity on the North Slope. He said Exxon built an extra nine miles of ice road to avoid polar bear dens, while Savant shut down a “constructed and functioning” ice road when it discovered a den nearby.
The company also faced some mechanical problems this year. Drillers lost a “bottomhole assembly” in the permafrost. The drillers have since set surface casing on the well.
All in all, Vigil said the delays pushed back the drilling schedule “about 30 days.”
Brookian drilling in 2010? To meet regulations designed to prevent drilling during the “breakup” season when ice begins to melt on the North Slope, Vigil said Savant must finish operations by April 27.
Vigil said it was “possible” but not “optimal” to leave the rig at the Badami facilities during the offseason because the rig isn’t large enough for full development drilling.
Following work this winter, Savant plans to demobilize Doyon Rig 16 back to Deadhorse before the ice road melts. The company will then evaluate the results from the B 1-38 well and start planning a winter 2010 program to redevelop the Brookian formation.
Vigil said the existing dock at Badami would allow for offseason work, but the ultimate decision to continue through the summer will be based on the availability of equipment.
The program involves trying to develop a proven reservoir in the Brookian, and also sidetracking an existing well and drilling horizontally, using hydraulic fracturing techniques to improve production rates and the total recoverable reserves at the field.
The results from the program will in part determine whether or not Savant will try to restart the plant at Badami, but Vigil said the effort would also be “sensitive” to oil prices.
Risk and reward in Alaska Savant arrived in Alaska in 2006, picking up state leases and acquiring a package of seismic previously shot by BP. The company drilled its first well in Alaska last winter, a quick initiation for an independent company new to northern Alaska.
Savant drilled Kupcake No. 1 from an ice island built in Foggy Island Bay, some 20 miles west of Badami. Well results showed the hydrocarbon-bearing sands were thinner and wetter than expected. Savant plugged the well and wrote it off as a dry hole, Vigil said.
Last August, Vigil told Petroleum News that Badami fits more in line with the projects Savant prefers than Kupcake. He described Badami as a “technical risk,” where the challenge is finding and developing a known resource, rather than an “exploration risk.”
Vigil said Savant came to Alaska because the North Slope allows smaller companies to go after smaller accumulations with the help of an experienced oil field service industry.
In particular, Vigil praised the tax credit program expanded under Alaska’s Clear and Equitable Share, known as “ACES,” a piece of 2007 legislation that also increased state production taxes.
He called the credits a “major factor” in Savant’s decision to explore in Alaska, and said the level of investment is something peer companies in the Lower 48 “can’t fathom.”
“I’m not sure we would actually be at Badami if it were not for tax credits,” Vigil said.
He said the state would recover its investment through taxes if Savant produces oil.
Vigil called on the governor and the Legislature to maintain the level of state investment through tax credits. He also called for a “stable tax regime,” increased infrastructure and a rethinking of the regulatory process for drilling to reduce redundancies in permitting.
Still, he pointed to the oil and gas yet to find on the North Slope as the main incentive.
“If the rewards weren’t big enough, we wouldn’t be here,” Vigil said.
Vigil touts cooperation Savant proves independents can work successfully with the majors in Alaska, Vigil said.
Savant arranged farm-in agreements with both ExxonMobil and ConocoPhillips in preparation for Kupcake No. 1 last year. Some of the well bore information Savant gathered went to bolster BP’s technical files for the offshore Liberty project.
This year, Savant and Exxon teamed up to build and maintain an ice road on the eastern North Slope. Exxon is preparing to drill at Point Thomson, some 15 miles east of Badami.
Editor’s Note: Previous articles about the Red Wolf prospect incorrectly identified the target as being in the Middle Ellesmerian Kekiktuk formation. The Kekiktuk Conglomerate is actually the lowest Ellesmerian unit.
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