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Eni pushes first oil at Nikaitchuq Italian major tells RCA oil production could start early with at least 3,500 barrels per day, but several permits outstanding Eric Lidji For Petroleum News
Eni Petroleum appears to be ahead of schedule at the Nikaitchuq unit.
The Italian major recently told state regulators that it believes oil production at the nearshore field off Alaska’s North Slope could start as early as Dec. 15. For the past 18 months, Eni predicted that oil production would begin before the end of 2010, but in filings from mid-August, the company pegged the startup date as January 2011.
The new date comes from filings Eni made to the Regulatory Commission of Alaska on Oct. 19, as part of a request to connect Nikaitchuq to the North Slope pipeline grid.
Eni attributed the potential bump in scheduling to the completion or near-completion of several final details. The company said it has finished building its processing facility on Oliktok Point, which will prepare crude oil for transportation, and is “ahead of schedule” on installing equipment and utilities associated with the facilities. Eni has also already finished building other infrastructure, like a new gathering line and a fuel gas pipeline. Eni said it expects to sign the contracts to buy and move that fuel gas by Nov. 15.
Eni said it is still waiting for the Alaska Oil and Gas Conservation Commission to approve certain metering equipment, but expects a ruling “no later than” Dec. 1.
Eni did not offer RCA certainty that Nikaitchuq would start up earlier than planned, as that startup will depend on a number of factors, not all of which are under the company’s control.
Connecting to Kuparuk Pipeline Eni is looking to connect its new 14-mile crude oil gathering line into the Kuparuk Pipeline, where oil can then be transported to the trans-Alaska oil pipeline. The Kuparuk Transportation Co. is asking RCA to approve the interconnection agreement.
In its filings, KTC said that Eni plans to drill 76 wells at Nikaitchuq: 34 producers, 34 injectors, up to six water wells and two disposal wells. In its August filings, Eni detailed a 52-well program: 26 producers, 21 injectors, three water wells and two disposal wells.
While Eni will begin producing oil at Nikaitchuq through its onshore facilities at Oliktok Point, the company is simultaneously constructing offshore facilities at Spy Island.
First oil production at Nikaitchuq will come from the new onshore production site at Oliktok Point. Eni told the RCA that it expects initial production rates to start at a minimum of 3,500 barrels per day from six oil wells, “of which four currently exist.”
Eni plans to begin drilling from Spy Island in the third quarter of 2011.
Speeding up after slow down The new timeline is good news for Eni, especially considering the delays at Nikaitchuq.
Eni sanctioned the Nikaitchuq unit in January 2008 and that fall officials spoke publicly in Anchorage about bringing onshore facilities online by late 2009, and offshore facilities by late 2010. In March 2009, though, Eni slowed down its pace by six months to a year.
Rumor at the time suggested Eni slowed development because of low oil prices and a weak global economy in the wake of the credit crunch. Those explanations, though, didn’t take into account that Eni got the state to modify the royalty rates on much of the unit, allowing the company to pay lower rates during periods of lower oil prices.
In filings from May 2009, Eni said the delay came not only from those economic factors, but also because the company missed the seasonal window to barge “processing and operations modules” to the North Slope due to a hurricane in the Gulf of Mexico.
At that time, Eni first began listing December 2010 as its expected startup date.
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