Logistics key to Point Thomson project

Last year’s ice road only available to move materials for four weeks; barges used in summer; rolligons moved significant amounts

Kristen Nelson

Petroleum News

ExxonMobil has been fighting a running battle with the State of Alaska over development of its North Slope Point Thomson field — but it has also been waging a logistics battle to get equipment and supplies to the site which is 60 miles east of Prudhoe Bay on the coast of the Beaufort Sea just west of the Arctic National Wildlife Refuge.

Definitely not on the road system.

That logistics battle was the focus of an overview of the last 18 month’s work by Lee Bruce, ExxonMobil’s senior project manager for Point Thomson at the Resource Development Council annual conference Nov. 18.

The terms of an agreement with the State of Alaska — after the state terminated the Point Thomson unit for lack of development and took back the leases — allowed drilling on two of the leases provided that the wells were completed by the end of 2010 and production begins by the end of 2014.

Real drilling — targeted to the reservoir — began at Point Thomson in late November, as field operator ExxonMobil continues work it began there in July 2008. Initial surface drilling for two wells, to depths of some 5,000 feet, was completed in May and August. Drilling into potential hydrocarbon-bearing reservoirs at coastal fields can only be done in winter months.

The project’s central pad is “an old drilling site with a lot of residual equipment left over that we had to remove,” Bruce said. That work began in July 2008 and by September 2008 the pad was cleared and work had begun to prepare the pad for future work.

Transportation to Point Thomson is based on the season: Exxon Mobil had a significant barging operation that first summer followed by air and rolligon supply, and finally by trucking down a 60-mile-long sea ice road. Construction on the ice road began in February and it opened the first week in April, he said, and shut down May 1, allowing just four weeks to get materials trucked in for the drilling program.

Bear bypass

Work at the central pad was going on concurrently with the ice road, with more than 12,000 insulated pads put down to protect the tundra and more than 1,800 rig mats to provide a solid foundation for work.

Modifications to the Nabors 27-E rig were completed in April and the rig was ready for mobilization. Bruce said modification costs, between ExxonMobil and Nabors, were more than $35 million.

The rig was moved from Deadhorse to the central pad via the sea-ice road — a total of nine modules weighing more than 4.7 million pounds.

The first well was spud May 8.

“We drilled and cased and cemented the surface hole in 14 days with 1 percent nonproductive time,” Bruce said. He called that level of productivity “a testament to the guys and gals that worked on the rig to get it ready to roll,” and said it was “a significant achievement for drilling this well.”

Summer barging

“We had to stop and allow the Inupiat to do their whaling. And we were fortunate that they were able to get their whales in time and allow us to start barging again,” Bruce said.

More than 120 roundtrip barge runs were completed, each about 24 hours with eight hours of loading and unloading on each end. Six barges were used.

At the pad eight 200,000-gallon diesel storage tanks were installed, providing 1.6 million gallons of diesel, which was delivered in 189 tanker trucks.

It’s the equivalent of filling the tanks of 75,000 trucks, Bruce said.

Getting diesel to the site by barge was a logistics necessity, he said, because “there’s no way to get diesel out there now except by helicopters at 500 gallons a load.”

More than 400,000 gallons of potable water were also delivered by barge, along with 750,000 gallons of drilling fluids.

A thousand joints of tubular were moved, along with 22 loads of barite cement.

“We also pre-positioned all of our ice-road building equipment and our heavy well-capping equipment so we can meet the requirements of being able to cap a well in 15 days.”

Some 30,000 tons of equipment, materials and consumables were moved in the 67 days of barging.

“No one thought we could get it done, and again, we got it done just in time. I think the last barge run shut down because of the weather conditions deteriorating significantly out there in the middle of October,” Bruce said.

The second well was spud July 29. As with the first well in May, there was less than 1 percent nonproductive time.

Ready to go

There are 137 people living at Point Thomson.

He said drilling was expected to resume Nov. 23.

Bruce said ExxonMobil has in hand all of the permits required for drilling and has begun facilities permitting.

“We’re very fortunate the Corps of Engineers project manager is right lockstep with us with an aggressive target to achieve a record of decision in August of 2011.”

That would be two years from the start of project permitting and “would be world-class performance,” he said.

ExxonMobil’s overall philosophy is one of engaging agencies early and of open transparent communication on the project, Bruce said. “That has served us well and I expect it’s going to continue to serve us well in the future.”

The Alaska Department of Natural Resources is a cooperating agency with the Corps of Engineers on permitting.

Both wells will be completed by year-end 2010, Bruce said. From 2010 to 2013 “we’ll complete our front-end engineering design work.”

“In 2011 we expect to start field construction. And we’re on target to have first production by year-end 2014,” he said.

ExxonMobil has spent $300 million in the last year on Point Thomson, Bruce said, 80 percent of those dollars in Alaska.

More than 1,700 people — including a team of more than 100 Exxon employees — have been directly involved with Point Thomson work so far.

In the winter of 2011-12, during facilities construction, about 600 workers are expected to be involved full-time.

After production begins 130-plus people are expected to be employed providing on-going daily operations and maintenance.

Logistics also an issue at Pioneer’s Oooguruk

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

“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

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