Eni asks for more time at Nikaitchuq

Company wants term of unit agreement pushed out nearly two additional years, also asks for extension on ADL 391283 timeline

Eric Lidji

Petroleum News

Eni US Operating Co. Inc. wants extra time to develop the Nikaitchuq unit.

The subsidiary of Italian oil giant Eni S.p.A. recently asked the state to extend the term of the offshore unit to April 1, 2011, from the current expiration date of April 30, 2009.

The request comes a few weeks after news that Eni had suspended drilling operations at Nikaitchuq this winter, pushing the startup of the field to 2010 or later from late 2009.

Eni said it “conducted extensive reservoir evaluation, engineering studies, and economic analysis to determine if it is feasible to develop and produce the hydrocarbons discovered in the Schrader Bluff and Sag River formations within the Nikaitchuq Unit,” and shared confidential “reservoir and engineering analysis, and economic studies” with the state.

Eni told the state it already “completed and or initiated” several activities at Nikaitchuq, located in the near shore waters of the Beaufort Sea, north of the Kuparuk River unit.

Those activities include:

• building onshore production and operations pads and an offshore drilling pad;

• drilling the first production well;

• starting construction of production facilities;

• starting work on the underwater cable connecting the offshore drilling pad to production pad at Oliktok Point; and

• starting work on the Vertical Support Members for an 8-inch crude oil gathering line.

Eni also said it is currently evaluating data from a 3-D seismic shoot last summer.

According to a 2007 revision of the 2004 agreement, the current term of the Nikaitchuq unit ends in April 2009 unless the state certifies a well in the unit as capable of producing in paying quantities or the commissioner of Natural Resources extends the deadline.

The commissioner cannot extend the deadline more than five years.

Extra time for ADL 391283

The acreage contained in the lease was originally part of the Kuparuk River unit, added through expansions in the mid to late 1980s. But the Kuparuk River unit owners farmed out some of the acreage to Eni in 2007, and the state called the new lease ADL 391283.

The addition of ADL 391283 to Nikaitchuq came as part of a 2007 state decision to expand the Nikaitchuq unit to include the leases of the neighboring Tuvaaq unit.

Under the revised agreement, Eni had until Oct. 5, 2009, to commit all or some of ADL 391283 to a participating area, with any uncommitted portion contracting out of the unit.

A participating area is the portion of a unit from which production occurs. It is usually created just before a field begins sustained production.

Eni is now asking for that deadline to be pushed to Oct. 5, 2010.

Other leases in the unit have different expiration dates than ADL 391283.

The Nikaitchuq unit covers some 33,870 acres spread across 18 state oil and gas leases.

The state announced the request on March 20 and is taking comment through April 27.