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Alpine begins production Phillips Alaska and partner Anadarko see returns from $1 billion investment as oil moves to meters at Kuparuk Nov. 16 Kristen Nelson PNA News Editor
Payoff has begun on a $1 billion investment made by owners of the Alpine field on Alaska's North Slope.
Phillips Alaska Inc. announced Nov. 16 that it has begun moving oil from Alpine. Phillips Alaska is field operator and holds a 78 percent interest in Alpine, discovered by Phillips Alaska predecessor ARCO Alaska Inc. in 1994 and delineated in subsequent winter drilling seasons. Phillips' partner at Alpine, Anadarko Petroleum Corp., holds the other 22 percent interest in the field, which is west of Kuparuk adjacent to the National Petroleum Reserve-Alaska.
The companies determined in 1996 that Alpine was a commercial-grade discovery. Since then, a main drilling and production pad has been completed and pipelines built between Alpine and Kuparuk. Gravel has been laid for the secondary drilling pad at Alpine and the road between the two pads. Work planned for early 2001 includes pipelines between the pads, completion of a bridge on the road between the pads and installation of modules on the secondary pad, which will become operational next summer.
Phillips said that as of Nov. 16, 30 wells — 16 production and 14 injection — have been completed at the first Alpine drill site. The entire Alpine development calls for two drill sites and more than 112 horizontal wells. Production to 80,000 by year-end Ryan Lance, Phillips Alaska's vice president for the western North Slope, told PNA Nov. 16 that the company circulated diesel through the system to warm it up “over the last four or five days, and when we were ready to go and had the final safety system checks, we opened up the wells yesterday.”
Lance said production started with nine wells and a production level of 35,000 to 40,000 barrels a day. About 31,000 barrels would be required to fill the line, so it would take about 20 hours for the first oil to reach Kuparuk, probably about dinner time Nov. 16, he said.
“I sell crude at Kuparuk,” Lance said, “so my cash register starts ringing when it gets to Kuparuk.”
The rest of the existing production wells will be brought on quickly, he said: “We'll ramp up before year-end to 80,000.”
Estimated 429 million barrels recoverable
The companies estimate gross recoverable reserves from Alpine at 429 million barrels, and Phillips Petroleum Co. Chairman and Chief Executive Officer Jim Mulva called Alpine a key to Phillips' Alaska operations.
“We expect Phillips' production levels in Alaska to remain between 375,000-400,000 barrels-of-oil-equivalent per day for the next several years,” Mulva said in a Nov. 16 statement.
Anadarko Chairman and CEO Robert Allison Jr. called Alpine start-up “just the first in what I'm sure will be a succession of new, important Alaskan oil and gas fields.”
The companies said Alpine is the largest onshore oil field discovered in the United States in more than a decade. It is also the farthest west producing field on the North Slope and the first significant commercial oil production on lands conveyed to an Alaska Native corporation pursuant to the terms of the Alaska Native Claims Settlement Act.
“Under the terms of ANCSA,” said Jacob Adams, president of the Arctic Slope Regional Corp., “70 percent of the net revenues realized by ASRC are distributed among all regional corporations in Alaska, who in turn share one-half of their receipts with the village corporations and their at-large shareholders.”
The companies said that Alpine field construction took three years and 6 million man hours. Total cost will be more than $1 billion, of which the companies said $800 million has been spent with Alaska contractors.
Alaska is also expected to benefit, with state tax and royalty payments over the life of the field expected to total more than $1 billion.
The field includes both state and Kuukpik Village Corp. lands. The royalty interest is owned by the state of Alaska, the Kuukpik Village Corp. and by ASRC.
Both Kuukpik and ASRC will receive royalty shares from Alpine production. Residents of Nuiqsut will also get gas from the field for village power generation. Chugach has right to access Del Welch, owner of the original Katalla oilfield and the private land on which Stevens hopes to place a drill rig, told PNA that he and his wife, Ginger, are in negotiations to sell their 465 acres to Stevens. Welch said he has all the permits needed to drill on his property.
In early November, Cal Baker, Cordova district ranger for the Chugach National Forest, said he expected to receive a proposed plan of operations from Stevens yet this year, but as of Nov. 28, the only paperwork filed by Cassandra Energy was for a geophysical exploration permit.
“We received an application to do some geophysical exploration work — remote sensing with a helicopter,” Bob Behrends, forest service public services staff member, told PNA. ... “It’s nonintrusive, noninvasive, surface exploratory work, and involves 30 helicopter landings and takeoffs.”
Behrends said Stevens planned to do the work “sometime between now and May 1, 2001.” The Forest Service expects to have a decision on the permit in December.
Baker said Stevens will probably get his permit because the Forest Service is “dealing with valid, existing rights in the area ... independent of the forest plan revision that is currently out for public review until Dec. 14.”
Because drilling will take place on private land, Stevens will not be required to file an Environmental Impact Statement, Baker said.
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