Providing coverage of Alaska and northern Canada's oil and gas industry
July 2017

Vol. 22, No. 29 Week of July 16, 2017

Eni: exploration now

Development drilling at Nikaitchuq remains on hold for at least another year

Eric Lidji

For Petroleum News

Eni US Operating Co. Inc. is unlikely to resume development drilling at the Nikaitchuq unit until mid-2018, focusing instead on exploration and ongoing workovers activities.

Earlier this year, the local subsidiary of the Italian major released and demobilized Nabors rig 245, which had been working at the North Slope unit since at least early 2010, before startup. The company has contracted the new Nordic Calista Rig No. 4, which is scheduled to arrive at Nikaitchuq this fall for workover activities starting next spring.

The company recently commissioned “major upgrades” to Doyon rig 15 in preparation for the one-to-two-well Nikaitchuq North exploration program, scheduled to begin in December 2017 from the Spy Island drill site. The results of the program will determine the future program of development drilling for the offshore pad, according to Eni.

Under current plans, Eni expects to begin converting eight existing single lateral production wells at Spy Island into multilaterals and to drill three new wells no sooner than July 2018. The Nordic Calista Rig No. 4 would begin workover activities at the Oliktok Point pad in May 2018 and move to the Spy Island drill site at a later date.

Nikaitchuq North

The biggest component of the upcoming Nikaitchuq program is the exploration work.

Nikaitchuq North will be the first Alaska exploration project operated by Eni in a decade, since the company drilled wells at the Rock Flour and Maggiore prospects in 2007.

The project involves drilling an ultra-extended reach well from the Spy Island drill site into federal waters - Harrison Bay Block 6423 Unit - north of the existing unit boundary.

The program could spawn additional activities. In the most recent Beaufort Sea lease sale, in late 2016, the company acquired ADL 393175, sandwiched between the unit and the Harrison Bay Block 6423 Unit leases. “This lease will provide Eni with some protection acreage, should there be any future development opportunities involving the Nikaitchuq North Exploration Project,” the company explained in its development plan.

The Bureau of Ocean Energy Management published the Nikaitchuq North exploration plan in early June, triggering a series of short-term public reviews ending in July 2017.

In its plan, Eni said it planned to drill the first well - NN01 - between mid-December 2017 and mid-February 2018 with flow testing continuing through mid-March. The company said it might also sidetrack the well in April and May. The second well - NN02 - would follow a similar schedule running from December 2018 to late May 2019.

The wells would be extremely directional.

According to the plan, the NN01 well would have a vertical depth of 8,131 feet and a measured depth of 34,150 feet. The NN02 well would have a vertical depth of 8,329 feet and a measured depth of 38,173 feet. The sidetracks would measure about 1,000 feet.

Upgrading the Doyon rig 15 to accommodate those long and relatively shallow wells involves increasing the top drive torque to 72,000 foot pounds from 63,000 foot pounds and increasing the pressure rating for the drilling mud manifold, according to Eni.

The company has not revealed its target for the wells. The Nikaitchuq unit development targets the Schrader Bluff formation, which extends into the outer continental shelf.

Future work

Eni suspended development drilling at Nikaitchuq and reduced its Alaska workforce by 10 percent in late 2015, in response to the persistent downturn in global oil prices.

In a plan of development from early July 2016, the company said it would potentially resume development drilling in early 2017, “with hopes of a more favorable oil prices environment.” The proposed 2017 program included six wells from the Spy Island drill site - one producer (SP03-FN9), two injectors (SI02-SE5 and SI06-FN8) and four laterals (SP33-W3L1, SP30-W1L1, SP16- FN3L1 and SP27-N1L1) added to existing wells - and a future phase of the project that would convert as many as eight wells to multilaterals.

Eni is continuing to list those wells as priorities for its 2018 program.

The drilling suspension in late 2015 followed a period of years where Eni was looking at various expansion opportunities at the unit. The company completed its “West Extension” in 2014 and started its “East Extension” in 2015, before the shutdown. The company drilled the first well dedicated to evaluating future N sand development, after focusing exclusively on the O sands of the Schrader Bluff formation. The company also began drilling the first multilateral wells at the unit and adding laterals to existing wells.

Those expansion activities followed a six-year initial development program sanctioned in early 2008. Eni completed its initial Oliktok Point pad development drilling in 2012 and shifted to continuous drilling at the Spy Island drill site, which was stalled in late 2015.

Since suspending regular development activities, Eni has been conducting workovers.

The Nikaitchuq includes 11 leases covering approximately 21,000 acres in the state waters of the Beaufort Sea, north of the Kuparuk River unit. The unit had produced more than 34 million barrels of oil through November 2016, according to the company.

The unit produced 23,854 barrels per day in 2016. The unit reached peak production in late 2015 but experienced has experienced a notable increase in production in early 2017.

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