BP permits for Ugnu test

Milne S pad to be expanded, will use cold heavy oil production with sand technology

Kristen Nelson

Petroleum News

BP Exploration (Alaska) has begun permitting at Milne Point for an extended Ugnu well test operation next year.

Ugnu is the shallowest and heaviest of North Slope oil accumulations and while it is a well-known resource — wells to the deeper light oil formations go through the Ugnu — the formation is not in production because technical problems of producing the cold, heavy oil which lies in unconsolidated formations have not been solved.

A coastal consistency review notice May 15 said BP is proposing to add to the existing S pad in the Milne Point unit to create a shallow U-shaped pad for Ugnu testing. Work in 2007 would include gravel placement so that the gravel can compact and settle prior to an extended Ugnu well test operation in 2008, BP told state regulators.

Equipment for the well test operation is being designed and will be the subject of future applications.

The gravel pad expansion will accommodate equipment necessary to perform extended well testing at the Coho 1 well, the pre-pilot application of the cold heavy oil production with sand, or CHOPS, production process for heavy oil in the Ugnu formation.

BP proposes to add gravel to S pad to provide for safe access and the ability of large service equipment vehicles to circumnavigate the pad without the need for backing up long distances.

It also allows for optimal placement of facilities supporting the CHOPS pre-pilot test with the required access and equipment spacing requirements while minimizing the overall disturbance to the tundra. Access to the well row would also be maintained for rigs to facilitate drilling additional wells so existing light oil operations on S pad can be accommodated while the CHOPS production process is being tested.

BP told the state that pre-pilot well testing is expected to be an extended operation, the exact length of which is not now known.

Based on availability, BP will use stockpiled gravel from the Milne M pad abandonment project. Recycled gravel from remediation management activities may also be used.

20% of Ugnu could be accessed

BP’s Milne Point resource manager, Scott Digert, told the Alaska House Special Committee on Ways and Means that BP planned to spend about $25 million in 2007 to do pilot tests for technology the company thinks could be used to produce the heavy oil in place at Ugnu, the shallowest and heaviest of North Slope oils.

To date there has been no production from the Ugnu formation, although deeper viscous oil from the Schrader Bluff and West Sak formations is in production, with some 100 million barrels of cumulative North Slope production to date, compared to 15 billion barrels of light oil. An additional 100 million to 1 billion barrels of viscous production is possible.

Digert said the first Ugnu wells would use cold heavy oil production with sand technology, where oil is produced along with massive amounts of sand that come with it. The sand would be separated on the surface, he said, and the oil would have to be warmed before it could be transported with light oil.

Digert said BP thinks that with technologies like CHOPS it could get at some 20 percent of the Ugnu formation, which is a known resource in place below existing infrastructure.

BP also plans to try other technologies in the future such as steam injection or other thermal recovery methods, but not the mining used in some shallow Canadian heavy oil fields. Digert said the depth of the Ugnu formation, some 2,500 to 3,500 feet, and the existence of permafrost above it, mean mining isn’t an option on the North Slope.

He said steam injection is also expected to be less effective on the slope than in Canada because the Ugnu is colder and because of the challenge of getting steam down through the permafrost and warming up the colder oil. The North Slope rock is also different than Canada, where the oil sands are “blocky, very massive sands,” he said, allowing for easy vertical movement. “Ours tend to have layers of shale within the sand that tend to block that vertical movement of oil.”