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State approves BRPC Beechey Point unit Development at 52,876-acre unit north of Prudhoe Bay would commercialize small discoveries between Milne Point, Northstar units Kristen Nelson Petroleum News
Brooks Range Petroleum Corp. has received approval from the Alaska Division of Oil and Gas for formation of the Beechey Point unit. The new unit includes 25 state oil and gas leases, some 52,876 acres, onshore and offshore north of the Prudhoe Bay unit between Milne Point and Northstar.
The division said in its decision that the Beechey Point unit area has had a number of small discoveries over the years, and has been part of several former units, but has not been developed.
BRPC drilled the North Shore No. 1 and the Sak River No. 1 wells in the winter of 2006-07. The company sidetracked and tested North Shore No. 1 the following year at more than 2,000 barrels of oil per day of high quality crude oil from the Ivishak formation. BRPC has also acquired 130 square miles of seismic data covering the entire unit area.
On July 10, 2008, the division determined that the North Shore No. 1 well was capable of paying in producing quantities and BRPC has asked the state to authorize the North Shore No. 1 well as a unit well.
Ivishak, Sag River, Kuparuk The primary targets at Beechey Point are the Ivishak sandstone of the Sadlerochit group, the Sag River formation and the Kuparuk River formation. The unit “lies north of the northwest to southeast trending, down-to-the-north, Prudhoe fault that separates the Prudhoe Bay field from deeper, more complexly faulted structures to the north,” the division said.
North and west of Prudhoe Bay there are smaller structural closures at the Ivishak level, the division said, and early exploration in the area focused on “small, fault associated structural closures in the Ivishak Sandstone.”
Most early exploration wells penetrated the overlying Sag River formation and the underlying Lisburne group carbonates, but potential hydrocarbon plays in those reservoirs were not fully evaluated and traps in the Kuparuk River and Brookian sequences were secondary targets. The division said the Lisburne is not an exploration target at Beechey Point.
The Ivishak in the area ranges in thickness from 320 feet at the North Prudhoe Bay State 1 well, to 370 feet at the Point Storkersen No. 1.
The Sag River formation is “a potential reservoir target” at Beechey Point, the division said. The Kuparuk River formation in the area is highly variable in thickness and reservoir quality. Fields around Beechey Point produce from the Kuparuk, the nearest such production being from Point McIntyre to the east; Kuparuk also produces south and west of Beechey Point in the western satellites of the Prudhoe Bay unit and in the Kuparuk River and Milne Point units.
Earliest well in 1969 Drilling began in the area in 1969 with the Hamilton Brothers Point Storkersen No. 1 well, drilled to 11,473 feet measured depth. The well tested oil in the Sag River; it flowed 315 barrels per day and 735 bpd from two different depths in the Ivishak Sandstone; it did not test the Kuparuk River formation.
The Hamilton Brothers drilled the 11,200-foot Kuparuk Delta 51-1 well in 1970 in what was then the Kuparuk Delta unit, finding no flowing hydrocarbons in the Kuparuk, Sag River, Shublik and Ivishak, but flowing 2,200 bpd, decreasing to 1,500 bpd, from a lower Brookian “stray sandstone” at a depth of some 7,100 feet.
Conoco drilled the 13,605-foot Kuparuk Delta 51-2 in 1970, with successful tests of oil from the Ivishak Sandstone and Kuparuk River formation, with the Ivishak flowing 695 bpd and 520 bpd from two different depths; there was also flow to the surface from the Kuparuk formation.
Conoco takes over Conoco took over operation of the unit and it was renamed the Gwydyr Bay unit. While Conoco didn’t drill until 1981, there were additional wells drilled in the area by Mobil and Cities Service.
The Conoco Gwydyr Bay 2A well, a sidetrack from the 11,365-foot Gwydyr Bay 2, flowed 3,000 bpd from the Ivishak and had a stabilized flow of 740 bpd from the Kuparuk River formation.
In 1997, BP Exploration Alaska drilled Pete’s Wicked, identifying some 65 feet of oil pay in the Ivishak on logs; no well tests were conducted.
BP submitted plans for a roadless drill site and a three-well development, but the plans were dropped and the acreage reverted to the state.
BRPC drilled the North Shore No. 1 in 2006-07 and sidetracked the well in 2008, with the sidetrack testing 2,092 bpd from the Ivishak; Sag River tests were inconclusive, but in July 2008 the division determined that the North Shore No. 1 well was “economically and physically capable of producing in paying quantities” under the division’s regulations.
Five exploration blocks BRPC submitted a five-year initial plan of development that the division said “included plans to delineate all underlying oil or gas reservoirs, bring several isolated reservoirs into production through the proposed North Shore Development Project, and maintain and enhance production once established.”
Five exploration blocks — North Shore, West Shore, Northwest Shore, East Shore and Offshore — are identified in the plan.
Development includes having all permits in place for the North Shore development project by the end of 2010; applying for an initial participating area (area from which production is occurring) by Oct. 1, 2012; and beginning production by Jan. 1, 2013.
Exploration includes a commitment by Dec. 1, 2010, to drill in one of the five designated exploration blocks; by July 1, 2011, BRPC shall complete the first exploration well; by Dec. 1, 2012, the company will commit to drill a second well within one of the remaining undrilled exploration blocks; and by July 1, 2013, BRPC will complete the second exploration well.
Effective control The division said no unit will be approved unless the parties to the unit agreement hold “sufficient interest in the unit area to give reasonably effective control.” The application was not signed by all the working interest owners, but the Beechey Point unit agreement was approved by 78.9 percent of the record title owners of the 25 leases, “which is effective control under the unit operating agreements.”
TG World, one of the working interest owners in the leases, and BRPC have been in litigation over alleged contract breaches and TG World objected to formation of the unit.
The division said TG World was concerned that overlapping operating agreements — four operating agreements were submitted with the unit application — would prevent development. The division said it concluded the operating agreements do not prevent unit development because the operating agreements allow for development without 100 percent working interest owner commitment. Those working interest owners who signed the agreement “hold sufficient interest in the unit area to proceed with exploration and development plans,” the division said. The division noted that while it was not the norm, the unit agreement does not preclude multiple operating agreements.
The division said other concerns raised by TG World “were discussed and resolved” in an Aug. 24 meeting between the working interest owners and the division.
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