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Pioneer lays out plans for Cosmopolitan Production from Cook Inlet unit could begin in 2014, fill up to 40 trucks daily with peak at 8,000 bpd; project not yet sanctioned Wesley Loy For Petroleum News
Pioneer Natural Resources Co. says daily oil production from its proposed Cosmopolitan development on Alaska’s Cook Inlet could peak at 8,000 barrels, enough for 40 tanker truckloads bound for Tesoro’s refinery at Nikiski.
Pioneer laid out these and many more details about the Cosmo project in documents submitted recently to state and federal regulators.
An Alaska spokesman for the Irving, Texas-based independent stresses the company has made no decision yet on sanctioning, or moving forward, with the development.
But based on the level of detail in the plan documents, Pioneer would seem close to green-lighting Cosmo. And presumably, recent oil prices in excess of $80 a barrel are providing encouragement.
The 23,516-acre Cosmopolitan unit takes in eight state leases and two federal leases in Cook Inlet offshore the west bank of the Kenai Peninsula.
In plans submitted to the Alaska Department of Natural Resources and the U.S. Minerals Management Service, Pioneer proposes to tap Cosmo from a drill site on land about 500 feet back from the Cook Inlet beach. The wells will angle out to the unit two to three miles offshore.
If the project goes, first oil is scheduled for 2014, Pioneer said.
Old discovery Pioneer didn’t find Cosmo.
Pennzoil did, in 1967, drilling the Starichkof State No. 1 and the Starichkof State Unit No. 1 wells.
The first well “was drilled on the eastern flank of the structure,” encountering oil in the Starichkof interval and water in the Hemlock interval, Pioneer said. The second well was drilled on the northeastern flank and hit water.
The early drilling didn’t result in a commercial development.
In 2001, ConocoPhillips formed the Cosmopolitan unit and the next year drilled the Hansen well up dip of the Starichkof State No. 1, encountering oil in both the Starichkof and Hemlock intervals, Pioneer said.
In 2003, ConocoPhillips drilled a sidetrack, the Hansen 1A, across both the Starichkof and Hemlock sands, and a 50-day flow test averaged 550 barrels per day of 24-27 API gravity crude.
A 3-D seismic survey was completed over Cosmo in 2005, and the next year Pioneer took over the unit.
In 2007, Pioneer drilled a lateral, the Hansel 1A-L1, from the Hansen 1A wellbore, targeting the upper Starichkof interval. In recent months, Pioneer re-entered and flow tested the lateral.
The Cosmo reservoir “is lower quality than most other producing oil fields of the Upper Cook Inlet,” Pioneer wrote in its plan of operations submitted to the DNR.
Drilling plans To develop Cosmo, Pioneer intends to use the Rowan rig 68 for extended-reach, undulating, horizontal wellbores “drilled from the east to the west across the entire structure,” Pioneer said.
“Vertically, up to three laterals may be drilled from each trunk wellbore to access the sand prone Hemlock and Starichkof intervals. Additionally, hydraulic fracturing of the reservoirs may be necessary” to reach commercial production rates, the company said.
Although all the drilling will be done from land, Pioneer has applied to the U.S. Army Corps of Engineers for permission to pipe in Cook Inlet seawater for a flooding program to maintain field pressure and boost oil recovery.
Pioneer proposes to begin development drilling in the fourth quarter of this year and drill through 2014.
The five-acre drill site is on leased, private land between the Sterling Highway and the inlet, 5.5 miles north of the Anchor Point community. It’s the same site both Pioneer and ConocoPhillips used for their exploratory drilling.
Pioneer is proposing to drill 11 to 28 development wells, with half to be producer wells and the other half waterflood injectors.
While most of the wells will be aimed at Cosmo’s state leases, some are planned to extend three miles offshore into the federal leases, Pioneer said. To date, no wells have reached the federal leases.
Production facilities To accommodate equipment for processing the oil, natural gas and water from the wells, Pioneer proposes expanding the drill site by 15 acres for a total development footprint of 20 acres.
It’s a good site, says Pioneer, previously developed as a gravel pit with only limited residential development nearby.
Prefabricated, truckable modules set on piles or blocks will contain equipment for processing the oil.
Power for the site and possibly the drilling rig will be purchased from Homer Electric Association — a cleaner and quieter option than generating power onsite from diesel, Pioneer said.
The production site will have a control room staffed 24 hours a day, but no permanent overnight housing.
The site also will feature a loading rack with three to five stations for oil tanker trucks.
As for natural gas from the field, Pioneer said it “plans to come to an agreement with a third party to construct and operate a gas pipeline extension to the site.” The third party would run a gas line 16 miles south to Anchor Point from the existing distribution network at Ninilchik. Pioneer aims to sell Cosmo gas into this line.
Pioneer anticipates up to a 30-year life for the Cosmo field, with production starting in 2014.
“Peak production is estimated at 8,000 barrels of oil per day,” Pioneer said. “Average production over the life of the field is estimated to be 3,000 BOPD.”
Pioneer previously has said Cosmo could contain 30 million to 50 million barrels of oil.
Cosmo likely would generate $1 million to $2 million in property taxes annually for the Kenai Peninsula Borough, and the state and federal governments would collect royalties, Pioneer said.
Transportation options Pioneer said it considered various options for delivering Cosmo oil to market, including a pipeline, marine tankers and trucks.
“Oil trucking 75 miles to the Tesoro Refinery was selected based on risk and cost factors,” Pioneer said.
Trucking eliminates the need for loading oil for a sea voyage, and is most appropriate for the size of the Cosmo oil resource, the company said. What’s more, trucking will reduce the Tesoro refinery’s reliance on oil deliveries by sea.
After loading at the Cosmo production plant, tanker trucks would go north along the rural Sterling Highway to Kalifornsky Beach Road connecting to the Kenai Spur Highway.
A Golder Associates analysis done for Pioneer shows that the spill risk from trucking the oil “is comparable to pipeline transportation,” Pioneer said.
Cosmo over its lifetime will average 14 truck trips per day, with each tanker likely hauling a maximum of 200 barrels or 8,400 gallons, the Golder analysis says. The trips rise to 40 per day when Cosmo production peaks about two years after startup.
“Note that during peak operations there will be a maximum of 6-7 crude oil tanker trucks traveling simultaneously along the route per day,” the analysis says.
The biggest hazard from the trucking operation is a traffic collision, Golder says. The consultant estimates a frequency of one collision every 25 years involving an oil tanker truck.
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