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Companies looking at more Slope projects BP’s Weiss tells RDC Prudhoe partners moving Sag River development, BP looking at economics, technology for Northwest Schrader Kristen Nelson Petroleum News
Janet Weiss, president of BP Alaska, told the Resource Development Council June 26 that in addition to the $1 billion Prudhoe Bay investment increase previously announced for BP and its Prudhoe partners over the next five years, and the $3 billion of new western region Prudhoe projects under evaluation, BP and its partners are moving forward on development of the Sag River formation at Prudhoe Bay and BP is reworking economics for Northwest Schrader at its wholly owned Milne Point field. BP is the Prudhoe Bay operator; ConocoPhillips and ExxonMobil are the other major owners at the field.
Weiss said that passage of Senate Bill 21, the governor’s oil tax reduction, signaled to industry that Alaska wants to be globally attractive for industry investment and said the bill’s passage has already had a “profound impact” on the pace and scale of projects BP is pursuing with its partners.
The previously announced $1 billion dollar investment includes adding two drilling rigs, which Weiss said would mean some 200 additional jobs. BP is about ready to go out to bid for the new rigs, she said, with one expected to begin drilling in 2015 and the other in 2016.
Also as previously announced, BP has been increasing well work activity and plans to add more equipment at the end of the year to produce more oil from existing wells. Weiss said after her speech that the additional equipment includes a coiled tubing service unit to be added at Prudhoe Bay.
The previously announced evaluation of an additional $3 billion in new developments on the west side of Prudhoe Bay would include appraisal work lasting two to three years, Weiss said. Development of the area could last nearly a decade, she said, creating thousands of direct and indirect jobs, accessing hundreds of millions of barrels of additional oil and eventually generating “tens of thousands of barrels of new oil production per day.”
Field tests at Sag River There are challenges associated with Sag River formation development, Weiss said.
She said there have been field tests on new techniques for shallow Sag River formation at Prudhoe Bay over the past couple of years, and because of the results of those tests and the improved fiscal climate following passage of Senate Bill 21, BP is moving forward with a 16-well first-phase Sag program, scheduled for 2015 and 2016.
The main Prudhoe reservoir, the Ivishak, is hundreds of feet thick; the shallower Sag River formation, by contract, averages 20 feet, and is also a tight formation which restricts flow, she said.
The field tests that have been conducted at Sag River were on new techniques to enhance recovery, Weiss said, and those results, combined with the improved fiscal climate, resulted in a decision to move forward on the first phase of Sag formation development with a 16-well program in 2015 and 2016.
If full development of the Sag formation follows — which would depend on the outcome of the first phase — it could mean as many as 200 production and injection wells, she said, spread over two dozen rig years of drilling, with as much as 200 million barrels of new oil production.
Northwest Schrader longer term In addition, BP is also reworking the economics of Northwest Schrader at Milne Point, where BP is the 100 percent owner. Northwest Schrader “is another potential source of new oil production that was sidelined under ACES,” Weiss said, referring to the tax regime enacted under Alaska’s Clear and Equitable Share in 2007, which upped taxes from the Petroleum Profits Tax enacted the previous year.
There are “formidable technical hurdles” to be overcome at Northwest Schrader, she said, but if full development goes forward it would be a $1-2 billion investment with two new pads and 70 new wells.
Weiss said after her speech that Northwest Schrader is viscous oil “that is almost doable with current techniques and some of what we’re doing right now ... are the technologies that should, coupled with SB 21, enable the Northwest Schrader” to be developed.
The accumulation is under evaluation, she said, adding “we do need to see a couple of technology trials and how they’re going to turn out” before a decision is made on Northwest Schrader development.
Weiss said BP has so far produced less than half of the oil and gas in its North Slope portfolio, and said what remains is a “multibillion-barrel resource and a world-class opportunity for BP and for all Alaskans.”
She characterized where BP is in Alaska as “mid-life” and said “ACES, with all of the turmoil and rancor surrounding it, has been our mid-life crisis.”
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