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April 2008

Vol. 13, No. 15 Week of April 13, 2008

ConocoPhillips files Qannik pool rules

Third Alpine satellite due to start up this summer in western North Slope Colville unit; drilling operations to begin in June

Kristen Nelson

Petroleum News

ConocoPhillips Alaska, operator of the Colville River Unit on the western North Slope, has filed an application with the Alaska Oil and Gas Conservation Commission for pool rules for the Qannik oil pool, which overlies the Alpine, Nanuq and Fiord oil pools within the unit. The company said initial plans are to develop approximately 5,000 acres of reservoir from drill site CD2.

Eight new horizontal wells are planned, as well as utilization of the existing Qannik horizontal exploration well, CD2-404.

Six of the wells would be producers and three would be water injectors: horizontal well lengths would range from 6,000 to 9,000 feet.

Recovery would involve waterflood supplemented with gas cap expansion drive.

Ultimate recovery is estimated at 17 million barrels, with a range of 11 million to 25 million barrels based on reservoir simulation.

Initial production, estimated for late 2008 by ConocoPhillips Alaska President Jim Bowles in November 2006, is currently targeted for summer 2008 start-up. Its peak annual project rate is estimated at 4,000 barrels per day in 2009, with a possible range of 3,000 to 6,000 bpd.

ConocoPhillips said in its application that successful results from this effort would likely result in expanded development activities at drill sites CD2 and CD4.

Working interest partners in the project are the same as at Alpine, ConocoPhillips 78 percent and Anadarko Petroleum 22 percent.

Existing infrastructure will be used

The company said existing infrastructure will be used when possible. Drill site CD2 was expanded by 7.5 acres to allow up to 18 new development wells. CD2 is some three miles west of the Alpine Central Facility.

Assuming receipt of conservation and area injection orders in May, drilling operations would start in June.

Facilities installation began in February; first oil is expected in July; and drilling operations would end in January 2009.

Qannik, which means snowflake, in the local Inupiat language, is a sandstone with a stratigraphic trap, containing both an oil and gas leg.

Original oil in place in the nine-well target area is estimated at 79 million barrels.

Oil from the production test at CD2-404, drilled in May 2006, had an API gravity of 29.4 degrees.

Erec Isaacson ConocoPhillips Alaska’s vice president of land and exploration, said when the discovery was announced in July 2006 that the company had basically been drilling through Qannik to reach the Alpine accumulation, which is at about 7,000 feet subsea. They had seen the Qannik accumulation on logs, he said, and used exploration dollars to put in a well to test it.

ConocoPhillips said average Qannik production from CD2-404, drilled in May 2006, was 1,200 barrels per day of 29.4 degree API gravity oil from a 25-foot sandstone at 4,000 feet subsea. The Alpine accumulation, at 40 degrees API gravity, is a lighter oil. ConocoPhillips said results from that well were sufficient to sanction the project.

Open annuli in existing wells

ConocoPhillips said the Qannik interval was not considered a significant hydrocarbon bearing interval and was not cemented during initial Colville River field development. “However,” the company said, “improvements in horizontal drilling technology coupled with increased oil prices have caused Qannik to now be considered a viable development opportunity.”

Typical western North Slope depletion plans involve alternating water and miscible gas injection, miscible gas injection is not planned for Qannik. “The potential for injected gas to migrate through open annuli has resulted in water injection being selected as the only means of maintaining pressure support and maximizing recovery.”

The company said while cross flow is not expected to occur, injected fluids could flow from the Qannik reservoir into either the annular disposal interval or the Lower K2 interval, “via the open annuli of existing CD2 Alpine wells.” This possibility primarily exists in the near wellbore region of Qannik injectors, “where Qannik reservoir pressures are at their highest.”

ConocoPhillips said cross flow would have no appreciable impact on ultimate recovery, but would make planned waterflood less efficient. The company said its Qannik development plan includes comprehensive monitoring to address the open annuli situation in CD2 wells. The plan includes installation of wireless pressure transducers on the outer annuli of the 19 Alpine CD-2 wells that fall within a quarter mile of Qannik injectors, allowing continuous monitoring of the outer annuli. A quarterly review of pressure trends would also be conducted in those Alpine CD-2 wells.

Colville production history

Alpine, the first Colville unit field to produce oil, was discovered in the early 1990s and came online in late 2000. It is the third largest oil field on the North Slope, behind Prudhoe Bay and Kuparuk. Production averaged less than 30,000 bpd in November 2000, but by June 2001, at 88,551 bpd, Alpine had topped Northstar production and has been the third most productive field on the North Slope since.

Production at Alpine neared 130,000 bpd as satellite Nanuq came on line in late November 2006. At the time Prudhoe and Lisburne had combined November high production volumes of almost 380,000 bpd and Kuparuk had peak November 2006 production of almost 210,000 bpd.

When the two Alpine satellites, Fiord and Nanuq, were sanctioned in late 2004, ConocoPhillips said combined production from Alpine, Fiord and Nanuq was expected to peak at 135,000 bpd in late 2007. In fact, they peaked in May 2007, averaging 138,984 bpd that month, their high-production day at 142,523 bpd on May 10.

In March 2008, Alpine, Fiord and Nanuq averaged 114,144 bpd.






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