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Cronus uneconomic, Pioneer says Pioneer says Cronus oil too tight to produce; no new North Slope wells this winter; AVCG still assessing Cronus By Alan Bailey Petroleum News
The results from Pioneer Natural Resources’ winter 2005-06 drilling season on Alaska’s North Slope demonstrate some of the inherent risks associated with exploring for oil and gas. The company was involved in drilling three wells using the new Doyon/Akita Arctic Fox drilling rig. This new mobile rig, purpose designed for Arctic exploration, enables the drilling of multiple wells in a single winter season, thus paving the way for an aggressive but economical drilling program.
But all that Pioneer has to show for its winter drilling efforts are some holes in the company’s balance sheet.
The first disappointment appeared when Pioneer announced that the Hailstorm No. 1 well in the NE Storms unit, the initial well of the season, had proved to be a dry hole. ConocoPhillips and Pioneer each have a 50 percent working interest in the unit, which consists of seven state oil and gas leases south of Prudhoe Bay and southeast of the Kuparuk River unit. Struck oil But things looked up in March when Pioneer struck oil in its second well, the Cronus No. 1, southwest of the Kuparuk River unit. The primary target for the well was a Cretaceous-age Torok sand sequence, similar to the reservoir in the nearby Meltwater field.
“A thick, oil-bearing sand section in the Torok and a thin, oil-bearing sand in the Jurassic-aged Kuparuk C were penetrated by the well,” Pioneer said in May. “Wireline and core data are currently being analyzed and integrated with 3-D seismic to determine if appraisal activities are warranted during the 2006-2007 winter drilling season.”
But the results of the analysis have proved disappointing.
“After analyzing data from the well and 3-D seismic, it was determined that the hydrocarbon bearing zones were too tight to produce. Therefore, the well was declared a dry hole and expensed in Q2,” Susan Spratlen, Pioneer’s vice president, corporate communications and public affairs, told Petroleum News Aug. 15. AVCG still assessing Cronus Alaska Venture Capital Group owns a 10 percent working interest in the Cronus well.
“AVCG is still assessing the Cronus accumulation as a potential low-permeability resource for the future but we will not drill an additional well at Cronus this year pending further review,” Ken Thompson, managing director of AVCG, told Petroleum News Aug. 15.
After Cronus, the Arctic Fox rig went on to drill the Antigua No. 1 well, south of the Kuparuk River unit. ConocoPhillips is the operator for Antigua, but Pioneer has a 32 percent working interest in the well. However, Pioneer’s second quarter 2006 results report described the North Slope drilling at both Cronus and Antigua as “unsuccessful” and according to Alaska Oil and Gas Conservation Commission data ConocoPhillips plugged and abandoned the Antigua well.
The results from Antigua have impacted AVCG’s plans for its Whiskey Gulch prospect, a Kuparuk sands play near and on trend with the Antigua prospect.
“With the Antigua being a dry hole, we will not drill at Whiskey Gulch this winter,” Thompson said. “Instead, we and our JV partners are assessing the drilling of two distinctly different prospects on our Gwydyr Bay acreage this winter and we have contracted Nabors rig 16-E to drill those two wells and possible sidetracks.”
In the past AVCG has described Gwydyr Bay, north of the Prudhoe Bay unit, as a single Kuparuk sands prospect but the company has since identified two prospects in the area. No Pioneer wells next winter Spratlen said that Pioneer does not plan to drill any new exploration wells in the winter of 2006-07. Instead, the company is focusing its Alaska resources on the development of its Oooguruk field in the shallow waters of the Beaufort Sea northwest of the Kuparuk River unit. The company is also focusing its efforts on investigating development options for the Cosmopolitan oil discovery offshore the southwest coast of the Kenai Peninsula — the company took over the operatorship of Cosmopolitan from ConocoPhillips in June.
Spratlen emphasized that the lack of exploration drilling in the coming winter represents a pause to “step back a little and look at the prospects,” rather than a change in direction for Pioneer’s Alaska exploration program.
“All of our resources are directed towards Cosmopolitan and even more so to Oooguruk,” Spratlen said.
Pioneer said in early August that it had completed the construction of the gravel island drill site for Oooguruk. Additional work scheduled for 2006 includes contouring and armoring the drill site, fabricating equipment and modifying the drilling rig for installation during 2007. First production is expected in 2008.
Spratlen said that although Pioneer is actively investigating the development of Cosmopolitan it has no immediate plans for further seismic acquisition or drilling at the discovery.
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