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Vol. 12, No. 8 Week of February 25, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Drilling Cosmo this summer

Pioneer files spill plan for Cook Inlet unit; if OK’d will be produced from onshore

Kay Cashman

Petroleum News

Pioneer Natural Resources Alaska is moving forward with plans to drill a sidetrack appraisal well at its Cosmopolitan prospect this summer. If development of the Lower Cook Inlet unit is sanctioned by the Texas-independent, the offshore oil and gas accumulation will probably be produced from onshore, company President Ken Sheffield told Petroleum News.

“Based on current information and the status of the evaluation today, it is likely that the field would be produced from onshore if ultimately sanctioned,” Sheffield said Feb. 21.

A joint state-federal unit offshore the lower Kenai Peninsula, Cosmopolitan was formed in 2001 and contains about 25,000 acres. It has a resource potential of 30 million to 100 million barrels of oil, Sheffield said in a speech last fall.

A sidetrack to a sidetrack at Hansen

Pioneer applied to renew its oil discharge prevention and contingency plan in January. The Alaska Department of Environmental Conservation declared the plan application sufficient for review and posted a public notice on Feb. 21 that said Pioneer proposed “to conduct a regional, multi-year onshore oil and gas exploration drilling program.”

The actual spill plan addressed the current project in addendum A under project overview, saying the company planned to drill “two sidetracks” — 1A and L1 — a drilling program that would run from July 2007 to July 2008. Since Hansen No. 1A was drilled in 2003 as a sidetrack to the 2001-02 Hansen Well No. 1, Petroleum News’ assumption is that there was a typo in the spill plan and that Sheffield’s statement was correct when he said Pioneer plans just one sidetrack at this time — supposedly No. L1, a sidetrack to Hansen No. 1’s sidetrack 1A.

Petroleum News sources say Pioneer is looking at drilling as many as 21 wells over a period of 3-5 years at Cosmopolitan, if the project proves commercially viable and is sanctioned by its working interest owners, which include Pioneer (50 percent), ConocoPhillips (20 percent), Devon Energy (17.5 percent) and Forest Oil (12.5 percent).

No. 1A went out almost four miles

The first two Hansen wells were drilled by ConocoPhillips, which was the Cosmopolitan unit operator until 2006 when it sold 40 percent of its 60 percent interest to Pioneer.

Both the original well and the first sidetrack were drilled from an onshore pad in section 2, township 4 south, range 15 west, Seward Meridian, to bottomhole locations out under Cook Inlet in section 32-T3S-R15W, SM, west-northwest of the onshore pad. The drilling pad was on a bluff on private land overlooking the inlet, approximately six miles north of Anchor Point and one-half mile west of the Sterling Highway. Cosmopolitan is about two miles offshore.

The same drilling pad will be used by Pioneer to drill the second sidetrack this summer, but the bottomhole location has not yet been released by the company, nor has a drilling rig selection been announced.

What is known is that the sidetrack will be drilled in much the same way as the first, using extended reach drilling technology, and that related activities, such as preparing the gravel pad and setting up the camp and rig, will begin in April or May. Production testing, Pioneer said, is expected “to occur over a period of several months,” which was what was done at the first sidetrack.

During the testing of that first sidetrack ConocoPhillips trucked produced oil to the Kenai Peninsula’s Tesoro refinery, a Forest executive said at the time.

DEC said Pioneer’s spill plan proposes to address prevention and response measures for a response-planning standard of 1,500 barrels per day for 15 days to a total of 22,500 barrels at the drilling site.

First production 2010

In a fall 2006 speech, Sheffield said that Pioneer would evaluate the results from that new well and, if the results met certain criteria, the company would define a development strategy and make a development decision.

“We’re pushing this project forward,” he said. “We’re envisioning that if all goes well we could see first production in approximately 2010.”

The 2010 startup date is contingent on further appraisal of the prospect, he said, noting that a development at Cosmopolitan would entail a large project.

“If all this were to come together … it would require some pretty significant infrastructure. … We’re about 65 miles from the existing Tesoro refinery.”

Petroleum News sources say transportation facilities for Cosmopolitan would likely include an oil pipeline to Nikiski and a natural gas pipeline tie-in to the Kenai-Kachemak Pipeline at Happy Valley.

Challenges ahead

Petroleum News sources say producing Cosmopolitan from onshore will be challenging.

The Hansen No. 1 “well went down about a mile and a half and then out underneath the inlet about three miles” and was a “world-class accomplishment,” Rick Mott, ConocoPhillips Alaska’s vice president of exploration and land in April 2003 told an Anchorage audience when the Hansen No. 1A sidetrack was being drilled. State records show it at 18,630 feet total depth and 7,418 feet true vertical depth.

Mott said the sidetrack was being drilled with “the largest and most powerful drilling rig in Alaska” (Nabors Rig 273) and would go even farther out underneath the inlet (almost four miles). The sidetrack was finished a month later at a total depth of 20,789 feet. Its true vertical depth was 7,102 feet.

Former Alaska Division of Oil and Gas Director Ken Boyd told Petroleum News Feb. 21 that he recalled a discussion years ago about using a jack-up rig vs. onshore drilling at Cosmopolitan.

“I think the answer is it is simpler to drill the reservoir from a jack-up but not absolutely necessary. The problem, of course, it that a more substantial rig is needed to drill offset — long reach — wells from onshore. A jack-up might be required to reach the extreme western part of the structure,” but that might not be a big deal with advances in technology, Boyd said.

“I will guess that the majority of the prospect can be reached from onshore, albeit with some difficulty and added expense,” he said.

One of the problems Pioneer faces “is the nature of the rocks. Cook Inlet, unlike the North Slope, is full of gummy coal that wreaks havoc with directional wells,” Boyd said.

“Phillips, when it was just Phillips, had real problems drilling directional wells in the Sunfish prospect. Coal was the problem, or one of the problems,” he said referring to the abundance of coals under the inlet that have been known to collapse in around drill pipe causing it to get stuck and necessitating the drilling of a sidetrack.

“I don’t think you have to use a jack-up but it would be desirable. Of course the downside is that there is no jack-up” in Cook Inlet right now, Boyd said.

In the third unit plan of exploration approved by Alaska’s Division of Oil and Gas last fall and an extended suspension of operations granted by the U.S. Minerals Management Service, Pioneer was required to drill a new well or a sidetrack well to a minimum true vertical depth of 6,000 feet, with drilling to commence by Nov. 14, 2007. The well was to penetrate the Lower Tyonek sand-prone interval found in the Starichkof State No. 1 well.

Geological information on record

The known oil accumulation at Cosmopolitan was discovered by Pennzoil in 1967 in the 12,112-foot vertical, Starichkof State No. 1, drilled from a jack-up rig. The company recovered 30 barrels of 20 degree API gravity oil from a drill stem test at about 6,900 feet and 21 barrels from a drill stem test at about 6,800 feet.

Pennzoil reported encountering the top of the Hemlock formation at 6,745 feet. A second well, also drilled in 1967, found some gas at 4,000 feet but water in the Hemlock formation at 7,355 feet some two miles from the first well.

While drilling results were enough to hold the lease, Pennzoil’s discovery was never developed and the original unit lapsed.

In 2001, prior to drilling Hansen No. 1, Phillips said it had done some chemical analysis of the Starichkof oil and believed that new drilling would show actual gravity was significantly higher.

The Cosmopolitan operators have been relatively close mouthed about Hansen drilling results, but last fall Sheffield said the Hansen No. 1A entered the Hemlock and tested at approximately 500 barrels per day.

In mid-2005 Tim Dove, Pioneer’s president and chief operating officer at the time, said the Hansen well and sidetrack “tested at a stabilized rate of 600 to 800 barrels a day over different intervals that lasted for three to four months.”

Robert Boswell, former president and CEO of Forest, told an investment symposium in April 2002 that the Hansen No. 1 tested oil in the Hemlock and in the Tyonek formations.

Forest later said the Hansen No. 1A was completed with a horizontal section through the Starichkof and Hemlock intervals.

At the North American Prospects Exposition held Feb. 5-6, 2004, in Houston, Texas, ConocoPhillips was shopping for partners to share some of the cost of exploring Cosmopolitan, including shooting 3-D seismic over the prospect, which was eventually done in 2005.

In literature it handed out at NAPE, ConocoPhillips described the original oil in place at Cosmopolitan as “significant in the combined section of the Lower Tyonek and Hemlock sandstones. These units have been tested and are shown to flow 25 degree API gravity oil at rates greater than 500 BOPD.” The company also said that there was upside potential “for increased well production rates with better reservoir understanding,” as well as shallow gas and oil potential in thin sandstones in the Upper Tyonek formation.

The oil play, ConocoPhillips said, is in fluvial sandstones in the Oligocene Hemlock and Miocene Tyonek formations of the Lower Cook Inlet basin. An axial fluvial braid plain is the depositional environment for these sections. Net pay of more than 100 feet in the Hemlock sandstone, the primary target and more than 130 feet in the secondary target, the Miocene Tyonek are within the general reservoir parameters.

ConocoPhillips described the play as a four-way dip closure.

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