As it adjusts to new ownership, Savant Alaska LLC is undertaking a review of development and exploration opportunities at the Badami unit on the eastern North Slope.
But as has been the case for both the company and the field in recent years, economic conditions could also delay any attempt to pursue those opportunities in the near future.
With low oil prices and the ongoing bankruptcy proceedings of parent company Miller Energy Resources Ltd., Savant was “unable to justify the expense” of hydraulic fracture stimulations on two existing wells and drilling two new wells at the unit over the past year, the company told state officials in a recent plan of development. Those projects had originally been scheduled for late 2014 or early 2015, but were postponed to this past year because the company had been unable to secure equipment and barge it to Badami in time to complete the activities before the end of the open water season in the Arctic.
Savant now plans to pursue those projects “as economic conditions warrant.” The company is currently undergoing internal evaluations to determine what opportunities exist and plans to review those plans with state officials by the end of September.
Earlier this year, Miller Energy emerged from bankruptcy as Glacier Oil & Gas Corp. and is currently evaluating its operations and prospects on the North Slope and in Cook Inlet.
As part of those efforts, Savant recently began a geologic and geophysical review of the “Badami and Killian sands and associated producing wells,” as well as “historical wells and field structure.” The company is also reviewing potential targets outside the Badami Sands participating area, including the Killian Sands on the eastern end of the unit.
Exploration stalled
With oil prices currently jeopardizing development activities that promise to improve production rates, any exploration activity is probably unlikely in the near future. But even if oil prices suddenly rise, exploration at the unit is hampered by an ongoing administrative dispute between the company and the Department of Natural Resources.
In preparation for exploration work, Savant asked the state in late 2012 to expand the unit to include seven exploration leases to the east. The state Division of Oil and Gas only agreed to include two of those leases into the unit. The company appealed the matter to the Department of Natural Resources, where it has remained for more than three years.
A few months after appealing, Savant asked the state to suspend work commitments while the matter progressed. A previous plan of exploration required Savant to drill an exploration well through the Canning formation and into the Hue Shale to evaluate the potential of the Killian interval as previously encountered in the East Mikkelsen Bay No. 1 well. According to the Division of Oil and Gas, the appeal “cannot stay the work commitment.” According to Savant, the lack of resolution for the appeal and the request for a stay “makes planning difficult for further delineating and developing the field.”
Some improvements
Even with those economic and administrative obstacles prevent development and exploration, Savant managed to improve operations at Badami over the past year.
A “minor workover” of the B1-11A and B1-36 wells identified 321 feet of additional zones in need of perforation, which the company performed in November 2015. The work increased production by 369 barrels per day, according to the company.
Although small by North Slope standards, the increase is considerable for the unit.
Badami averaged 992 bpd in October 2015, 879 bpd in November 2015 and 1,206 bpd in December 2015, according to the Alaska Oil and Gas Conservation Commission.
In a potential cost-saving measure, Savant is negotiating with ExxonMobil to partner on small pigging operations on the Badami and Point Thomson pipelines this summer.
ExxonMobil recently brought the neighboring Point Thomson unit online. All production from the eastern unit passes through Badami Oil Sales Pipeline on its way to market, making the two companies natural partners for any pipeline maintenance activities.
Earlier this year, the Department of Natural Resources asked Savant to include a section in the plan of development to discuss marketing and facility access. The state has been making a similar request to all operators, which has created some consternation for producers with stranded natural gas resources. Savant told the state that it is “always interested in entertaining offers to use its spare production capacity at all of its facilities, and is willing to enter into facility sharing agreements as reasonable and appropriate.”
