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Vol. 22, No. 18 Week of April 30, 2017
Providing coverage of Alaska and northern Canada's oil and gas industry

IPA production up

BP posts gains at Prudhoe Initial Participating Areas despite drilling declines

Eric Lidji

For Petroleum News

BP Exploration (Alaska) Inc. is expecting another year of stable production at the Initial Participating Areas of the Prudhoe Bay unit, despite another planned drop in drilling.

The operator of the most productive unit in Alaska performed a surprising feat in 2016, increasing oil production from the Initial Participating Areas while decreasing drilling.

In a plan of development submitted in late March, BP reported a slight uptick in crude oil and condensate production from the initial participating areas in 2016 despite a 38 percent drop in drilling and a nearly 19 percent drop in rate-adding well work projects.

BP is once again expecting a decline in rig work at the Initial Participating Areas this year. The company expects to log 1.3 rig years in 2017, down from 1.8 rig years in 2015.

Even so, in its production forecast for the Initial Participating Areas, BP is projecting a slightly higher range of potential production rates than it offered for its 2016 forecast.

If the current forecast proves correct, oil production in 2017 would remain roughly even with oil production in 2015, despite two years of reduced drilling and workover activities.

The Initial Participating Areas, or IPA, is the largest of the three administrative regions at Prudhoe Bay and the first to report its plans each year. BP usually files a plan for the Greater Point McIntyre Area in June and a plan for the Western Satellites in September.

Smaller cuts

The cuts planned for this year are smaller than those expected for last year.

In its 2016 plan of development for the Initial Participating Areas, BP expected a decrease from 3.8 rig years in 2015 to 1.6 rig years in 2016. The company eventually performed 1.8 rig years of activity in 2016, and is planning 1.3 rig years for 2017.

BP initially proposed a 31-well development program for the Initial Participating Areas in 2016, down from a 60 wells in 2015. The company actually drilled 37 wells in 2016.

Well work was also down, with the company performing approximately 1,000 jobs, including 336 that added production, at the Initial Participating Areas in 2016. The company performed approximately 1,800 jobs in 2015, of which 413 were rate adding.

Even so, BP produced 197,900 barrels of crude oil and condensate per day from the Initial Participating Areas in 2016, up from 196,400 barrels per day in 2015. All told, the company sent 72.43 million barrels of oil from the Initial Participating Areas to the trans-Alaska oil pipeline in 2016, up from 71.7 million barrels in 2015. And the company also produced 38,000 barrels of natural gas liquids per day from the Initial Participating Areas in 2016, or 13.9 million total barrels delivered to the pipeline - equal to rates from 2015.

In fact, the oil production from the Initial Participating Areas, combined with oil production from Prudhoe Bay satellites, “fully utilized available (Prudhoe Bay unit) processing capacity within reservoir management constraints,” according to the company.

In its 2017 plan of development, the company attributed the increase in oil production in 2016 to “the lack of any production impacting facility TARs (turnarounds), strong wellwork and drilling performance, and increased emphasis on mitigating and minimizing deferrals.”

The Initial Participating Areas also produced 6.883 million cubic feet of natural gas per day in 2016, down from 6.902 million cubic feet per day in 2015. Slightly more than 90 percent of the gas production was returned into the reservoir through injections, while nearly 6 percent was used for fuel and nearly 3 percent was used for miscible injectant.

The remaining 1 percent included sales, exports to other fields and limited flaring.

2017 plans

The proposed 2017 development program would be a 13.5 decrease in drilling.

BP expects to drill four to seven rotary sidetracks and 20 to 24 coiled tubing drilling sidetracks at the Initial Participating Areas in 2017, down from seven rotary sidetracks and 28 coiled tubing sidetracks in 2016. The company also expects to drill one new well at the Initial Participating Areas in 2017, down from two new wells in 2016. The company expects its rigged workover program to remain flat, at two to four projects.

While the company blames the decline in rig activity on both oil prices and on the changing nature of the maturing field, the lack of growth in rig workover activity also reflects increasing success from non-rig workover activity, according to the company.

Even though the 2016 development program represented such a large decline from 2015 activities, BP still managed to spread its drilling work more or less evenly across the entire aerial expanse of Initial Participating Areas. The proposed 2017 program is much more geographically focused. It includes three sidetracks at F pad, a cluster of four sidetracks at 3 pad, 9 pad and 17 pad and a sidetrack at J pad, plus a few scattered wells.

Even with the projected decline in rig activity, BP is forecasting oil production between 158,000 and 198,000 barrels per day and natural gas liquids production between 30,000 and 41,000 barrels per day for the coming year. By comparison, in a revised forecast for 2016 activity, the company projected oil production between 157,000 and 196,000 barrels per day and natural gas liquids production between 36,000 and 45,000 barrels per day.



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