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Vol 21, No. 18 Week of May 01, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

A major CD5 expansion

ConocoPhillips to increase the NPR-A development from 15 to 33 wells

ALAN BAILEY

Petroleum News

ConocoPhillips is going to expand its CD5 development in the northeast corner of the National Petroleum Reserve-Alaska from 15 wells to 33 wells, Nick Olds, ConocoPhillips vice president of North Slope operations and development, announced during a Resource Development Council meeting on April 21. Olds said that the company has approved funding for a $190 million expansion project.

“We’ve got internal approval and co-owner approval to fund an additional 18 wells and the (associated) infrastructure on the pad,” Olds said. “Based on the well results that we’re seeing from the first 10 wells we’re going to full design capacity of 33 wells and we’re moving ahead.”

The development will not require any expansion to the existing gravel pad at CD5 but will require the installation of some additional the pipe racks. The pipe racks will be fabricated in Alaska this year for installation during the ice-road season next winter. First oil from the expanded development is expected in the third quarter of 2017, Olds said.

A true milestone

CD5, described by Olds as a true milestone for ConocoPhillips, has involved an initially sanctioned development involving the drilling of 15 wells, some of which are production wells and some of which are injectors. Currently 10 wells are in operation and drilling of the 11th well is underway, Olds said. So, the newly approved expansion will more than double the scale of the operation at the first commercial drill site in the NPR-A.

ConocoPhillips is using horizontal drilling and hydraulic fracturing at CD5 and has seen encouraging results. Olds commented that, although the drilling and fracking techniques are modeled on those used in shale oil plays in the Lower 48, the oil reservoir at CD5 is conventional, with the fracking used to stimulate oil production and to connect different distinct sand bodies within the reservoir formation. The $1.1 million initial development at CD5 is on target to achieve its projected annual average oil production rate of 16,000 barrels per day, Olds said.

Scott Jepsen, ConocoPhillips vice president external affairs, told Petroleum News that the expanded CD5 development is moving ahead, despite the current low price of oil, because ConocoPhillips had allocated capital to new development, including the CD5 development, in Alaska.

Olds said that the fact that CD5 had come in ahead of schedule and below budget had supported the argument that ConocoPhillips should invest more capital in its NPR-A program.

Sequential development

Olds characterized the CD5 development as part of a “level-loaded sequential development strategy” in NPR-A. In following this strategy, ConocoPhillips is stepping out west from the Alpine oil field in the Colville River unit, developing and bringing on line one drill site at a time, and hooking each drill site back to the Alpine central processing facility. Having put CD5 into operation in October 2015, in November ConocoPhillips sanctioned the Greater Mooses Tooth 1 development, a drill site the same size as CD5 and about eight miles to the south-west. That will be followed by Greater Mooses Tooth 2, eight miles further southwest.

GMT-2, which is currently being permitted and going through phase two front end engineering, will have a slightly larger gravel pad than the other two sites and will likely cost somewhere in excess of $1 billion to develop. And then there is the potential for further development in ConocoPhillips’ Bear Tooth unit, to the northwest of GMT-1 and GMT-2

Both GMT-1 and GMT-2 have the potential for the drilling of 33 wells, with the development of each site involving peak employment of about 700 job positions. GMT-1 is slated to come on line in late 2018, while GMT-2, if approved, should see first production in late 2020.

“The key thing here is we’re leveraging the existing infrastructure, the processing capability, the camps, the power, the communications package, Alpine central facilities, so we can keep a very small footprint for CD5 and projects like GMT-1 and GMT-2,” Olds said.

And in this sequential development process, the learnings from one drill site can be applied to later developed sites; permitting of different sites can be conducted in sequence; and the developments, by being carried out at different times, have less impact than otherwise on local resources and on local communities.

Olds said that the total combined area of the CD5, GMT-1 and GMT-2 sites amounted to just 185 acres, an area that constitutes 0.0008 percent of the 22.8 million total acreage of NPR-A.

Alpine discovered 1994

The Alpine field, which formed the starting point for the chain of developments extending into NPR-A, was discovered in 1994 and went on line in late 2000, with production from two initial drill sites, CD-1 and CD-2, in the Colville Delta unit. The development of the CD-3 and CD-4 drill sites followed in 2006.

NPR-A oil and gas leasing that started in 1999 led to a significant drilling program, to the west of those Alpine sites, for ConocoPhillips and its partners.

“We’ve had a very active program within the NPR-A coming out of those lease rounds,” Olds said. “We’ve drilled 30 exploration wells, and 28 of those have been operated by ConocoPhillips.”

Two of the wells, the Lookout 1 and Rendezvous 2 wells, drilled in 2001, proved to be the discovery wells for GMT-1 and GMT-2. This year ConocoPhillips has drilled three exploration wells in NPR-A, Olds said.

While the earlier Colville Delta developments were on state of Alaska land, CD5, which is also in the Colville River unit, is within the boundary of the NPR-A. Kuukpik Corp., the Native corporation for the nearby village of Nuiqsut, owns the surface land at CD5, with Arctic Slope Regional Corp. being a primary subsurface land owner for ConocoPhillips’ NPR-A developments.

Community collaboration

Olds particularly emphasized the importance of the strong collaboration with the North Slope communities, in particular Nuiqsut and ASRC, in the company’s NPR-A initiatives. Without that collaborative environment, ConocoPhillips would not be able to conduct all of its activities in the area. For example, the siting of a major bridge across the Nigliq channel of the Colville River involved working for several years with the elders and the community, to ensure that the bridge location would have a minimal impact on subsistence hunting and gathering.

“So that’s the type of collaboration that we really need, to make sure that we go ahead with these developments and have the least impact to their environment, as well as to the traditional way of life,” Olds said.



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