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Vol. 19, No. 24 Week of June 15, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

Cosmo plans advancing

BlueCrest outlines two-pronged approach to offshore oil and gas field

Eric Lidji

For Petroleum News

BlueCrest Energy Inc. is planning a two-pronged development for Cosmopolitan.

As currently envisioned, the Fort Worth, Texas-based independent intends to install two offshore platforms to support natural gas production from the Cook Inlet prospect and use existing onshore facilities to support oil production through extended reach drilling.

BlueCrest said it is currently in negotiations with two rig companies for the oil development. But sanctioning the gas development depends upon “a suitable market for gas in the Cook Inlet basin, additional information gained from drilling the first offshore delineation wells, and receipt of all required governmental approvals from the offshore program,” the company said in filings with the Alaska Department of Natural Resources.

Either way, the program is scheduled to begin this summer with the first of three offshore wells to delineate previously made discoveries at the field off the coast of Anchor Point.

The wells would all be vertical or deviated penetrations into the deeper oil-bearing zones at the field. After collecting reservoir information, BlueCrest would plug the wells back to shallower gas-bearing zones to support future gas production. BlueCrest is aiming to drill the first of the three delineation wells this summer. The proposed Cosmopolitan State No. B-1 well would be a directional well into the Hemlock formation to “extend the current knowledge of the various producing stratigraphic intervals and to provide guidance for drilling of more wells to the south,” according to the company.

Under its deal to buy the remaining interest in Cosmopolitan from former partner Buccaneer Energy Ltd., BlueCrest has agreed to drill these wells using the Endeavour jack-up drilling rig. The deal allows BlueCrest to use the rig for as many as five months each year, with a commitment to pay for at least 150 days on the rig over the next three years, so long as the rig meets regulatory and technical specifications for the proposed work. The deal also gives BlueCrest first right of refusal on the rig through April 1, 2019.

Oil development next year

The oil development could begin as soon as next year.

BlueCrest said ongoing negotiations with rig contractors are aimed at mobilizing drilling equipment to the onshore site by late this year or early next year. The goal is to find a rig that can support a “multi-year” program lasting “at least five years,” with the expectation of “multiple changes in plan as new information is gleaned from each new well and as available applicable technology and local market conditions evolve over time.”

When Buccaneer and BlueCrest acquired the Cosmopolitan prospect from former operator Pioneer Natural Resources Alaska Inc. in early 2011, they only picked up two leases held by wells - ADL 18790 and ADL 384403. Pioneer had previously relinquished three other leases at the prospect not held by wells. The state subsequently made these three leases - ADL 391902, ADL 391903 and ADL 391904 - available under special terms, given the known value of the acreage. Apache Corp. acquired the leases in a June 2011 lease sale and identified a preliminary drilling target, but postponed further plans because of permitting delays related to its basin-wide 3-D seismic program.

In August 2013, Apache assigned the leases to Buccaneer, which in turn assigned them to BlueCrest, giving BlueCrest complete working interest over all five leases at the field.

The current BlueCrest program imagines “an orderly delineation of these leases through continuous step-out drilling within the entire project area.” The onshore program “will progress continuously” with “rapid progression along the drill pad from well-to-well.”

The program calls for drilling extended-reach wells from an onshore pad located some 2.5 miles from the offshore reservoir. Each well would allow for at least one lateral into the oil-bearing zones, but BlueCrest said it might eventually use multi-lateral wells, too.

The first well in the program, Hansen No. 2, would be “an undulating lateral penetration” of an interval in the Hemlock beneath the existing Hansen No. 1AL1 well, which is a lateral that Pioneer drilled in 2005 off a previous ConocoPhillips sidetrack. The Hansen No. 1A sidetrack into the Hemlock has been temporarily plugged and is not capable of production, according to BlueCrest. The current plan is to permanently abandon the well.

The “next three or four” wells would reach north of Hansen No. 2. The proposed bottom-hole locations for these extended-reach wells remain confidential for the time being.

The onshore development will also likely include a waterflood program into “at least” the Hemlock and Starichkof reservoirs, according to BlueCrest. While the company is still studying where to locate the injection wells and whether it makes more sense to isolate these wells within specific zones or use the wells across multiple zones, it is designing its onshore facilities to accommodate water production and injection. The first injection well would likely be drilled after “at least” three new oil development wells have been drilled.

BlueCrest is also studying an offshore gas development at Cosmopolitan.

While the program depends on the results of the delineation program scheduled to begin this summer, BlueCrest said “considerable design work” has already been done on two small monopods. The proposed “A” platform would sit atop the Cosmopolitan State No. 1 well Buccaneer and BlueCrest drilled in early 2013. The proposed “B” platform would sit atop the proposed Cosmopolitan State No. B-1 well scheduled for this summer.

Each platform would accommodate as many as six gas production wells, which would connect back to the onshore facilities through a single pipeline serving both platforms.

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