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Vol. 12, No. 3 Week of January 21, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

KUPARUK ANNIVERSARY: Tarn: Satellite development begins

1997 begins with announcement of discovery west of Kuparuk; testing yields in excess of 2,000 bpd

Kristen Nelson

Petroleum News

ARCO Alaska said March 10, 1997, that oil had been found in two delineation wells and a sidetrack in the Tarn prospect west of Kuparuk.

Testing of the Tarn 2 yielded a steady, stimulated flow rate in excess of 2,000 bpd of 38 degree API gravity oil from a sandstone reservoir discovered at a depth of 5,200 feet. Tarn 2 is the first well drilled in this year’s three-well Tarn exploration program.

ARCO and BP also announced the signing of an alignment agreement that will quicken the pace of oil exploration in and around Kuparuk. The agreement provides for joint exploration and appraisal of a 580-square-mile area that includes the ARCO-operated Kuparuk River unit and adjacent acreage. The agreement also allows production of satellite oil accumulations through existing Kuparuk facilities and clears the way for West Sak development.

“This agreement will allow us to unlock the full potential of the Greater Kuparuk Area,” said Ken Thompson, president of ARCO Alaska. “It encourages exploration, facilitates development and maximizes use of existing facilities. When we have exploration success it will allow us to move new production quickly to market.”

“The agreement establishes a new, more cooperative way of doing business on the North Slope,” said Richard Campbell, president of BP Exploration (Alaska). “It will accelerate resource development, provide opportunities for Alaskans and enhance state revenues.”

ARCO said joint exploration drilling during 1997 may include two prospects in addition to Tarn — Cache and Tabasco. Cache will test three prospective horizons below the Kuparuk reservoir. A well drilled and tested in 1995 indicated the shallow Tabasco prospect could be commercial. A planned 1997 well will test a separate Tabasco accumulation identified with 3-D seismic survey data.

The 1997 joint exploration program also includes a major 3-D seismic survey designed to better delineate known prospects and to identify new ones.

ARCO said that to date the Greater Kuparuk Area joint exploration team has identified more than 10 satellite prospects—including the West Sak heavy oil accumulation—which together could yield potential reserves of almost 1 billion barrels.

The agreement aligns all ARCO and BP ownership of tracts within the Greater Kuparuk Area at 58.5 percent for ARCO and 41.5 percent for BP; ownership of existing Kuparuk production is not changed by the agreement.

Tarn development announced

On April 30, 1997, ARCO and BP announced plans to develop the previously announced Tarn oil discovery; Tarn is adjacent to the southwest corner of the Kuparuk River unit.

Pending issuance of local, state and federal permits, field construction and development will begin in early 1998 with initial production of 10,000 to 15,000 bpd in late 1998 or early 1999.

Evaluation of a 3-D seismic survey and date from a three-well, one-sidetrack delineation drilling program completed earlier in April indicates that the northern area of Tarn contains estimated proven and potential reserves of 50 million barrels.

Field development is estimated to cost about $120 million.

ARCO Alaska, as operator, has started engineering for a one or two drill site development that could include up to 50 wells, along with a nine-mile pipeline to move Tarn production to existing processing facilities in the Kuparuk field.

Construction of drill sites, pipeline and necessary power lines will begin in early 1998 with development drilling during the summer of 1998.

Kuparuk wins ARCO Environmental Achievement Award

Kuparuk’s aggressive pollution prevention program was recognized in 1997 with the ARCO Environmental Achievement Award. The program is also low cost, saving thousands of dollars each year, said Kuparuk environmental coordinators Barb VanderWende and Lisa Pekich in the Alaska Spark in August 1997.

Pollution prevention is the focus of the Kuparuk waste management strategy, they said. “If no waste is generated, nothing needs to be collected, transported or managed.”

The key to the program’s success is inclusion in core business processes, with management support and departments including pollution prevention in their work processes.

The nearest landfill is some 50 miles away and charges $1,300 per 27-cubic-yard dumpster.

And hazardous waste has to be transported more than 2,000 miles for handling.

Waste reduction at Kuparuk ranges from reconditioning and reuse of laser printer toner cartridges to reduced pad site to reclaiming and reuse of brine in drilling.

West Sak, Tarn production begins

1997 and 1998 saw production start at both West Sak and Tarn.

The West Sak oil field began commercial production from the field’s first producing well Dec. 26, 1997.

Production from the well, 200 bpd, is being slowly increased and is expected to reach the project’s production target of 300 bpd.

Fifty West Sak wells, both production and injection wells, are scheduled for completion by early 1999. Work on the field began in October 1997. Nine wells have been drilled and cased and will soon be in operation.

“This effort will develop 51 million barrels of new reserves and add near-term production of 4,000 b/d gross in 1998, increasing to 7,000 b/d day gross in early 1999,” said ARCO Alaska President Ken Thompson.

ARCO Alaska and BP said Aug. 24, 1998, that commercial production has started from the Tarn oil field nine miles southwest of Kuparuk.

Tarn is producing 18,000 barrels of 38-degree API gravity oil per day from five wells and will reach production rates of approximately 25,000 bpd from 20 wells, 12 producers and eight injectors, by year-end 1998.

The field is expected to reach peak production of more than 30,000 bpd by late 1999, ranking it in the top 30 producing domestic oil fields.

Tarn is a 50 million barrel oil accumulation and the second satellite accumulation to begin production in the Kuparuk River unit since December 1997. ARCO, BP and the other co-owners previously announced the startup of the West Sak oil field.

“For the industry and the state these new satellite fields will mean new reserves, new production and new state revenue,” said Kevin Meyers, president of ARCO Alaska. “For ARCO, Tarn is one more step toward achieving our Alaska production goal of ‘No Decline After ’99.’”

“Satellite developments like Tarn play an important role in BP’s plans to grow our Alaskan production over the next few years and sustain it at more than half-a-million barrels a day into the future,” said Richard Campbell, president of BP Exploration (Alaska). “They’re also an important new source of jobs and business opportunities for Alaskans.”

Full development of the Tarn oil field will include 40 wells from two drill sites. The field was first deemed a commercial discovery in March 1997. Field development is estimated to cost about $150 million.

“These new oil fields have been brought quickly on production because the Kuparuk Alignment Agreement allows production from satellite accumulations like West Sak and Tarn to be processed through existing Kuparuk facilities,” said Kuparuk Senior Vice President Frank Brown.

1998: Tabasco production to be increased

ARCO Alaska, BP Exploration (Alaska), Unocal, Chevron USA, and Mobil Exploration and Producing said Aug. 27, 1998, that they have applied for state permission to begin commercial production from the Tabasco oil field, a shallow, viscous oil accumulation that overlies the Kuparuk reservoir on Alaska’s North Slope.

Test production from a single Tabasco well began May 13 and the well is producing more than 2,500 bpd of 16.5 degree API gravity oil. Following approval of commercial production by the state, plans call for drilling up to 20 production and injection wells over the next few years with production increasing to more than 10,000 bpd in 1999.

The new field has estimated reserves of as much as 30 million barrels of oil.

“This field could be larger,” said ARCO Alaska President Kevin Meyers. “A 3-D seismic survey indicates the Tabasco formation extends beyond the area we are now developing. We are planning a delineation drilling program to determine the full extent of the reservoir.”

Tabasco was discovered in 1986 during development of the underlying Kuparuk field. Tabasco is the second viscous oil development in the Kuparuk area, following startup of the West Sak oil field in December 1997. It is the third Kuparuk satellite oil field to begin production in the last year. Like the Tarn field which began production in late July, Tabasco will be produced using existing Kuparuk infrastructure.

“Development of these viscous oil reservoirs is possible because of new, low-cost drilling and completion technologies and because we’re able to make extensive use of existing Kuparuk drill sites and processing facilities,” Meyers said.

BP Exploration President Richard Campbell said, “Tabasco is one of a number of satellite accumulations in and around existing fields which will help to grow and sustain North Slope production into the foreseeable future.”

1999: cost restraint; BP buys ARCO

ARCO Chairman and CEO Mike Bowlin told the Alaska Support Industry Alliance’s annual conference in January 1999 that the company remains committed to key projects on Alaska’s North Slope despite the downturn in oil prices and a reduction in the company’s capital budget.

“Only the most competitive projects in ARCO’s global portfolio survived the cut for 1999,” Bowlin said. These projects include Alpine, the Prudhoe Bay miscible injectant expansion or MIX project, and the Point McIntyre enhanced oil recovery project.

Bowlin said ARCO Alaska was not hit as hard by cost reductions as other ARCO units because it was already a low-cost leader. He commended ARCO Alaska, its co-owners, contractors and the state government for efforts that have significantly reduced ARCO’s per-barrel operating and overhead costs since 1994.

ARCO had announced a $500 million two-year cost reduction plan in October 1998, the first major oil company to do so, Bowlin said. ARCO said it would eliminate 1,200 jobs, mostly administrative and technical in Los Angeles and Plano, Texas, close some 20 small offices around the world and downsize others.

Bowlin said there would be $330 million in upstream reductions over two years, with exploration spending reduced by $150 million, mostly international, and production costs and overhead to be cut by about $110 million.

On April 1, 1999, BP announced plans to acquire ARCO.

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Thoughts from Alzheimer, Jepsen, Werner

• Dave Alzheimer, who has been an engineer at Kuparuk since 1985, noted two big changes: “The first is a substantial increase in the total number of people who work there. The second has been a steady growth in the application of better technologies to operate a declining field as effectively as possible.”

Alzheimer said he is most proud of the progress in automation.

“In 1985,” the said, “the board operators used pneumatic controllers to control each facility. Today we have a large installation of distributed and programmable logic based control systems to help operate the facilities and drill sites. This transition required a motivated work force willing to accept change and to contribute many good ideas to optimize operation of the facilities.”

• Scott Jepsen, ConocoPhillips Cook Inlet manager, worked at Kuparuk from 1982-1990 and from 1997-2000.

Jepsen said the Kuparuk alignment agreements “allowed the unit to start development of the satellites,” including the development of Tarn in 16 months. “It was on budget as well.”

• “What I find probably the most rewarding thing that I’ve … had in my career here was my long-term involvement with West Sak, and certainly the project itself and the people I’ve been involved with — the progress that’s been made with that project,” said Mike Werner, greater Kuparuk geoscience, in the 2001 20th anniversary video.

“It’s very rewarding after working with it on and off for about 17 years to actually see startup in 1997 of commercial production from West Sak.”

The biggest change he’s seen is in how wells are drilled, how data is collected and handled. Werner said he thinks West Sak demonstrates the impact of technology changes, especially in horizontal well technologies. “It’s totally different from the … work processes we had when I first started (and) it continues to change.”