Brooks Range Petroleum Corp. has been working for nearly seven years to bring the Southern Miluveach unit into development in the face of various setbacks, and this past year once again brought a mixture of advancement, delays and creative maneuvering.
The local operating arm of a multiparty joint venture started 2018 with a plan in place to cross the finish line into development within a year, only to revise its deadline in two directions: delaying the installation of permanent facilities while simultaneously advancing a plan to bring the unit online early next year through temporary facilities.
In its sixth plan of development, submitted in early October 2018, the company said it expects to finish installing its temporary production facility at the onshore North Slope field by the second quarter of 2019, allowing oil production to begin from existing wells while the company continues its efforts to install permanent infrastructure at the site.
The Mustang field is the first development at Southern Miluveach, which sits in the increasingly crowded fairway between the Kuparuk River unit and the Colville River unit. BRPC discovered the field in 2012 but a series of technical, economic and logistical complications led to years of delays, requiring alternative approaches to development.
To avoid losing the unit and its leases to expiration, BRPC successfully applied for certification of an existing well and proposed a plan to start production in the short term by connecting a 6,000-barrel-per-day Early Production Facility to the Alpine Pipeline.
The temporary system would produce from three existing wells: North Tarn No. 1A, Mustang No. 1 and SMU M-02. Some work is required on two of those wells before they can begin producing. BRPC said it needs to drill either a lateral extension or a sidetrack at Mustang No. 1, and it needs to perforate and stimulate SMU M-02 before start-up.
During the initial field commissioning, BRPC expects to pre-produce from the SMU M-02 well in order to better understand the Kuparuk A sands. The company mentioned plans to flare any excess gas during this period - a proposal the state recently rejected.
BRPC also plans to drill as many as four new wells at the Southern Miluveach unit during the coming year, as part of its initial development campaign for the Mustang field.
Its longer-term plans for the unit include installation of a 15,000-barrel-per-day central processing facility, completion of drill site facilities, construction of two pipelines and implementation of a 21-well development program with 10 producers and 11 injectors.
The Division of Oil and Gas had yet to approve the plan as The Producers went to print.
Brooks Range Petroleum operates the Southern Miluveach unit on behalf of working interest owners CaraCol Petroleum LLC, TP North Slope Development LLC, Nabors Drilling Technologies USA Inc., AVCG, LLC, Mustang Road LLC and MOC1 LLC.
EPFIn its fifth plan of development for the unit, submitted shortly before the previous issue of The Producers went to print, BRPC said it expected to bring Mustang into production in early 2019. The target was well beyond a December 2017 deadline that the state Division of Oil and Gas had imposed under the terms of an extension granted in early 2016.
To resolve the gap, Brooks Range Petroleum re-entered the North Tarn No. 1A sidetrack for fracture stimulation and testing, with the goal of having the state certify the well as capable of producing in paying quantities, which would protect the unit from termination.
In late December 2017, the state certified the North Tarn No. 1A well and approved an associated plan of development for bringing the unit into production by early 2019.
A few months later, in late March 2018, Brooks Range Petroleum filed an amendment to the plan, proposing an Early Production Facility to bring the unit into production by late 2018 or early 2019 while the company worked toward installing its permanent facilities.
The company described the EPF as “a modular design, fit for purpose, that is design ready and can be transported to the site and begin operations in a timely manner.”
The EPF would be able to handle 6,000 barrels of oil per day with a gas-to-oil ratio of 1,000 and capacity for 1,500 barrels of produced water per day. Oil produced at Mustang and processed at the EPF would be trucked to a predetermined point of sale. The amendment also revised the timeline for larger, more permanent aspects of the project.
A few weeks after the state approved the temporary production plan in early May, the company proposed an amendment to its plan of development with a new timetable.
The state approved the revised schedule and called it “acceptable” as a plan, but it also noted, “Whether this schedule and BRPC’s action will be sufficient for the Division to conclude that “operations are being conducted” remains an open question. If BRPC is not conducting operations, (the Southern Miluveach unit) will automatically expire.”
In the same ruling, the state denied a request by Brooks Range Petroleum to flare natural gas associated with SMU M-02 operations for three to six months, or longer, while the company worked to complete a crucial tie-in with the Alpine pipeline. The proposal would have flared any gas not used for power generation, which the company later acknowledged would have been more than two-thirds of all gas produced in that time.
The state also expressed skepticism about the transportation plan, saying that temporarily trucking oil to the Alpine Pipeline may not qualify as a “reasonable cost of transportation” under the terms of the Southern Miluveach unit leases. The state said it would evaluate those costs as part of its eventual audit of the company’s royalty filings.
The state rejected a concurrent request by BRPC over the past year to expand the Southern Miluveach unit, saying the idea had not yet been justified by exploration work.