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Vol. 22, No. 47 Week of November 19, 2017
Providing coverage of Alaska and northern Canada's oil and gas industry

The Producers 2017: BRPC working on 2019 Mustang start-up

Company is working to certify existing well by late 2017 to address production deadline imposed by state

Eric Lidji

For Petroleum News

In its most recent plan of development for the Southern Miluveach unit, Brooks Range Petroleum Corp. said it expected to bring the Mustang field into production in early 2019.

The proposed target is more than a year beyond a December 2017 deadline imposed by the state Division of Oil and Gas, under the terms of an extension granted in early 2016.

The Division of Oil and Gas had yet to approve or reject the plan of development, and so the question of timing remained unresolved, as The Producers was going to print.

But a potential solution appeared to be in the works. Earlier in the year, Brooks Range Petroleum announced it was working to certify one of its existing wells at the unit as capable of producing in paying quantities, which would protect the unit from termination.

In its current plan, submitted in early October 2017, Brooks Range Petroleum said it was currently re-entering the North Tarn No. 1A sidetrack for fracture stimulation and testing.

To date, Brooks Range Petroleum has built the Mustang pad and the Mustang road connecting the pad to Drill Site 2M at the Kuparuk River unit. The remaining pieces of the development include drill site facilities, a 15,000-barrel-per-day central processing facility, two cross-country pipelines, associated infrastructure such as communication and housing facilities, and as many as 26 wells - nine for production and 17 for injection.

Under the program described in its plan of development, Brooks Range Petroleum would install on-pad piles in the first quarter of 2018 and install cross-country pipelines in late 2018 and early 2019. The company would also finish building the remaining modules next year, bringing the Alaska-built modules to Mustang between June and December 2018 and the Canadian-built modules to the field by sealift in August 2018. A 60-to-90-day system-wide review in late 2018 would precede project start-up in early 2019.

The state approved a previous plan of development for the unit despite concerns about the December 2017 deadline. “The Division would like to see BRPC succeed with SMU,” then-Acting Division of Oil and Gas Director James B. Beckham wrote. “But the tight schedule, impending unit expiration, and concerns BRPC has raised with technical issues and financing cause the Division to question the likelihood of success.” Even with those concerns, he approved the plan because it “set forth a possible path toward production.”

Brooks Range Petroleum operates the Mustang project on behalf of CaraCol Petroleum LLC, TP North Slope Development LLC, MEP Alaska LLC, Nabors Drilling Technologies USA Inc., AVCG LLC, Mustang Road LLC and MOC1 LLC. Mustang Road and MOC1 are subsidiaries of the Alaska Industrial Development and Export Authority, which helped finance the road, pad and processing facilities projects.

Additional financing

In an April 2017 annual report, officials from Alpha Energy Holdings Ltd. - an affiliate of one of the working interest owners - wrote that the joint venture was responding to the current economic climate by delaying drilling until after the field came into production.

The idea was to finance development drilling using cash flow from oil production rather than additional financing. The report also noted that construction of the Mustang Operations Center must resume before any additional drilling activities could continue.

In late June 2017, the Alaska Industrial Development and Export Authority approved an additional $2.5 million investment into the Mustang projection as bridge financing. The public corporation previously invested $20 million toward the gravel Mustang Road and associated pad and $50 million toward the forthcoming Mustang Operations Center.

AIDEA also announced that Brooks Range Petroleum was working with the Walker administration and a team of contractors on a plan to gain certification for an existing Mustang well by the third quarter of this year and bring the unit online in late 2018.

“The June 29 resolution that was approved by the AIDEA board is a positive step forward in getting the Mustang project back on track,” Brooks Range Petroleum Chief Operating Officer Bart Armfield told Petroleum News by email at the time. “BRPC is planning to conduct some field work on the project in the coming months with an ultimate objective to engage with other third party entities to fully fund the overall project, with an anticipation of first oil production from the facility in late Q4 2018.”

Expansion

To improve regional economics and save valuable acreage in the vicinity, Brooks Range Petroleum requested a major expansion of the Southern Miluveach unit in late June 2017.

The proposed expansion would add approximately 19,552 acres from 11 leases to the north, west and northeast of the unit, more than doubling its size. According to the company, the expansion acreage is only marginally economic on its own. Developing those leases as satellites of the Mustang project would improve their economic profile.

In a supplemental plan of development, Brooks Range Petroleum proposed building the 15-acre gravel Pinto pad on ADL 391549 to support a 40-well development program. Any production from the expansion acreage would be processed at the Mustang facilities.

According to a timeline provided by the company, Brooks Range Petroleum would spend the next year evaluating the Torok and the Kuparuk formations in the expansion acreage by interpreting seismic data and monitoring nearby wells. An exploration program to test the Torok formation would begin as early as the 2018-19 winter drilling season, either testing an existing well or drilling and testing a new well in the expansion area. If warranted, the company would also evaluate the Kuparuk formation in the acreage.

If the company sanctioned a development, road and pad construction would likely begin in early 2020 with development drilling in early 2022 and first oil by the end of that year.

The proposed expansion would essentially bring the unit to the original boundaries proposed by Brooks Range Petroleum when it first requested the unit in late 2010.



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