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Vol. 10, No. 42 Week of October 16, 2005
Providing coverage of Alaska and northern Canada's oil and gas industry

Liberty: ERD considered

MMS says BP looking at developing federal offshore discovery from shore

Kristen Nelson

Petroleum News Editor-in-Chief

BP Exploration (Alaska) is considering developing its Liberty prospect east of Endicott from onshore, Minerals Management Service Alaska Regional Director John Goll said Oct. 6.

The prospect is on federal outer continental shelf acreage. BP drilled the Liberty discovery well in 1997. Recoverable oil is estimated at 120 million barrels.

It would be a “world-class project,” Goll told the Resource Development Council, because it would use extended reach drilling. “The distances they are considering are at the envelope of the world’s records,” he said, “and the question … they need to be working through and we will be reviewing: Is this feasible?”

Goll did not provide well lengths that would be required to develop Liberty from shore, but an agency scoping report from 1999 says drilling from shore would require 25,000-foot to 40,000-foot extended reach wells. MMS said in 1999 it did not believe this would be technically viable, and thought it would probably be cost prohibitive.

BP has been responsible for a number of worldwide extended reach drilling records at Wytch Farm in the United Kingdom, with wells ranging from 27,240 feet to 37,001 feet of measured depth (length along the pipe), and horizontal displacements (length along the surface) from 25,105 feet to 35,196 feet.

ERD wells in Alaska

The Alaska Division of Oil and Gas discussed extended reach drilling in its August preliminary finding for the proposed Healy basin exploration license. It said “challenges to successful ERD include problematic movement of downhole drill string and well casing, applying sufficient weight to the drill bit, possible buckling of well casing or drill string and running casing successfully to the bottom of the well.”

ERD technology has been used in a few cases off California, with wells drilled from shore to offshore reserves instead of installing platforms, the division said. It noted BP’s Wytch Farm, where the development plan called for a $260 million artificial island in Poole Bay, and extended reach wells were used instead. “Other successes with ERD include the North Sea, Gulf of Mexico, South China Sea and at Milne Point, Badami, Point McIntyre, Alpine and Niakuk fields in Alaska,” the division said.

A 6.6-mile horizontal displacement was drilled in Argentina in 1999, but, the division said, horizontal displacements of half a mile to two miles are the typical range. BP set a long-reach record for horizontal directional wells in the United States in 1998 with a displacement of 19,804 feet in the Niakuk field. “Despite its $6 million price, the well represents a cost saving over the other drilling alternative — construction of an offshore artificial gravel island,” the division said.

A graphic with the division’s discussion shows total horizontal departure in Alaska wells growing from around 5,000 feet in 1981 to almost 20,000 feet at the Niakuk well in 1998.

Liberty MOU in 2004

Liberty has been “on again and off again over the last eight years or so” Goll said.

An environmental impact statement was issued for the project in May 2002, although BP had already said it was deferring the project as it revised its development plan. There was also agency disagreement between MMS and the Environmental Protection Agency on how the project should go forward, and reports that one of the Endicott owners was “holding up” a BP proposal to process Liberty oil through Endicott facilities. BP is the major Endicott owner at 68 percent, followed by ExxonMobil at 21 percent and Chevron (this was a Unocal property) at 10 percent, with Doyon Ltd., NANA Regional Corp. and ConocoPhillips combined holding the remaining 1 percent.

In September 2004 BP, MMS and the U.S. Army Corps of Engineers signed a memorandum of understanding for permit evaluation and the National Environmental Policy Act process for Liberty.

MMS published the 2002 EIS because it documented the extensive analysis done for the project. The agency said it would be used as a reference document for future projects and when BP submitted a revised project, agencies would evaluate whether to use the 2002 final EIS, issue a supplemental EIS or issue new environmental documentation.

A supplemental EIS is included in the 2004 MOU.

In June 2003, when BP requested a suspension of production from MMS for Liberty to run through the end of 2004, it said if “an economically viable option exists and permitting risks to costs and schedules are manageable,” the company would select a preferred conceptual development in 2004.

The MOU schedule agreed to in 2004 calls for pre-application work to begin this November, with BP providing agencies with a complete description of the Liberty project; an application in June 2006 and final approvals in late 2007.

One more Beaufort sale in this plan

The Beaufort Sea sales MMS held in September 2003 and March 2005 were “held on time; and these were the best sales we had had since the late ‘80s,” Goll said. “Many great prospects have been leased through these two sales, and we’re looking forward to further exploration,” he said.

Production from the federal offshore in Alaska is “still somewhat limited,” he said, although a little less than 20 percent of Northstar is on federal acreage and has been in production for about five years.

There are also a couple of federal leases at the Cosmopolitan prospect in Cook Inlet where drilling has been done and operator ConocoPhillips is doing a 3-D seismic program.

“And in the Arctic we expect to see one, maybe more seismic programs proposed in the Chukchi and Beaufort for next summer. This would be the first seismic up there in a number of years,” he said.

A third Beaufort Sea sale will be held in March 2007 under the current five-year plan. If there is interest in Cook Inlet a sale could be held there; and an environmental impact study process has begun for a possible Chukchi Sea sale after the agency received expressions of interest earlier in the year. That sale would be held either at the end of the present 2002-2007 sale period, or early in the next, 2007-2012.

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