A November 2017 startupBrooks Range’s Mustang development moving forward again after recent hiatus ALAN BAILEY Petroleum News
Brooks Range Petroleum Corp. is moving ahead with its Mustang development on Alaska’s North Slope and anticipates first oil from the field in November 2017, Jack Laasch, the company’s operations and strategy manager, told a meeting of the Alaska Support Industry Alliance on May 12. The company expects initial production of 6,000 barrels per day, with production peaking at 12,000 barrels per day in late 2018 and into 2019, Laasch said.
Laasch said that seven processing modules for the field have already been constructed and are currently staged in Canada. Brooks Range plans to ship the modules to the North Slope in the summer of 2017. The company completed the gravel pad and access road for Mustang some time ago but suspended the development after encountering some technical issues with its drilling program. The company has also been transitioning into new ownership.
Brooks Range plans to restart the engineering for the Mustang project in June of this year, Laasch said. Permitting and compliance work will also begin at around the same time. Development drilling will restart in the late second quarter of 2017, using a rig upgraded with managed pressure drilling equipment, he said.
Plan of development The Mustang oil field is in the Southern Miluveach unit, immediately west of the Kuparuk River unit. When in 2015 Brooks Range submitted its third plan of development for the unit, the company indicated that it wanted to defer the startup date for the field from April 2016 because of mechanical and reservoir problems encountered when conducting development drilling in the field. The company had drilled three development wells but, while an injection well operated effectively, technical difficulties stymied the successful completion of two production wells. In its new plan, Brooks Range said that continued development would require a different drilling rig or modifications to the existing rig. It now appears that Brooks Range has opted for the rig modification option.
Meanwhile, the company was going through a major change of ownership, having been sold by Alaska Venture Capital Group LLC and Ramshorn Investments Inc. to a three-party joint venture.
In April of this year the Alaska Department of Natural Resources, recognizing the work that had already gone into developing the field, approved an extension of the Southern Miluveach unit to December 2017, to provide Brooks Range with an opportunity to bring the field on line.
A new start With the dust settling from the ownership change and a plan in place for resuming development drilling, activity in the Mustang project is about to continue, Laasch said.
“We’re off to a new start now,” he said.
Verified analyses of data for the field indicate proved oil reserves of 24.7 million barrels, probable reserves of almost 44 million barrels and possible reserves of 51 million barrels, Laasch said. Although Brooks Range anticipates maximum production of some 12,000 barrels per day, the field facilities are designed to be able to handle up to 15,000 barrels per day of oil. Brooks Range has previously said that the processing capacity at Mustang takes account of the possibility of the field facilities acting as an anchor for other developments in the immediate area. The facilities are conveniently located less than a thousand feet from the Alpine oil pipeline: Mustang will deliver processed crude oil into the Alpine line for delivery to the trans-Alaska pipeline.
Fabrication in Alaska In addition to the modules fabricated in Canada, some further module fabrication will take place in Alaska, starting in the second quarter of 2017, Laasch said. Currently about half of the pilings are in place on the Mustang pad for the placement of various modules. All of the pipeline vertical support members have been set, ready for the pipeline installation. Development drilling, scheduled to start in 2017, will continue in 2018 with a pattern of injection and production wells, Laasch said.
Although in the past Brooks Range has contracted out the planning, permitting and compliance work for Mustang, in late 2015 the company decided to instead conduct this work in house, an arrangement that will go into effect when the work restarts in June, Laasch said. Procurement of materials and equipment, currently on hold, will probably restart in June or July. And there are two turbine units at the dock in Anchorage, waiting to be installed on modules that will be fabricated in Alaska.
Remaining costs Brooks Range anticipates further costs of $8 million on field engineering, $25 million on fabrication and $33 million on the installation of facilities on the field pad, Laasch said.
Asked about an oil price at which the Mustang development would become economically viable, Laasch said that his company is committed to get the oil flowing from the field at any price but hopes for a price of $50 or more. State tax credits are one of the factors that go into the financial modeling for the field - changes to the tax credit rules create significant uncertainty and uneasiness, Laasch said. Currently the field working interest owners are really challenged by the oil prices and by the uncertainty relating to the oil tax debate in Juneau, he said.
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