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Vol. 23, No.45 Week of November 11, 2018
Providing coverage of Alaska and northern Canada's oil and gas industry

The Producers 2018: Eni looking north at Nikaitchuq

Resumption of drilling activities at the unit is focusing on exploration prospect in federal waters; workovers at existing wells

Eric Lidji

for Petroleum News

In the years just prior to the downturn in oil prices in late 2014, Eni US Operating Co. Inc. tried to expand oil production at its Nikaitchuq unit through small expansions.

The local subsidiary of the Italian-based major undertook a range of projects: adding multilaterals to existing wells, evaluating the potential of the N sand beneath the OA sand development, and drilling farther west and farther east than the original pattern of wells.

A suspension of drilling activities in May 2015, in response to the downturn, halted those initiatives. And now, with prices recovering, Eni is looking in a new direction: north.

Earlier this year, the company launched the Nikaitchuq North exploration project by drilling the NN-01 well. The well was the first exploration activity at Nikaitchuq since the original delineation of the North Slope field more than a decade ago. The ultra-extended reach well used the existing Spy Island Drillsite at Nikaitchuq to access a target in the Harrison Bay Block 6423 Unit in federal waters north of the unit boundaries.

Eni expects the program to guide its development decisions going forward. Depending on the results of the exploration program, the company could resume development drilling at Nikaitchuq as soon as this fall. In a plan of development from July 2018, the company announced plans to drill as many as three new wells and to add laterals to as many as eight existing single lateral wells at its Spy Island Drillsite as soon as October 2018, as well as plans to continue workover activity on its existing Oliktok Point Pad wells.

The new development drilling depends on the ongoing exploration program in part for a practical reason: Eni would be using the same rig - Doyon 15 - for both drilling efforts.

The relationship between the two programs may also involve drilling targets. In its plan, Eni said that the development program could begin as early as late 2018 “pending the results and scope of exploration work.” From the beginning, the purpose of the exploration program was to add reserves to Nikaitchuq and to increase oil production.

In an announcement laying out its strategy for 2018-21, Eni CEO Claudio Descalzi said his company was “doing well” in Alaska and was planning “increased investment.”

The Nikaitchuq North project may have revived Eni’s appetite for North Slope exploration, which had faltered after a pair of disappointing onshore wells drilled a decade ago. In late August 2018, the company announced that it had acquired some 350,000 acres on the eastern North Slope from Caelus Natural Resources Alaska LLC for an undisclosed price. The company is a partner on the Caelus-operated Oooguruk unit, which neighbors the Nikaitchuq unit in nearshore state waters north of the Kuparuk River unit.

Upcoming plans

From the beginning, Eni has been developing Nikaitchuq from the onshore Oliktok Point Pad and the offshore Spy Island Drillsite. The suspension came after the completion of the initial Oliktok Point program and before the completion of the Spy Island program.

The plan for the current year, running through September 2019, calls for drilling three new wells at Spy Island and converting eight existing Spy Island wells into multilaterals.

According to a schedule in the plan, the new Spy Island wells are SP03-FN9, SP06 and SI02-SE6, planned for October 2018 through late February 2019. (In a different part of the plan, Eni listed SP03-FN9, SI02-SE5 and SI06-FN8.) The eight new laterals are SP33-W3, SP30-W1L1, SP16-FN3L1, SP27-N1L1, SP23-N3L1, SP10-FN5L1, SP18-N5L1 and SP05-FN7L1, planned for late February 2019 through mid-September 2019.

Under the current naming conventions used at Spy Island, wells beginning with “SP” represent productions wells while wells beginning with “SI” represent injection wells.

Eni is using Doyon 15 for its Spy Island program. The company contracted the rig in preparation for its Nikaitchuq North exploration program earlier this year. The program involved drilling an ultra-extended reach well from the Spy Island Drillsite into federal waters north of the Nikaitchuq unit, and the rig required considerable modification.

The timetable of the proposed development activities depends on the timing and results of the NN-01 exploration well being drilled into the Harrison Bay Block 6423 Unit.

Eni had initially planned to spud the well by Dec. 10, 2017, complete the well in mid-February 2018 and conduct flow testing between mid-February and mid-March 2018.

The actual spud date was pushed to Dec. 23, with drilling activities beginning in February 2018 and expected to continue into mid-July and flow testing occurring in late July or August. The delays forced the company to defer plans to drill a sidetrack in order to comply with summer drilling restrictions in the waters off the North Slope. The company still plans to drill an NN-02 appraisal well during the upcoming winter exploration season.

The company is not planning to resume development drilling from the Oliktok Point Pad but does plan to continue its ongoing workover activities from the pad in early 2019.

The company is also planning to conduct workover activities on Spy Island wells.

Prior suspension

Eni suspended development drilling at Nikaitchuq in May 2015 in response to the global downturn in oil prices. The suspension occurred as the company was completing some of its initial development plans and was beginning to consider opportunities for expansion.

The company completed its initial drilling plans for the Oliktok Point Pad in October 2012 and conducted a sidetrack campaign on select wells in 2013 and 2014. The additional work also included an appraisal in mid-2014 to evaluate an N sand target. All the previous wells drilled from the Oliktok Point Pad had targeted an OA sand reservoir.

After the end of the sidetrack program in May 2014, all development activity at the Oliktok Point Pad shifted from drilling to workover operations. The company eventually released its Nabors 245 rig in late 2017 and contracted the Nordic Calista 4 rig.

A continuous drilling program at Spy Island began in November 2012. The program was expanded in early 2013 with the first multilateral at Nikaitchuq and expanded again in late 2013 with a campaign to add a second lateral to all new Spy Island production wells.

The company conducted the West Extension Project at Spy Island between the third quarter of 2014 and early 2015 and launched the East Extension Project in 2015, before suspending all drilling activities at the unit and putting the Doyon 15 rig in cold stack.

The Nikaitchuq unit produced 20,797 bpd in 2017, down from a peak of some 27,000 bpd in late 2015, according to Eni. The unit came online in February 2011, and cumulative production passed 45 million barrels in April 2018.

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