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Vol. 14, No. 43 Week of October 25, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Cosmo back on track

Pioneer plans more appraisal work at offshore Cook Inlet prospect this year

Kay Cashman

Petroleum News

Work on the Cosmopolitan oil prospect in Southcentral Alaska’s Cook Inlet basin has ramped back up, operator Pioneer Natural Resources told Petroleum News Oct. 20.

In January, Pioneer put plans to drill an appraisal well on hold until 2010 because of low oil prices, although Tadd Owens said the company would continue to investigate the feasibility of commercial oil production from Cosmopolitan, which was discovered in 1967 by Pennzoil.

Owens, Pioneer’s director of government and public affairs, also said Pioneer was “well positioned to ramp back up when prices recover.”

In August, Pioneer said it would continue with just one drilling rig in Alaska in 2009 and 2010 — at its offshore North Slope Oooguruk oil field — suggesting no drilling was anticipated at Cosmopolitan in 2010.

On Oct. 20, with crude prices in the high 70s, Petroleum News asked Owens if there was any possibility Pioneer would do something at Cosmopolitan in 2010.

“Pioneer will conduct additional appraisal work at Cosmopolitan during the fourth quarter of this year and first quarter of 2010,” Owens replied in an e-mail. “The company plans to work over and flow test the Hansen 1A L1 well — originally drilled in 2007 — in order to gain additional reservoir information.”

Pioneer, he said, “continues to move forward with permitting and facility planning activities as well as plans for a second appraisal well.”

Thirty to 50 million barrels

The Cosmopolitan resource, which Pioneer has pegged at 30-50 million barrels of oil equivalent, lies about two miles offshore from Anchor Point on the southern Kenai Peninsula.

Pennzoil’s Starichkof State No. 1 discovery well, a 12,112-foot vertical hole, was drilled with a jack-up rig. The company reported encountering the top of the Hemlock formation at 6,745 feet, recovering 30 barrels of oil from a drill stem test at about 6,900 feet and 21 barrels from a drill stem test at about 6,800 feet.

In a second well drilled in 1967 Pennzoil found some natural gas at 4,000 feet, but water in the Hemlock formation at 7,355 feet some two miles from the first well.

In 2003, ConocoPhillips, Cosmopolitan operator that year, drilled a long-reach well and sidetrack called Hansen 1 and Hansen 1A from an onshore well pad that sits six miles north of Anchor Point between the Sterling Highway and the coast.

Those wells “tested at a stabilized rate of 600 to 800 barrels a day over different intervals that lasted three to four months,” according to statements made in 2005 by Tim Dove, president and chief operating officer of Pioneer.

Pioneer gradually bought out all the working interest owners of Cosmopolitan, including ConocoPhillips and Forest Oil, taking over as operator in 2006.

In September 2007, Pioneer started drilling the Hansen 1A 1L sidetrack from the same onshore pad used by ConocoPhillips, with Rowan rig 68. That well was completed in late 2007 and a subsequent extended test produced 400 to 500 barrels of oil per day from the Starichkof zone.

“The whole objective here is to test this second horizon for its rate,” Dove said at the time.

The purpose of the rate test is to “determine whether we can go essentially directly to a development of this project.” With an oil refinery about 60 miles away “… we’ve got a ready market for oil,” he said.

Results encouraging, but no green light

Combined with the results of the tests in the original Hansen well, there was a flow rate of about 1,000 barrels per day, a number right in the middle of the hoped-for range, Owens said, but apparently not quite high enough to take the field to development.

“The results were encouraging. … Good news, but there’s a lot of work to do before we can kick off full development at Cosmo,” he said Sept. 12, 2008.

At that time Owens said Pioneer was evaluating both the effectiveness of the drilling and the significance of the test results.

With the Hansen 1A 1L well targeting a relatively shallow prospect (the Lower Tyonek sand-prone interval found in the Starichkof well), and being the longest extended reach well ever drilled in the Cook Inlet basin’s challenging coal seam-laced geology, he said it was critical to “learn from the experience of drilling that well before embarking on the next drilling project,” describing Cosmopolitan as “sort of drilling Rubik’s cube. You’ve got to be confident that your drilling plan is going to be successful and that you’ve got the best plan to develop that resource. Successfully drilling that well was a big step in the right direction for us, because that really proved to us that those long horizontals from onshore can effectively produce the reservoir.

“Technically they’re very challenging wells. The technology that exists today in drilling allows these wells to even be contemplated. Ten or 15 years ago they probably would not have been realistic,” he said.

Pioneer also intended to use the 2007 well test results, made public in February 2008, to learn more about the Cosmopolitan reservoir.

Second appraisal well

The second appraisal well, scheduled for late 2009, was going to be a separate well rather than a sidetrack, from the same well pad. That, combined with some front-end engineering development design work and some permitting, should lead to a development decision, the company said in 2008.

“At the end of 2009 we’re hoping to have a good project design, to have permits in place and to have a second successful appraisal well drilled,” Owens said Sept. 12, 2008, when West Texas Intermediate crude was still $100 per barrel. “At that point we think we’ll have everything in place to … move forward with a full development.”

The development design that Pioneer envisaged prior to cancellation of the 2009 well, would likely involve tankers trucking oil from the well pad to the Tesoro refinery at Nikiski. The trucks would use the existing Sterling Highway that runs down the west side of the Kenai Peninsula. The operation would only cause a small increase in highway traffic, Owens said.

“We’d have processing facilities and a truck-loading rack on-site adjacent to the existing drill pad,” he said.

If Cosmopolitan goes on line, the field would also produce modest quantities of natural gas — the field reservoir has a very low gas-to-oil ratio, Owens said. Pioneer anticipated the construction of a 16-mile gas pipeline that would extend north to connect into the southern end of the existing Kenai Kachemak pipeline.

Original schedule

In November 2007, Pioneer’s tentative development schedule called for permitting in 2008, facility construction in 2008-09 and development drilling in 2009-10.

If all went well, the Texas independent was hoping for first production in 2010, company President Ken Sheffield told attendees of the mid-November Resource Development Council conference in Anchorage, when oil prices were around $55 per barrel. At that time the company was wrapping up drilling operations on sidetrack Hansen 1A L1 and hoped to have it flow-tested by the end of the year. If it was successful Sheffield said the company would drill 12 more directional wells to develop the field.

Pioneer has 100 percent of the working interest in Cosmopolitan.

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