Despite some bumps and scraps, the winter exploration season is under way, with six companies in various stages of drilling on state and federal land across the North Slope.
Anadarko is getting its work done in the Brooks Range Foothills by shuffling its rigs.
“The goal was always to try and get three wells finished,” Anadarko spokesman Mark Hanley said on March 24. “It looks like we’re going to get all the wells completed.”
Anadarko is still drilling at Chandler No. 1 using the Nabors rig 105-E.
Anadarko started drilling the well last winter, but didn’t finish. The company left the rig on an insulated ice pad at the site over the summer, allowing a quick start this winter.
Chandler No. 1 sits some 12 miles east of Umiat.
Using the Doyon Arctic Fox rig, Anadarko already completed Wolf Creek No. 4 this winter. The well sits 40 miles west of Umiat in the National Petroleum Reserve-Alaska.
Upon finishing Wolf Creek No. 4, Anadarko moved the Arctic Fox back across the Colville River to start drilling Gubik No. 4, a follow-up to Gubik No. 3, drilled last year.
Anadarko originally intended to use Nabors rig 105-E to drill Gubik No. 4.
Multiyear search for gasThe wells are part of a multiyear search for natural gas. Anadarko is partnering on the project with Petro-Canada and BG E&P and using Arctic Slope Regional Corp. land.
In recent filings with the U.S. Securities and Exchange Commission, Petro-Canada said the Gubik No. 3 well tested at rates up to 15 million cubic feet per day of natural gas.
Although Anadarko is not yet disclosing information about the program, Hanley offered some perspective on the figure, saying, “When we do wells, and we do testing and logging, we look at a lot of things,” including reservoir geology as well as total reserves.
Echoing statements he made before lawmakers in early February, Hanley said one goal of the exploration venture, aside from proving up total reserves, is to figure out a way to economically develop a known natural gas reserve spread over a vast and isolated region.
One aspect of the program is determining “total deliverability,” Hanley said.
Deliverability measures the amount of natural gas a producer can call upon at any given time based on the wells in operation and the characteristics of the rocks underground.
Learning the geologyIn addition to measuring total volumes and flow rates of gas, exploration companies also use test wells like Gubik No. 3 to learn more about the characteristics of the geology of a reservoir, according to Kevin Banks, director of the state Division of Oil and Gas.
The flow rate figure does not provide any hint about the variety of factors that would be essential for a company to know before deciding whether to sanction development.
Those include “connectivity,” the ability of oil and gas to move between underground layers of sand and rock; “porosity,” the empty space in those formations able to soak up oil and gas; and “permeability,” how easily oil and gas move through those rocks.
Even with a large discovery of oil or gas, less than ideal geology can increase the cost of developing a field, and therefore change the economics. Anadarko had previously said the gas in the foothills of the Brooks Range is not consolidated into one giant field, like the oil at Prudhoe Bay, but rather spread over many smaller fields dotted across the region.
If those fields end up being too small and too far apart, it will likely take additional wells to develop the region, which would in turn alter the overall economics of the program.
Anadarko wants more time to make those decisions.
The company has used 2016 as a possible date for starting production from the area.
ConocoPhillips and ChevronFarther north in NPR-A, ConocoPhillips spud the Grandview No. 1 well on Feb. 18 and then spud the Pioneer No. 1 well on Mar. 12, drilling both wells with Doyon rig 141.
The wells are in the Greater Mooses Tooth unit, west of the Alpine field. The company said it does not have any results from the program to report yet.
ConocoPhillips is using the wells to expand on previous discoveries in the area.
In the central North Slope, Chevron appears to have finished work this winter.
In reports since mid-March, the Alaska Oil and Gas Conservation Commission lists Chevron’s exploration season as “completed,” but doesn’t say how many wells the company ultimately drilled in its exploration venture in the White Hills prospect.
Rig reports since early February suggest Chevron drilled at least two wells this winter: Muskoxen 36-7-8 and Bluebuck 6-7-9, both located toward the northern end of prospect.
Chevron received AOGCC drilling permits for those wells in December 2008.
In January and February, the company also received AOGCC drilling permits for the Stegodon 24-6-8 and Panthera 21-6-9 wells, in the vicinity of Muskoxen and Bluebuck.
Reports from the oil patch suggest Chevron may have suspended some winter work.
Chevron has previously declined to discuss White Hills, calling it a “tight” venture.
The company drilled three wells at the White Hills prospect last winter.
White Hills is located south of the Kuparuk River unit, near the Dalton Highway.
Chevron has said it is exploring for both oil and gas at the prospect. Deputy Resources Commissioner Marty Rutherford has speculated the region is gas prone.
Indies north of PrudhoeThe area north of Prudhoe Bay has attracted independent explorers in recent years.
UltraStar is at work on the Dewline No. 1 well north of Prudhoe Bay.
Jim Weeks, managing member of UltraStar, said the well will be a tight venture, but previously described the program as a 9,900-foot well to target a prospect in the Ivishak formation and “secondary targets” in the shallower Sag River and Kuparuk formations.
UltraStar is using the Doyon Arctic Wolf rig for the project.
About seven miles west of Dewline, a four-company joint venture previously announced plans to suspend drilling work this winter as it resolves a legal dispute between partners.
The program would have included as many as three wells drilled in the coastal Gwydyr Bay area north of Prudhoe Bay, where the company has been exploring for several years.
Operator Brooks Range Petroleum Corp. is currently in mediation with partner TG World Energy Corp. over the program. A trial has been scheduled to begin on Jan. 11, 2010.
If the case goes to trial, it would likely mean a second lost drilling season.
Bow Valley acquiredMeanwhile, a third partner in the joint venture, Calgary-based Bow Valley Energy Corp., is preparing for a meeting on April 9 where shareholders will vote on whether the company should be acquired by UK-based independent Dana Petroleum (E&P) Ltd.
The February announcement of the acquisition followed a decision by Bow Valley to consider options for the company in the wake of weakening markets and maturing debt.
Toward the end of last year, Bow Valley sold its interest in the Gwydyr Bay acreage for $2 million, but retained an interest in an oil discovery at the North Shore prospect.
The joint venture drilled North Shore No. 1 in 2007, and re-entered the well in 2008.
In filings with Canadian regulators, Bow Valley said it plans to focus efforts in Alaska on the Tofkat prospect near the village of Nuiqsut, and the Slugger prospect south of Point Thompson, areas where the company “considers the prospectivity to be superior.”
Bow Valley said it has spent some $30.4 million in Alaska since arriving in 2006, including $12 million last year. In 2007 and 2008, the company received $5.3 million in tax credits from the state related to exploration activities on the North Slope.
Bow Valley still has some outstanding obligations to the joint venture, it said.
Under the terms of a 2006 agreement, Bow Valley is required to pay about 28.6 percent of the “drilling, completion and testing” costs on the next two exploration wells drilled by the joint venture in order to get a 20 percent working interest in the prospects.
Bow Valley holds a 20 percent working interest in Tofkat No. 1, drilled last winter.
As of the end of 2008, Bow Valley listed “the net book value of Alaska oil and natural gas properties” at C$9.8 million, down from C$16.1 million at the end of 2007.
The fourth partner in the joint venture is Nabors subsidiary Ramshorn Investments Inc.
On the eastern North SlopeA new development on the North Slope this winter is exploration in the east.
Denver-based independent Savant is drilling an exploration well at the Badami unit on behalf of operator BP Exploration (Alaska) and partner Arctic Slope Regional Corp.
AOGCC rig reports list Savant Alaska as “moving rig.”
Farther to the east, ExxonMobil is preparing a drilling program at Point Thomson, the long-disputed state unit, but most likely will not finish drilling before the end of the season.
Exxon received an AOGCC drilling permit for PTU No. 15 on March 18.
The permit allows Exxon to drill on state lease ADL 47559.