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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: Glacier advancing four units; bullish on Badami

Success at Starfish project renewed hope in the frustrating but promising eastern North Slope unit

Eric Lidji

for Petroleum News

Glacier Oil & Gas Corp. spent the past year performing small tasks at its four units and planning two large exploration ventures that might guide work in the years to come.

The company was created through the bankruptcy case of the former Miller Energy Resources Ltd. and now operates four units. Through its subsidiary Cook Inlet Energy LLC, Glacier operates the West McArthur River unit and the Redoubt unit on the west side of Cook Inlet and the North Fork unit in the southern Kenai Peninsula. Through its subsidiary Savant Alaska LLC, it operates the Badami unit on the eastern North Slope.

Unlike its predecessor Miller Energy, which had acquired multiple prospects throughout Alaska and eventually became overextend when commodity prices dropped, Glacier has been taking a gradual approach by focusing on maintenance activities to improve operations at existing wells and reserving its larger resources for targeted projects. Those projects include exploration drilling but also include large infrastructure investments.

West McArthur River

The biggest project planned for the West McArthur River unit in the coming year is exploration activity at the long-delayed Sabre prospect in an offshore corner of the unit.

The current plan calls for using the Spartan 151 jack-up rig to drill the offshore well.

In its 27th plan of development from late January 2018, Glacier said it was “seeking partners in the Sabre prospect to reduce the risk factors” associated with the well.

According to the plan, Sabre is the only specific project on the docket at the West McArthur River unit for the coming development year, which runs through April 2019.

The Alaska Department of Environmental Conservation issued a key permit for the project in mid-May 2018. The pollutant discharge elimination system individual permit allows the company to discharge certain waste fluids from the Spartan 151 into upper Cook Inlet during its operations at the Sabre prospect. The permit expires June 15, 2023.

Glacier subsidiary Cook Inlet Energy first discussed plans for a Sabre exploration well as early as late 2013 but delayed the project due to the logistics and the approximately $25 million cost of drilling an extended reach well from onshore facilities to the offshore prospect. The arrival of a jack-up rig in Cook Inlet after decades of failed attempts improved the economics of the well by allowed for vertical drilling from an offshore site.

Over the past development year, Glacier undertook one of the largest infrastructure projects in the history of the unit by shifting processing to the Kustatan Production Facility, which is newer and larger than the West McArthur River Production Facility.

Redoubt

Glacier is taking a gradual approach at the Redoubt unit. Although the company has a long-term goal of delineating and developing the Central, Southern and Northern fault blocks within the unit, its immediate plans mostly involve sidetracks and workovers.

The company undertook a similar range of projects in its 17th development year, running through the end of April 2018. The company drilled the Redoubt Unit No. 3A sidetrack as a waterflood injection well. The company also replaced electric submersible pumps in the Redoubt Unit No. 1A and Redoubt Unit No. 5B wells, although a related project to hydraulically fracture those two sidetracks was cancelled following pump failures.

Glacier also applied to contract the Redoubt unit and to create a new South Step Out participating area at the unit. The state had yet to rule on either application by mid-2018.

In the coming 18th development year, running through April 2019, Glacier plans to continue that approach. The company expects to use the results of current and planned waterflood activity to determine whether to convert additional wells to waterflood. The company plans to drill and stimulate the Redoubt Unit No. 4A sidetrack for waterflood.

The company is also planning to replace a failed electric submersible pump at the Redoubt Unit No. 9 well and might stimulate the well through hydraulic fracturing.

North Fork

As it prepares targeted exploration and delineation programs at its other properties, Glacier is trying to maximize production from existing wells at the North Fork unit.

The company emerged from the bankruptcy process with an immediate plan to undertake “small ball” projects at North Fork. The term described low-risk efforts to improve production and operations from existing wells, rather than ambitious expansion programs.

One of the projects undertaken during the 52nd plan of development ending in March 2018 was setting down-hole plugs to control water intrusion. The success of the work allowed the company to postpone plans to convert an existing well to Class II disposal, although the project could theoretically become necessary at some point in the future.

The company also perforated additional zones at the North Fork Unit No. 14-25 and North Fork Unit No. 41-35 wells in order to increase production. The company also completed “an optimization project to improve gas well process flow” and replaced well houses on the North Fork Unit No. 24-26 and North Fork Unit No. 42-35 wells.

In its 53rd plan of development running through March 2019, Glacier said it would continue this approach for the coming year, focusing on existing wells over new drilling.

Glacier also hinted at future plans, saying it intended to “fully delineate and develop all fault blocks” within the unit as market and technical conditions allowed. The two wells currently under consideration are North Fork Unit No. 42-35A and either North Fork Unit No. 22-26 or North Fork Unit No. 14-26. The company also said it was evaluating a plan to build an additional drilling pad at the unit to accommodate future drilling and a plan to drill outside of the current North Fork Gas Pool No. 1 participating area boundaries.

Badami

The results of the Starfish program will likely guide development plans at the Badami unit for several years, according to a development plan for the eastern North Slope unit.

The B1-07 well discovered oil and came online in mid-May 2018. Production topped 2,500 barrels per day in early testing, CEO Carl Giesler told Petroleum News in June.

The well resulted in a considerable increase in Badami unit production. The unit produced 698 barrels per day in April 2018 and climbed to 1,329 barrels per day in May, according to figures from the Alaska Oil and Gas Conservation Commission. The Starfish well averaged 1,567 barrels per day in June and 1,214 barrels per day in July.

The mid-May start-up beat targets by several months. In public comments and in a 15th plan of development for Badami, filed with the state Division of Oil and Gas on April 18, Glacier said that it expected to bring the B1-07 well into pilot production by mid-July.

Through its subsidiary Savant Alaska LLC, the company began drilling the well earlier this year outside the existing Badami Sands participating area using Nabors rig 27E.

In its plan, Glacier it would drill as many as two additional wells at Badami during the winter of 2018-2019, if warranted by B1-07 well results and by economic conditions.

Glacier also said that it intends to apply for a new participating area covering Starfish oil production, if the well is successful. And the company noted that a new drilling pad “will likely be necessary” to fully explore and delineate outside existing participating areas.

Describing the Starfish project to the Alaska Support Industry Alliance in September 2017, Giesler said, “If this well works close to what we think it will, it should open five to seven more prospects similar to it.” In its 2017 plan of development, Glacier described Starfish as one of “several new target ‘pods’ of interest” identified through a recent review of the Badami and Killian sands. The prospect is “southwest of the current development area within the Badami Sands” participating area in the middle of the unit.

The Alaska Oil and Gas Conservation Commission issued a permit on Jan. 12 for Savant to drill the Badami B1-07 well on ADL 367011. Although the company is describing the project as exploratory, the commission categorized the project as a development well.

Badami is uniquely positioned to accommodate new development. The 38,500-barrel-per-day processing facilities at the unit currently handle approximately 1,000 bpd, a reminder of the ambitions of the original operator, BP Exploration (Alaska) Inc.

The Starfish project is the first new drilling at Badami since Savant completed the Badami Unit Red Wolf No. 2 well in April 2012, according to AOGCC well reports. In the intervening years, Savant devoted its resources to workover projects and was stalled by a bankruptcy proceeding involving its former owner Miller Energy Resources Inc.

Through those proceedings, Glacier assumed control of Savant in early 2016. The company initially took a cautious approach to its new properties by focusing on low-risk development projects but began announcing potential exploration work last summer.



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