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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: Conoco advances westward, mostly alone

Company bought out Anadarko and BP over the past year; making waves at four units

Eric Lidji

for Petroleum News

The past year brought a quiet consolidation to one corner of the North Slope, leaving ConocoPhillips Alaska Inc. increasingly solo in its decades-long advance to the west.

The local subsidiary of the Houston-based independent announced in February 2018 that it would be buying out its minority partner Anadarko Petroleum Corp. at the Colville River, Greater Mooses Tooth and Bear Tooth units. In July 2018, ConocoPhillips announced it would acquire a 39.2 percent interest in the Kuparuk River unit from its minority partner BP Exploration (Alaska) Inc. in return for assets in the United Kingdom.

Anadarko and BP are retreating from the western end of the central North Slope as ConocoPhillips is advancing at its four operated units: increasing oil production at the Kuparuk River unit through strategic workover activities, increasing oil production at the Colville River unit through its CD-5 development, working toward first oil at the Greater Mooses Tooth unit and evaluating a potential exploration program at the Bear Tooth unit.

The Kuparuk field

The Kuparuk River unit is shifting into an era of increased efficiency, where ConocoPhillips is producing more oil despite a reduction of development activity.

“We have really advanced drilling technology to the point where it’s making a significant difference in terms of what we can develop and how much we can develop,” ConocoPhillips Alaska Vice President of External Affairs and Transportation Scott Jepsen told a joint meeting of Alaska state lawmakers in September 2018.

The second-most productive unit in Alaska produced 109,100 barrels per day in 2017, up from an average of 103,000 bpd in 2016, according to the most recent plan of development for the unit. The main Kuparuk oil field produced 84,100 bp0d in 2017, up from 78,100 bpd in 2016. The remaining production came from the four Kuparuk satellites, although only West Sak reported an increase in production.

ConocoPhillips attributed 7,500 bpd of incremental oil production to a 16-well (and 42-lateral) coiled tubing drilling program implemented at the main Kuparuk field last year, down from a 20-well (and 55-lateral) coiled tubing program from 2016 that had been credited with only 3,500 bpd of incremental production. The company also drilled four rotary wells in 2017 at the Kuparuk participating area (and another six as part of its West Sak development), compared with eight rotary wells at Kuparuk in 2016.

For the current development year, ConocoPhillips expects a slight increase in drilling activity at the main Kuparuk field - 17 coiled tubing sidetracks and five rotary wells.

An associated workover program in 2017 at the Kuparuk field yielded no increase. The company attributed 2,000 bpd to a rigged workover program and another 8,000 bpd to non-rig well work at the Kuparuk field, compared with 1,600 bpd for rigged work and 10,700 bpd from non-rig work in 2016.

The recent activity at the main Kuparuk field reflects the results of the Kuparuk West Sak 3-D seismic program from 2005 and the Western Kuparuk 3-D seismic program from 2011. But the company has also been engaging in a broader infrastructure-led exploration strategy, where exploration targets close to existing production are given higher priority.

Among those projects is one targeting the Cretaceous Brookian Moraine interval from Drill Site 3S. The company has been monitoring the reservoir for years from a pair of wells - 3S-613 and 3S-620 - and intends a drill a follow-up pair in 2019. Another exploration project involves 17,920 acres near Drill Site 2S, added in December 2017.

Through the end of 2017, the Kuparuk field had produced 2.44 billion cumulative barrels of oil and was being developed from 866 active wells - 471 producers and 395 injectors.

Kuparuk satellites

The other production bump at the Kuparuk River unit came from the West Sak satellite.

West Sak produced 13,818 bpd from 119 active wells - 60 producers and 59 injectors - in 2017, up from 13,701 bpd from 112 active wells in 2016.

The increase in wells came largely but not entirely from the Drill Site 1H program that came online last year. ConocoPhillips drilled two producers - the 3R-101 and 1H-102 multilaterals - and four injectors - 3R-102, 1H-111, 1H-114 and 1H-118. (Figures from the Alaska Oil and Gas Conservation Commission indicate an additional injection well.)

Through the end of 2017, West Sak had produced 88.6 million cumulative barrels of oil.

The company expects to continue Drill Site 1H development this year. The total 2017-18 program calls for four horizontal multilateral producers and 15 vertical injectors.

A subsequent phase planned for 2019 will target viscous oil at Drill Site 3R. Additional viscous oil opportunities at West Sak exist at Drill Site 1C, Drill Site 1D, Drill Site 3K and Drill Site 3N. Opportunities also remain at Drill Site 1H and Eastern NEWS. The company is currently projecting a 2023 startup date for the Eastern NEWS project.

The expansion of West Sak projects reflects the progressed of technology for producing viscous oil on the North Slope. Efforts to develop the prospects began decades ago.

The other three Kuparuk satellites all experienced production declines last year.

The Meltwater satellite southwest of the main field produced 947 bpd in 2017, down from 1,326 bpd in 2016. The satellite was being developed from 15 active wells in 2017 - nine producers and six injectors - down one injector from 2016.

The decline in oil production came, in some measure, from increased natural gas production. A three-week shut-in of the satellite in June 2017 measured back pressure to determine how much oil was being backed out of a common production line due to natural gas production and placed the total at approximately 900 bpd.

While gas flooding remains an efficient tool for enhanced recovery at Meltwater, the increasing gas-to-oil ratio is threatening the economics of some wells, according to ConocoPhillips. The company plans to convert to waterflood in late 2018 or early 2019.

Through the end of 2017, Meltwater had produced 19.7 million cumulative barrels of oil.

The Tabasco satellite produced 1,380 bpd in 2017, down from 1,430 bpd in 2016 from a similar profile of active wells - four producers and two injectors. Through the end of 2017, Tabasco had produced 20.1 million cumulative barrels of oil.

The Tarn satellite produced 7,800 bpd in 2017, down from 8,400 bpd in 2016, despite an identical active well profile - 39 producers and 24 injectors. Through the end of 2017, Tarn had produced 121.6 million cumulative barrels of oil.

Colville River unit

ConocoPhillips is expanding operations at the Colville River unit almost 20 years after the company brought the Alpine field online near the beginning of the 21st century.

The first two years of development at the CD-5 pad revealed new opportunities, leading to a physical expansion of the pad. The company first expanded the CD-5 pad in 2017, adding 12 well slots. The company is working on permitting and engineering for a second expansion, called CD5X2, which would add 10 more well slots starting in 2019.

A separate project at the CD-2 pad this year, called CD2X, would expand the drilling pad by some 5.8 acres to accommodate 32 additional wells at the Fiord West development.

The company expects the existing facilities to be able to handle the change in production profile but will be analyzing its facilities to ensure their ability to handle future growth.

The Colville River unit produced 62,901 bpd in 2017, up from 58,830 bpd in 2016, according to figures from the company and the state. The production figures could be even higher for the coming development year, with nine development wells, multiple sidetracks and potential a new exploration well currently on the agenda.

If sanctioned, the CD4-95 Narwhal exploration well would target the Brookian Nanushuk sand within the Narwhal trend using an existing slot and infrastructure at the CD-4 pad.

Alpine

Colville River unit development activities in recent years have focused heavily on the Alpine field from the CD-5 pad, which came online in late 2015 after years of delays. But ConocoPhillips develops the unit from six participating areas - Alpine, Nanuq Kuparuk, Fiord Kuparuk, Fiord Nechelik, Nanuq and Qannik - accessed from five drilling pads.

The Alpine oil pool includes the Alpine participating area and the Nanuq Kuparuk participating area, which have historically been the center of development at the unit.

ConocoPhillips drilled seven wells and sidetracks at the Alpine participating area in 2017: the CD5-18, CD5-20, CD5-22, CD5-39A and CD2-47A producers and the CD5-17 and CD5-19 injectors. The company could drill as many as six rotary wells at the Alpine participating area during the current development year, which runs through March 2019.

ConocoPhillips completed the 30,218-foot CD5-25 well and its 20,973-foot CD5-25 lateral in March 2018. The directional multilateral injector targeted the Alpine A and C sand and is a companion to the CD5-23 injector from January 2018. Those two injector wells would support a trio of proposed production wells - CD5-11A, CD5-11B and CD5-11C, as named by ConocoPhillips. The CD5-24 producer would aim for a target west of CD5-19. The sixth well would be the CD4-5D targeting the C sand west of CD4-26.

ConocoPhillips is also considering several coiled tubing drilling sidetracks, including a northward expansion of the CD4-208A pattern, a re-drilling of the CD4-210A well, a lateral drilled into the space between the CD5-23 and CD5-25 injectors, among a range of other opportunities into the Alpine participating area from the CD2 and CD5 pads.

The company drilled two wells at the Nanuq Kuparuk participating area in 2017: the CD5-314X producer and the CD5-316 injector. The CD5-314X well suggested the presence of a new target to the west but accessing it would require a bigger drilling rig.

As of March 2018, the Alpine participating area was being developed from 150 wells - 78 producers, 70 injectors and two disposal wells - up five from the previous year. The increased represents new drilling at the new CD-5 pad. The participating area produced 41,100 bpd of oil in 2017, up from 37,100 bpd the previous year.

As of March 2018, the Nanuq Kuparuk participating area was being developed from 13 wells - six producers and seven injectors - up two from the previous year. Nanuq Kuparuk produced 10,600 bpd in 2017, up from 9,600 bpd in 2016.

Cumulatively through 2017, the Alpine participating area had produced 429 million barrels and the Nanuq Kuparuk participating area had produced 33.7 million barrels.

Satellites

The remaining pools are considered satellites of the main Alpine development.

The Fiord satellite at CD-3 includes the Fiord Kuparuk and Fiord Nechelik participating areas. ConocoPhillips re-drilled a completed Fiord Nechelik producer and conducted a fracture stimulation operation on one well in 2017, but the company is not planning any drilling or stimulation at the Fiord participating areas in the current development year.

ConocoPhillips is planning at extended reach drilling program at the unit starting in 2020 and may drill a slant pilot hole production well from the CD-2 pad targeting the Fiord West Kuparuk reservoirs to assist with planning efforts for the extended reach program.

As of March 2018, the Fiord Kuparuk participating area was being produced from five wells - two producers and three injectors. The participating area produced 1,100 bpd in 2017, equal to the average production date from 2016. The Fiord Nechelik participating area was being produced from 23 wells - 13 producers and 10 injectors. The participating area produced 7,100 bpd in 2017, down from 7,800 bpd in 2016.

Through the end of 2017, the Fiord Kuparuk participating area had produced 13.8 million barrels and the Fiord Nechelik participating area had produced 55.4 million barrels.

The Nanuq satellite at CD-4 includes the Nanuq participating area.

ConocoPhillips plans to drill one rotary well and one coiled tubing drilling sidetrack at the Nanuq participating area this development year but has not yet defined either project.

As of March 2018, the company was developing the Nanuq participating area from nine wells - five producers and four injectors, equal to 2017. The participating area produced 1,500 bpd in 2017, equal to the production rate from 2016. The Nanuq participating area had produced 4.3 million cumulative barrels through the end of 2017.

The Qannik satellite at CD-2 includes the Qannik participating area.

ConocoPhillips plans to drill one rotary well at Qannik during the current development year and may drill other undefined rotary wells or coiled tubing sidetracks as appropriate.

As of March 2018, the company was developing Qannik from nine wells - six producers and three injectors. The participating area produced 1,500 bpd in 2017, equal to the 2016 rate. The participating area had produced 6.5 million barrels through 2017.

Greater Mooses Tooth

ConocoPhillips is replicating its step-out approach at the Colville River unit at its Greater Mooses Tooth unit in the National Petroleum Reserve-Alaska, with one crucial difference. The company is moving toward building a standalone production facility.

The company is pursuing three projects at the unit: GMT-1, GMT-2 and Willow (which sits on the boundary between Greater Mooses Tooth and Bear Tooth and impacts both).

ConocoPhillips plans to bring the GMT-1 development at the eastern end of the unit into production by the end of the year. The nearly $1 billion project includes a drilling pad, a 7.7-mile road and associated infrastructure and pipelines, and an initial drilling program of nine development wells with the physical capacity to handle as many as 33 wells total.

Earlier this year, the U.S. Department of Interior released a final supplementary environmental impact statement for the GMT-2 project at the center of the Greater Mooses Tooth unit. The $1.5 billion project includes a 36-well program with the capacity to handle as many as 48 wells. Construction could begin this winter, with first oil as soon as late 2021, according to ConocoPhillips, which has not yet sanctioned the project.

The two GMT developments would use existing processing infrastructure, with GMT-2 linked to GMT-1 and GMT-1 linked to CD-5 and the existing Alpine Central Facilities.

As currently envisioned, the proposed Willow development at the western end of the unit would have standalone processing facilities, a mark of its potential size and importance.

ConocoPhillips was initially uncertain about its development strategy for Willow but decided on standalone facilities in mid-2018, after increasing its resource estimate.

The company now believes that the prospect could produce between 400 million and 750 million recoverable barrels of oil equivalent, up from an earlier estimate of 300 million.

The company expects to make a sanctioning decision about the $2 billion to $3 billion project in 2021, which could potentially lead to first oil in the 2024 to 2025 timeframe.

By late summer 2018, the U.S. Bureau of Land Management was seeking public comments on the scope of a potential Environmental Impact Statement for Willow.

Bear Tooth

While the Kuparuk River unit, Colville River unit and Greater Mooses Tooth unit account for the majority of ConocoPhillips’ activity, the company is beginning to consider its options for the Bear Tooth unit just north of Greater Mooses Tooth.

The company plans to drill as many as three exploration wells at the Bear Tooth unit during the upcoming winter exploration season, according to a continuing development obligation plan submitted to the U. S. Bureau of Land Management earlier this year.

Although no names or locations for the wells were provided in the plan, ConocoPhillips said that two of the three wells would be located within proposed expansion acreage at Bear Tooth, which BLM had yet to approve in February.

ConocoPhillips is also planning to re-enter and test the Tinmiaq No. 6 well, which helped form the basis of the major Willow oil discovery at the Greater Mooses Tooth unit.

The connection between the re-entry and the new wells appears to be a sense that the Willow structure extends to the north of Greater Mooses Tooth, into the Bear Tooth unit.

In 2017, the company integrated its previous Cassin 3-D seismic program into its evaluation of the Willow prospect. “Additional newly reprocessed data was interpreted along with the existing Cassin 3D seismic data and this data was used to evaluate both Cassin and the northern extension of the Willow structure,” the company explained.



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