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Vol. 15, No. 19 Week of May 09, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

New Oooguruk horizon

Pioneer drills first well into Moraine, expects increased oil production

Eric Lidji

For Petroleum News

Pioneer Natural Resources expects its Alaska oil production this year to be up 60 to 70 percent over 2009 rates as the company develops a third reservoir at its Oooguruk unit, northwest of Oliktok Point in the shallow waters of Harrison Bay in northern Alaska.

The Texas-based independent produced 6,000 net barrels per day in Alaska in the first quarter of the year. That’s equal to second-half production from 2009, but roughly double the production rates reported since Pioneer brought Oooguruk online in summer 2008.

Pioneer holds a 70 percent stake in the unit, while Italian major Eni holds the rest.

The projected increase comes from two “highly productive” wells into the Kuparuk reservoir and a well into the Moraine reservoir, a previous undeveloped horizon.

The two Kuparuk wells Pioneer drilled this winter produced at a combined initial rate of around 7,500 gross barrels per day. In the coming months, the company plans to convert one of those production wells to an injector, saying it needs to pump water into the reservoir at equal volumes to the oil being extracted to maintain reservoir pressure.

That conversion could temper production increases expected from the unit somewhat.

Moraine: a third reservoir

When Pioneer sanctioned Oooguruk, it listed two producing horizons: the Kuparuk reservoir, and the deeper and larger Nuiqsut reservoir. Now, the company is also pursuing a third, shallower horizon called Moraine that reaches under the Colville River delta.

This year, Pioneer drilled a horizontally fractured well into the northern end of the Moraine reservoir. The 3,000-foot well produced at initial rates of about 1,100 gross bpd.

“Moraine is a large stratigraphic trap of thinly laminated sands that sit some thousand feet above, let’s say, the Kuparuk reservoir. They’re about 200 feet thick,” Tim Dove, president and chief operating officer of Pioneer, said in a May 5 conference call.

Pioneer estimates Moraine holds 50 million to 100 million barrels of recoverable oil.

“Of course every well we’ve drilled into the Kuparuk and the Nuiqsut have been drilled through the Moraine, so we have a lot of data,” Dove said, noting that Pioneer’s drilling has been “in or near the water leg” of the Moraine, and not the section stretching under islands in the Colville River delta. In addition to Pioneer’s drilling, previous explorers have drilled 12 wells into the reservoir, including several by Texaco in the mid-1980s.

Pioneer wants to conduct long-term testing on the Moraine, including possibly a waterflood pilot test to learn more about the continuity of the reservoir, Dove said.

Pioneer drilled the horizontal well from its existing gravel island in Harrison Bay. Dove said the company is looking to drill two or three more wells from the island into the northern reaches of Moraine early next year. “The real key to this is the potential to move onshore and drill the southern reaches of this prospect from an onshore gravel pad drill site. This would involve extended reach drilling from that pad,” Dove said.

Pioneer believes the wells drilled this year confirm the increased resource estimate of 120 million to 150 million barrels of oil that the company announced in February 2009.

During the summer and through the remainder of the year, Pioneer plans to drill two production and two injection wells into the Nuiqsut reservoir. One of the producing wells will be drilled as a dual lateral to test ways to optimize recoveries and reduce costs.

Alaska production in context

While Pioneer continues to see success in Alaska, Alaska remains a small part of its overall portfolio, accounting for a little more than 5 percent of first-quarter production.

Pioneer calls Alaska its “third major area of oil drilling activity” after the Spraberry and Eagle Ford plays in Texas. Combined, those two prospects represent more than 80 percent of the 2.9 billion barrels of oil the company estimates it can potentially recover from its portfolio. Alaska accounts for around 4.5 percent of those 2.9 billion barrels.

However, Alaska benefits from being an oil play. While many companies are going after natural gas opportunities, Pioneer is focused on liquids because of higher oil prices.

Alaska also benefits from being a higher reward basin, requiring fewer wells than other prospects in Pioneer’s portfolio. In 2010, Pioneer plans to drill about seven wells with one rig in Alaska, compared with around 440 wells with more than 20 rigs in Spraberry.

Also, Pioneer continues to get tax credits from the state for certain expenses. In the first quarter of the year, Pioneer reported earning $14 million in pre-tax exploration credits.

During the May 5 call, Pioneer executives didn’t discuss the Cosmopolitan prospect on the southern Kenai Peninsula in the Cook Inlet basin. The company recently laid out a development plan for Cosmopolitan, but hasn’t yet officially sanctioned development.

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