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Vol. 11, No. 5 Week of January 29, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Busy times for Conoco

Construction, well work hit highs; exploration near Teshekpuk, in Chukchi

Alan Bailey

Petroleum News

To stem the decline in North Slope oil production ConocoPhillips is forging ahead on three fronts: developing new satellite fields near the Alpine field, developing viscous or heavy oil in the central North Slope and exploring for new oil fields. That was a key message that Jim Bowles, president of ConocoPhillips Alaska, delivered at the Alaska Support Industry Alliance’s Meet Alaska conference on Jan. 20.

“We offset (production decline) with continuing investments in our work on the slope,” Bowles said.

Fiord and Nanuq

ConocoPhillips is bringing Alpine satellite fields, Fiord and Nanuq, on line in the Colville River delta.

“Those are two satellite fields that will come into Alpine,” Bowles said. “… Both of those when they’re done will ultimately produce peak rates upwards of 30,000 barrels a day.”

The company plans a third-quarter 2006 startup for Fiord and a fourth-quarter startup for Nanuq, Bowles said.

And viscous oil development also continues apace.

Bowles said that ConocoPhillips had started up production from the viscous oil West Sak accumulation from the Kuparuk unit 1E pad last year and from the 1J pad through the end of the year. The company expects ultimate peak production upwards of 45,000 barrels per day from West Sak.

“This is a project that could really make significant advancement over the years,” Bowles said.

Spending on the satellite fields amounts to about $500 million, as does spending on West Sak development, Bowles said.

Moving west

Development of new fields is progressively moving west, with permitting in progress for Alpine West, in the northeast National Petroleum Reserve-Alaska. ConocoPhillips is also in the process of authorizing funding for that project.

“That would be the first field that would actually be developed and produced out of NPR-A proper,” Bowles said.

The next field in line will be Lookout, a little further into NPR-A than Alpine West.

“Roughly $500 million we’re looking at on these two projects here, hopefully in the 2007-2008 timeframe,” Bowles said.

Exploration

Bowles said that ConocoPhillips will be participating in seven exploration wells on the North Slope this winter — he included three West Sak-equivalent viscous oil wells in that count. He also included the recently announced I-100 heavy oil well, in which ConocoPhillips will be participating with BP.

Bowles said that success with drilling for viscous oil could lead to some major new development.

“If we can have some success drilling those, it could spin off a future large project development for this West Sak viscous oil,” he said. “So, it’s going to be an important season for us as far as what we see on the exploration front.”

ConocoPhillips also plans to push the frontiers of exploration in northern Alaska by participating in two new 3-D seismic surveys. One of these surveys will be in the Teshekpuk Lake area of NPR-A, recently opened for exploration by BLM.

“We see that as a significant area,” Bowles said. “… We have a lot of high hopes for what that might lead to.”

The other 3-D survey will be in the Chukchi Sea.

“That’s an area where we are preparing to participate in a 3D survey and we do see a lot of resource potential in the Chukchi,” Bowles said.

As an example of what can happen after conducting a 3-D survey, Bowles cited this season’s flurry of exploration activity in the Storms area, southeast of the Kuparuk River unit, following a 3-D survey last winter.

Increased well work

In addition to new development and exploration, the past few years have seen a major increase in well work in existing fields. And that trend looks set to continue.

2006 “will be the biggest year we’ve had in Kuparuk since the early ‘80s,” Bowles said.

Bowles particularly pointed out an increase in the use of coiled tubing drilling in field development. From relatively little use a few years ago, this technique has become a normal part of business, he said. The technique is helping maintain production rates.

“Kuparuk set a world record of an 18,000-foot plus departure with 2-inch coiled tubing,” Bowles said.

Low sulfur diesel

The introduction of low sulfur diesel to replace conventional diesel fuel on the North Slope is also triggering a major amount of work. But in addition to being a large project in terms of the work involved, Bowles sees conversion to low sulfur diesel as having a major impact on the slope. Conversion will reduce acid fuel emissions by 40 percent over a four-year time period, he said.

ConocoPhillips, in conjunction with BP and Exxon, plans to transition to the new fuel two years earlier than mandated and has agreed with the state on some flexibility around how to do the transition. The transition project will involve a major modification to the Kuparuk topping plant that refines diesel fuel — that modification will entail a major sealift in 2007, Bowles said.

High workload

With so many projects going on, the ConocoPhillips’ North Slope workload is particularly high at the moment — the company estimates that it will require about 2.2 million man hours just in construction work in 2006. There’s a 50 percent increase from 2004 in direct man hours on construction projects, Bowles said.

“This just goes to show that there’s a lot of activity on the Slope in trying to continue development of reserves,” Bowles said. “… It’s going to be a very busy year for us in ’06.”

But, with so much work going on, Bowles emphasized the continued need to focus on safety. 2005 showed a 28 percent improvement in contractor safety for ConocoPhillips, he said.

“Be careful out there,” he said, as he concluded his presentation to the Meet Alaska conference.



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