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Vol. 12, No. 44 Week of November 04, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

AOGCC reduces potential oil flow from North Slope Burglin well

Following an Oct. 29 decision by the Alaska Oil and Gas Conservation Commission to further reduce the potential unassisted oil flow from the North Slope Burglin No. 33-1 well, Alaskan Crude Corp. says it will proceed with plans to re-enter the well this winter. But first the small independent will re-enter the Amarex Moose Point No. 1 well on the Kenai.

Drilling Kenai well first

“We’ll drill Amarex well first, then send our rig to the North Slope to re-enter the Burglin 33-1 well in the Arctic Fortitude unit,” Jim White, president of Alaskan Crude, told Petroleum News Oct. 30. “… Our first plan (for Burglin) is to test the Ugnu, and then evaluate what we have and make a decision as to the next step. ... The area is oil and gas prone.”

The Alaskan Crude drilling rig has a top drive and is similar in size to Aurora Gas’s AWS 1 rig, White said.

“Nice little pony — actually, it’s a race horse,” he said. “The rig is set to go at Amarex. We’re waiting for cold weather to freeze the ground.”

Alaskan Crude will use a snow road to truck its lightweight drilling equipment three miles from the Haul Road to the Burglin well, White said.

The original Alaskan Crude Corp. drilled the Burglin well down to Ivishak formation in 1984-85. The well was suspended in 1985 and the original company subsequently went bankrupt. Jim White later bought the company and acquired the Burglin leases in a state lease sale. Amarex drilled the Moose Point well to a total depth of 10,058 feet in March 1978 as part of an oil exploration program — Alaskan Crude now wants to test for gas in the well (a gas show was recorded in the original drilling).

In the summer of 2006 the Alaska Division of Oil and Gas approved formation of Alaskan Crude’s Arctic Fortitude unit. The new unit involved a plan of exploration that included re-entry of the Burglin well. But in July 2007 DNR threatened to terminate the unit because of lack of progress in the drilling program. However, Alaskan Crude paid a $60,000 fee and filed a written statement of its drilling plans to keep the unit in place. A key issue in the delayed drilling at Burglin has been the need for an oil spill contingency plan. Under state statutes and regulations, a company drilling an oil well needs a contingency plan for responding to an oil spill up to a maximum potential rate of unassisted flow for the well.

The cost of ensuring the availability of oil spill response resources capable of dealing with the maximum possible spill rate represents a significant hurdle to a small independent such as Alaskan Crude. And Alaskan Crude questioned the potential for an oil spill from Burglin during re-entry of the well.

Reduced planning standard

In June 2007 the Alaska Oil and Gas Conservation Commission upheld a request by Alaskan Crude to reduce the normal maximum flow rate planning standard of 5,500 barrels per day by 85 percent. The Ugnu and West Sak formations that Alaskan Crude was planning to test in the Burglin well were “highly unlikely to produce hydrocarbons to the surface in amounts greater than 825 barrels of oil per day,” the commission said.

However, the commission turned down an Alaskan Crude request to classify the Burglin well as a gas well, and thus avoid altogether the need for an spill plan. The company said that it was testing for gas and that in the region in which the well is located the only oil found in the Ugnu and West Sak formations is viscous oil that doesn’t flow to the surface easily.

Following an appeal, AOGCC reaffirmed on Oct. 1 its decision to classify the Burglin well as an oil well because the well may penetrate “a formation capable of flowing oil to the ground surface.” But, after a reinterpretation of the oil spill response regulations by DEC, the commission reduced the maximum potential oil flow rate for the well from 825 barrels per day to 600 barrels per day.

Alaskan Crude subsequently asked the commission for a ruling on that maximum flow rate, based on an amended drilling plan that involved only re-entering the Ugnu formation. And on Oct. 29 AOGCC reduced the unassisted oil flow potential for the well to 115 barrels per day, for an Ugnu test.

“We can certainly live with that,” White told Petroleum News.

White, a long-time Alaska oil and gas investor and explorer, said he drilled his first well “in Alaska in 1977 in the Copper River basin, not far from Rutter and Wilbanks’ well.

— Alan Bailey

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