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Vol. 21, No. 4 Week of January 24, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

Smith Bay plan gets OK

DOG OKs Caelus plan for second exploration well in the Tulimaniq leases


Petroleum News

Alaska’s Division of Oil and Gas has approved Caelus Energy’s plan of operations for the second of two exploration wells that the company plans to drill in the shallow waters of Smith Bay this winter. The drilling location is near the mouth of the Ikpikpuk River, about 59 miles southeast of Barrow. Both wells form part of what is referred to as the Tulimaniq exploration project. The first well, the CT-1 well, is being permitted under an amendment to an existing plan of operations, while the newly approved plan of operations relates to the second well, the CT-2 well.

Caelus became operator of the Tulimaniq project in June after acquiring a 75 percent interest in the Tulimaniq leases from NordAq Energy. NordAq, previously the sole lease owner, had originally planned to drill a single Tulimaniq well in the winter of 2014-15 but deferred the drilling plan.

The wells will primarily be stratigraphic test wells, designed for the collection of rock cores and the conducting of vertical seismic profiling. Well testing may be conducted if oil is encountered.

A few years ago FEX, a subsidiary of Talisman Energy Inc., commissioned a seismic survey in Smith Bay as part of an exploration project in the region. The geology of the Smith Bay area, although remote, appears very prospective for oil. There are known oil seeps nearby. Caelus has commented that, at Smith Bay, it is seeking oil in Brookian turbidites. Turbidites are rocks consisting of sandstone layers and channels, laid down as a consequence of periodic submarine sand flows in ancient marine basins. The Brookian refers to the youngest and shallowest of the major rock sequences under the North Slope.

Caelus has already mobilized the equipment it needs to spud the first well. The equipment, including the Doyon Arctic Fox drilling rig, has been transported by barge to a staging area at Point Lonely, to the east of Smith Bay. The company has also planned a snow road from the central North Slope to a staging area and camp near the southern shore of Smith Bay. The staging area and camp will be on an ice pad adjacent to a frozen lake with an ice airstrip. An ice road will run 6 miles from the staging area to the CT-1 well location and then another 5 miles to CT-2.

The camp will be able to accommodate approximately 213 workers during the drilling season, according to the operations plan.

Drilling will take place from circular ice pads, with maximum diameters of 500 feet, in an area where water depths are 4 to 6 feet. If an assessment of a well indicates value in conducting a vertical seismic profile, vibroseis will be used as a seismic sound source, the operations plan says. Vibroseis equipment imparts controlled vibrations into the ground or ice surface.

Drilling schedule

In November Casey Sullivan, Caelus director of public affairs, told the Resource Development Council’s annual conference that his company hopes to start drilling the CT-1 well in early February. The newly approved operations plan says that Caelus expects to drill the CT-2 well between March 7 and March 28.

Off-road tundra travel on state land opened about three weeks later than was envisaged in Caelus’ Smith Bay schedule, but it is not clear whether that delay will impact the drilling program. The state says that, regardless of any changes to the schedule early in the winter, the target timeframe for finishing drilling and demobilization will remain fixed. Overland demobilization and site cleanup is scheduled to take place between the end of March and May 11.

The plan of operations says that the drilling operations will use water-based drilling fluids, and that the fluids will either be injected or transported to a disposal facility at Prudhoe Bay. Well cuttings will be transported to Prudhoe Bay for disposal in a grind and inject facility.

To be commercially viable, an oil discovery in an area as far from existing infrastructure as Smith Bay would presumably need to be very large. Sullivan characterized Smith Bay as a 1 billion barrel opportunity for his company.

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