ConocoPhillips Alaska’s winter exploration on the North Slope is under way, with a seismic crew working and ice roads under construction. The company plans to drill or participate in four wells and an exploration tail on a development well and shoot 500 square miles of 3-D seismic this winter.
But that could change, Rick Mott, ConocoPhillips Alaska vice president exploration and land, told Petroleum News in a Jan. 11 interview. At the beginning of last year, Mott said, we talked about drilling four exploration wells, but “we ended up drilling six” and ran tests on two more, “so we actually had activities at eight wells last year.”
Two of this year’s wells are at the company’s Kokoda prospect in the National Petroleum Reserve-Alaska, at the end of a 70-mile ice road, “farther out than anyone has ventured with an ice road before,” Mott said.
Total drilled its Caribou prospect south of Kokoda in 2004, but did not build an ice road, using rolligons and an existing gravel air strip near the site. BP Exploration (Alaska)’s Trailblazer prospect, reached by ice road in 2001, is northeast of Kokoda, somewhat closer to the North Slope road system.
ConocoPhillips has drilled farther out in NPR-A, at Puviaq, but that well took two seasons, Mott said, with an ice pad put in one year and drilling done the next. Rolligons were used to reach the Puviaq well site which was drilled from “an isolated ice pad,” with no ice road access. Going in with rolligons, however, “prevents you from being able to test the wells, if you find something, because you can’t get the test equipment out there in a timely fashion.”
With the ice road, “we can actually test these wells if they’re discoveries,” he said.
To get that 70-mile ice road built, a remote camp has been established in NPR-A so that the road can be built from two directions, but even with work from two directions, it will be February before the ice is complete and drilling could begin.
Mott said the state’s exploration tax incentives helped get these wells drilled, as they “are eligible for a 40 percent tax credit…”
ConocoPhillips will use Doyon rig 141 to drill at Kokoda.
Iapetus could be Fiord extension
The company’s third winter exploration well, Iapetus, is on state and Native lands due west of the Fiord development, and could “be a new discovery out there, or an extension of Fiord,” Mott said.
That is also an expensive well, he said: It’s “tough to get a rig up there … because there are no roads … even though it’s fairly close to infrastructure.”
The ice pad for Iapetus will be at the shoreline, he said, “but the prospect straddles the onshore and offshore.”
Iapetus is in an area which was added to the Colville River unit, and a well is required this winter as part of the expansion agreement.
Doyon rig 19, which ConocoPhillips typically uses at Alpine, will drill Iapetus, and from there, Mott said, will go on to Fiord. Fiord and Nanuq, respectively north and south of the existing Alpine facilities, are the first two Alpine satellites in the Colville River unit and pad and road work is being done this winter. Fiord is a roadless development, while Nanuq will be connected by a short road to the main producing pad at Alpine.
Mott said the state’s tax regime, with ELF, the economic limit factor, is set up to benefit smaller developments. “It’s working just the way we think it should and it’s encouraging these developments — and as developments happen, so will that encourage our company to continue to invest in exploration.”
Development at the Fiord and Nanuq fields is “a watershed event, and will continue to encourage us to explore,” he said.
ConocoPhillips has received drilling permits for both the Kokoda 1 (a proposed vertical hole in section 27, township 11 north, range 5 west, Umiat Meridian) and the Iapetus 2 (a directional well with the surface in 8-12N-4E, UM, and the proposed bottomhole to the east in 7-12N-4E, UM).
Exploration tail from Alpine well
ConocoPhillips will also be doing what Mott called an “exploration tail … off the bottom of one of our Alpine wells.” The well will be drilled into the Alpine reservoir, he said, and then extended out “maybe a few thousand feet” to test another geologic interval. Depending on the results of the “exploration tail,” the well will probably be completed in the Alpine reservoir.
“It allows us to accomplish two things with one well bore,” he said, reaching a couple of objectives, with the exploration objective “somewhat deeper” than the Alpine reservoir.
ConocoPhillips will also participate in the BP-drilled I-100 at Prudhoe, an appraisal well from the Prudhoe I pad.
Mott said this will be a fairly average exploration year for ConocoPhillips. He has noted in the past that counting exploration wells doesn’t mean a lot, because with remote wells, such as those at Kokoda this year, the costs can be at least three to four times as expensive as field wells.
Mott said exploration is “managed on a global basis, not on a local basis,” and over the last 15 years there has been a lot of variation in the Alaska exploration budget, depending “on where in the world we have other operations.”
Seismic program under way
ConocoPhillips also has a big seismic program this winter in and around the Kuparuk field and south of Kuparuk and Prudhoe.
“This year we are going to acquire probably 25 percent more data with a single crew than has ever been attempted before,” Mott said. The early tundra access which the state allowed “was a big plus for us to try and achieve this,” he said.
The program is “still a slave to the weather” and “it’s not been a great year so far, between warm spells and big storms up there.”
Early access was a big help with the cost because there is a base cost to mobilize needed equipment and people to the slope, “and the more data we can acquire, the lower the cost per square mile, and that helps Alaska be more competitive on a global basis.”
Of the 500 square miles of 3-D seismic planned, about 300 square miles will be exploration and about 200 square miles are going to be within the Kuparuk field to “help us find new development well locations and also new appraisal locations that may lead to future additional West Sak-type developments.”
The program south of Kuparuk and Prudhoe will be shot jointly, 50-50, with Pioneer Natural Resources, Mott said, which is also a partner with ConocoPhillips on acreage in the northwest NPR-A, where ConocoPhillips acquired 808,000 acres gross, more than 500,000 net acres. Pioneer was our partner in most of that, he said. “We’re so pleased to have them in Alaska. They’re technically top notch and excellent partners,” he said.
ConocoPhillips is also looking at shooting 3-D seismic in Cook Inlet, Mott said. That offshore acquisition will be subject to weather, he said, but some 40 square miles will probably be acquired.
Remote exploration an issue
ConocoPhillips has been “investigating a way to explore in remote areas less expensively,” Mott said. “And literally everything is on the table” from a rig which would be easier to move to different vehicles to lighter-weight camps to the company’s approach to contracting: “Should we be doing the longer-term contracts” to give contractors the ability to spread their investments out over longer periods of time.
The drilling department has been investigating rigs for remote exploration drilling, and has looked at a number of rigs, not just in Alaska. The study has been going on for about six months and will wrap up at the end of the first quarter.
“It’s just all questions right now,” he said, but the company has to look at how “to get to some of these very remote locations out in northwest NPR-A” in a more cost-effective way.
Mott said Puviaq was an example of how “very, very expensive” it can be to drill at a remote location: ice pad work started late one winter and equipment was moved out to the site; the following season the rig was assembled and the well was drilled, but it took until late summer to get all the equipment out, a total elapsed time of some 18 months to drill one well.
“You just don’t get enough holes in the ground doing it that way,” Mott said. And in new, remote, under-explored areas, “you want to get a couple of holes so that we learn something.”
Future depends on opportunities, economics, competitiveness
As to the company’s future exploration plans, Mott said “we’re always responsive to the opportunities that we identify here.” They are balanced competitively against other opportunities the company has worldwide, and the results of a season’s drilling “can influence dramatically what happens the next season.”
The fiscal environment is also important, he said, because “there’s always competition for capital” and while the company’s Alaska exploration department is “doing everything we can from a technical perspective to identify new drilling opportunities for the company,” those opportunities have to be “economically attractive” and competitive with worldwide opportunities.
Mott compared exploration to the canary you take into the mine. If the fiscal environment changes, and isn’t viewed as competitive, “it would be hard to shut in Prudhoe Bay… But it’s not hard to shut down exploration if the industry’s unhappy” with changes in the fiscal environment.
