The Alaska Department of Natural Resources has extended Brooks Range Petroleum Corp.’s Southern Miluveach unit to Dec. 31, 2017. BRPC has been working to bring oil production online from its Mustang pad at the unit.
The North Slope unit was set to expire March 31 of this year and BRPC initially requested a one-year extension, to March 31, 2017, a request which the company later amended to Dec. 31, 2017.
The unit, formed effective March 31, 2011, consists of 8,960 acres, five state oil and gas leases, south of the Kuparuk River unit.
DNR said in a decision dated March 30 that the unit is operating under its third plan of development. BRPC said in its March amended request that it would like the POD, which was set to expire March 31 of this year, to expire at the end of 2017, matching the unit extension. In its decision, however, DNR only extended the POD to the end of 2016.
Drilling
The Southern Miluveach unit’s initial plan of operation was approved through the end of 2013 and required BRPC to drill, evaluate and test three wells in the Kuparuk formation by May 31, 2012. Two wells, North Tarn No. 1A and Mustang No. 1 were drilled by that date.
At the company’s request DNR’s Division of Oil and Gas extended drilling requirements for the third well but when the deadline was missed, the DNR commissioner issued a notice of default in November 2014. Drilling of the third well was required to cure the default, which BRPC appealed.
BRPC cured the default by drilling the third well in early 2015 and attempted to drill a new well and a horizontal lateral from one of the existing wells, but both encountered drilling difficulties and had to be suspended prior to reaching the reservoir interval.
Facilities construction
The company began facilities construction in 2014, work which continued in 2015.
DNR said BRPC reported fabrication of 470 piles and vertical support members for module, pipeline and platform support in 2015, with 284 piles installed in the field. Two off-pad pipeline platforms, the Alpine pipeline tie-in platform and a pipeline pigging platform were fabricated and installed. BRPC also shipped two 5 megawatt dual-fueled turbine power generation packages to Alaska.
Other facility packages and equipment have been ordered or bid upon and BRPC reported engineering 65 percent complete for work yet to be completed.
BRPC plans to use managed pressure drilling “to facilitate controlled drilling in over-pressured conditions,” DNR said, and may modify Nabors Rig 16E or contract for another suitable rig.
Drilling activities are likely to be deferred until the winter of 2016-17 while reservoir studies are completed and rig modification or acquisition conducted.
Unit extension
DNR said BRPC has conducted exploration under an approved plan, so the unit extension request meets regulatory requirements for consideration of a discretionary extension.
The unit extension approval allows BRPC the opportunity to complete Southern Miluveach faculties and bring wells online in 2017, resulting in increased production and increase in tax and royalty revenue for the state, DNR said, noting that most of the on-pad production facility modules have been completed, as well as a majority of engineering.
“Further understanding of the Kuparuk Reservoir and new lessons from neighboring units on drilling techniques in over-pressured reservoirs also supports the likelihood of oil production at the SMU in the near-term. Providing a unit term extension in this instance is in the state’s best interest and protects all parties,” DNR said.
Investment made
In its December request for unit extension BRPC President and CEO Bart Armfield said some $145 million had been spent on construction of the Mustang gravel road and pad, drilling of wells, engineering studies, reservoir evaluation, economic analysis, permitting, camp facilities and production facilities to be placed on the Mustang pad. He also said BRPC has cooperated with other area operators by sharing the Mustang road and pad to further other North Slope exploration and development activities.
The third plan of development, which has now been extended through the end of the year, includes completion of well technical work, finalizing well design and drilling protocols to address overpressure reservoir conditions, undertaking rig modifications or securing a new rig contract, continued reservoir studies to aid in the placement of the remaining development wells and completion of remaining engineering and issuances of remaining process modules for fabrication.
In its December request for extension of the term of the unit BRPC said earliest oil would be in the fourth quarter of 2016.
