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Vol. 12, No. 40 Week of October 07, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

300,000 acres gone

ConocoPhillips, partners, relinquish 41 NPR-A tracts west of discoveries

Kristen Nelson

Petroleum News

The culling has begun: ConocoPhillips and its partners Anadarko Petroleum and Pioneer Natural Resources have done enough drilling in northeast NPR-A that they have relinquished 300,000 acres because of non-commercial finds and the costs of working so far from infrastructure.

“When you take a look at what led us to drop that (acreage), it ended up really being the high cost of exploration coupled with what we found, that basically told us that it was uneconomic to pursue,” Erec Isaacson told Petroleum News Oct. 1. Isaacson, ConocoPhillips Alaska’s vice president of land and exploration, said the results of last season’s drilling — released by Pioneer in the spring — and “the cost increases and the pressures that we have associated with that … led to an acreage relinquishment that we had earlier this year.”

Pioneer Natural Resources said May 3 that it had participated in two wells in National Petroleum Reserve-Alaska last winter that were “non-commercial.” Pioneer participated in two wells in NPR-A last winter, Noatak and Intrepid, both drilled by ConocoPhillips.

The relinquished tracts cover Noatak, the Kokoda wells drilled to the south of Noatak and the area where ConocoPhillips permitted the Nugget wells, Isaacson said.

The 41 tracts the companies relinquished effective Sept. 1 run along the western and southern edge of a large block of leases the companies hold in northeastern NPR-A running west from state land at the Alpine field to south of Teshekpuk Lake (see map).

Also relinquished were a block of leases to the north on Harrison Bay.

Julia Dougan, associate state director of the U.S. Bureau of Land Management, the NPR-A landlord, told the Resource Development Council Sept. 20 that about 1.25 million acres have been leased in the northeast NPR-A in 1999 and 2002, “and about 800,000 acres are still under lease.”

Wells economically challenged

Noatak and Intrepid were known to be challenging going into the winter exploration season.

Last fall, ConocoPhillips Alaska President Jim Bowles said Noatak probably did “not (have) large reserve potential,” but he said if the well was successful “the resource could be tied back to Kuparuk or Alpine or maybe even Greater Moose’s Tooth if that’s developed at some future date.” Greater Moose’s Tooth is in NPR-A east of the relinquished acreage, within 25 miles of Alpine, where the company has announced discoveries.

Intrepid was even more of a challenge. That prospect is south of Barrow, more than 200 miles from Alpine, the closest infrastructure. Bowles said the company would need to find large reserves for the Intrepid prospect to be deemed commercial because of its distance from infrastructure.

Also logistics challenges

The companies started drilling last winter at Noatak and “rolligoned everything over to our Noatak location” from the Kuparuk River field, Isaacson said. Noatak is south of Teshekpuk Lake, some 50 miles into NPR-A.

At Noatak they “built a 7,000-foot Herc runway, ice runway” and flew all of the equipment that would fit into the Hercules aircraft to Barrow, sending the rest overland by rolligon. When they finished at Intrepid, they flew out what they could “and what wouldn’t fit in the Herc went from Barrow back to West Dock via the sea route because we were running out of time on the tundra,” Isaacson said.

“Last season logistically was incredibly challenging,” Isaacson said.

First there was a late start. “We didn’t get approval to actually get … on the snow until Christmas Eve, with the rolligons.” Because of the lack of snow and the late freeze “we weren’t able to chip as much ice as we normally would in order to make the ice pads and the landing strips” at Noatak.

And because of climatic conditions near Barrow it took a long time to build the ice road to Intrepid.

Because of “all those challenging logistics … costs were up considerably and so it ended up being an expensive exploration year last year.”

And then, he said, referring to the release by Pioneer of the well results, the wells were “basically … sub-commercial or dry holes.”

“So it was a big logistical effort without really anything to show from it.”

Closer in this year

Isaacson said budgets for this winter’s exploration have not been approved; that will happen in early December. But “I can tell you what we’re looking at for this coming year,” he said.

ConocoPhillips is looking at drilling a couple of wells in the “Alpine-Greater Moose’s Tooth area — really exploration-appraisal wells.” That drilling would “follow up on what we had discovered in that area.” A flow test for one of the Rendezvous wells is also possible, he said.

No exploration seismic is planned but there is a possibility of development seismic, 4-D type seismic, over proven field areas.

ConocoPhillips doesn’t yet have “partner and management approval, but that’s currently what we’re looking at.”

Isaacson said staging would be done using the ice road to Alpine — that road is built every year to move supplies to Alpine, which is not connected to the North Slope road system.

“And by doing ice roads (rather than the rolligon and Herc transport used last year) it allows you to use existing rigs that we currently have and so you don’t face the high costs, high-cost environment that we encountered (last year).

“Still, it’s not going to be cheap,” he said.

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