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Vol. 20, No. 27 Week of July 05, 2015
Providing coverage of Alaska and northern Canada's oil and gas industry

Investments mitigate declines

Drilling offsets declines, but Kuparuk River POD shows continued production drop

Eric Lidji

For Petroleum News

The Kuparuk River unit is central to ConocoPhillips’ recent promises to increase spending in Alaska in the wake of a major revision to the state oil production tax code.

Over the past 18 months, the largest producer in Alaska has sanctioned work on many of its North Slope properties - including construction of the CD-5 pad at the Colville River unit, plans for developing the Greater Mooses Tooth unit in the National Petroleum Reserve-Alaska and expenses as a non-operating partner at Prudhoe Bay.

The investments planned for the Kuparuk River unit are different.

CD-5 and Greater Mooses Tooth are efforts to extend the western edge of the North Slope infrastructure grid, which should lower the cost of development in the region.

At Kuparuk, ConocoPhillips has been undertaking a series of investments designed to increase oil production rates - or at least mitigate declines - at an existing field.

The current expenses at the BP-operated Prudhoe Bay unit are simply the price ConocoPhillips must pay to participate in the largest oil field in North America.

At Kuparuk, ConocoPhillips is the operator.

The investments at Kuparuk include infrastructure-led exploration, new or expanded drilling pads, newly commissioned drilling rigs and a proposal to increase well counts.

ConocoPhillips expects production to be flat by 2017.

So far, those efforts appear to be having a greater impact at the four Kuparuk River unit satellites than at the main Kuparuk field, according to the most recent plan of development for the unit, which ConocoPhillips submitted to state officials in mid-June.

Increased drilling

Sinclair Oil and Gas discovered the Kuparuk River oil pool in 1969. The field was remote at the time and geologically tricky compared to nearby Prudhoe Bay. ARCO Alaska sanctioned development about a decade later, prompted by rising international oil prices.

Through mergers and acquisitions between 1999 and 2002, ConocoPhillips became the operator of the Kuparuk River unit. Today, ConocoPhillips owns a 55.3 percent interest in the main field, with BP Exploration (Alaska) Inc. owning 39.2 percent, Chevron U.S.A Inc. owning 4.9 percent and ExxonMobil Alaska Production Inc. owning 0.6 percent. The same four companies own the Kuparuk satellites, albeit in slightly different percentages.

Since Kuparuk production peaked at 339,386 barrels per day in December 1992, activities have included infill drilling, satellite development and enhanced oil recovery.

In 2014, oil production declined even though drilling increased.

At the end of last year, ConocoPhillips was developing the main Kuparuk field with 835 active wells at 44 drill sites, according to the June 2015 plan of development. By comparison, the Kuparuk field had 817 active wells at 44 drill sites at the end of 2013.

The Kuparuk participating area produced 83,200 gross barrels per day in 2014, down from an average of 85,700 gross barrels per day in 2013, according to the company.

The increase in drilling mitigated the decline to some degree.

ConocoPhillips drilled 26 wells in the Kuparuk participating area last year - eight rotary wells and 18 coiled tubing sidetracks with a total of 40 laterals. The program added some 3,500 gross barrels of peak incremental oil production per day, according to the company.

The sidetracks were generally scattered throughout the field. The new wells included four at Drill Site 2E, two at Drill Site 2K and one each at Drill Site 2F and Drill Site 2M.

These figures continue a recent trend of increased drilling and declining incremental production from the main Kuparuk field. By comparison, the company drilled 15 wells with 41 laterals at the Kuparuk field in 2013, adding some 4,520 gross barrels of peak incremental oil production per day, and drilled 14 wells with 53 laterals at the Kuparuk field in 2012, bringing some 5,050 gross bpd of incremental production online.

This year, ConocoPhillips expects to drill 23 wells at the Kuparuk field - seven new rotary wells and 16 coiled tubing sidetracks. Those figures represent a decline from 2014.

The new wells are mostly associated with Drill Site 2S. The company is currently developing the drill site in the southwest corner of the unit with plans to bring production by the end of the year. DS-2S will be the first new drill site at the unit since 2003.

The proposed sidetracks are scattered throughout the unit.

In 2014, ConocoPhillips also added 3,360 gross barrels per day through a rigged workover program and another 10,600 gross barrels per day through a rigless workover program. Those figures are up from 2013, when the company added 2,601 gross bpd through a rigged workover program and 10,300 gross bpd through a rigless program.

Injections changing

Aside from increased drilling, the two biggest developments at the Kuparuk field in 2014 were changes to the miscible injection program and an expansion of seismic activities.

The main Kuparuk field had waterflooding at 24 drill sites (up from 18 in 2013), immiscible water-alternating-gas at 17 drill sites (up from two in 2013) and no miscible water-alternating-gas (down from 24 in 2013). Currently, miscible injection is unavailable for technical reasons. ConocoPhillips said it intends to continue miscible injection programs at four dill sites - 1B, 1C, 1D and 1E - using indigenous supplies.

In July 2014, ConocoPhillips stopped importing natural gas liquids used for the operations from the Prudhoe Bay unit and planned to convert the Oliktok Pipeline to instead import fuel gas from Prudhoe. ConocoPhillips expects to complete the necessary modifications at Central Processing Facility No. 1 and No. 2 by the end of this year and complete similar work at Central Processing Facility No. 3 by the end of 2017.

This change has impacted development at the satellites, as well as at the main field.

Seismic expanding

Another major effort last year was seismic acquisition.

Over the past decade, ConocoPhillips has been relying heavily on seismic data to help identify potential targets for additional development within the existing Kuparuk unit.

In 2014, the company completed 4-D processing over a 60 square mile area of the field and licensed a 47 square mile speculative 3-D survey in the northern end of the unit.

The company also undertook four seismic reprocessing efforts last year.

The WBA/Kalubik Depth Migration project will “better image” the western side of the Kuparuk field. The company expects to complete the project in the third quarter. The KRU-KWS 4-D project is reprocessing overlapping portions of the KRU 3-D program from 1990 and the KWS 3-D program from 2005. The KWS Structural Reprocessing project is considering a different aspect of the data. Preliminary interpretation is under way on both projects. The KRU 3-D Depth Migration project is improving imagining along the periphery of the field and should be completed late this year.



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Some satellites see production increase

While additional drilling was able to mitigate declining production at the main Kuparuk field, ConocoPhillips actually reported production increases at some of the satellites.

The Kuparuk River unit includes four official satellites: West Sak, Tarn, Tabasco and Meltwater. The old Palm satellite is now developed in conjunction with the main field.

At the end of 2014, West Sak had 92 active wells at six drill sites — down from 96 active wells at six drill sites at the end of 2013 and 102 active wells at the end of 2012. West Sak shares its drill sites — 1B, 1C, 1D, 1E, 1J and 3K — with the main Kuparuk field.

Even with the decline in active wells, production increased. West Sak produced some 16,241 barrels per day in 2014, up from 15,772 bpd in 2013, up from 14,185 bpd in 2012.

In its current plan of development, ConocoPhillips wrote that “the pace of future West Sak development has slowed while the performance of recent developments in evaluated,” using language it had previously used in its 2014 plan of development.

The biggest development planned for West Sak is North East West Sak. The NEWS project is a $450 million program to expand existing Drill Site 1H. The project was approved earlier this year and is expected to come online by early 2017 and produce some 8,000 gross bpd at its peak. According to the new plan of development, ConocoPhillips plans to conduct planning work this year and drill four horizontal multilateral production wells and 15 vertical injection wells starting in 2016.

The company is also considering additional NEWS development programs at Drill Site 1N, 3K and 3R, although all three projects are in the early stages and have yet to be publicly defined in depth. In public comments earlier this year, ConocoPhillips said it was currently appraising potential NEWS developments at the 1N and 1P drill sites.

Drill Site 1D and 1C

This year, the company is planning West Sak drilling campaigns at Drill Site 1D and 1C.

The Drill Site 1D program calls for four wells. 1D-143 would be a single-lateral into the B sand. 1D-145 would be a quad-lateral into the D Sand, A4 Sand, A3 Sand and A2 Sand. Those two wells are designed to replace the existing 1D-140 well. 1D-146 would be a single-lateral into the D Sand east of the existing 1C-135 and 1D-141A wells. 1D-142 would be an injector supporting 1C-135, 1D-141A and the new 1D-146 wells.

The company already expanded the existing gravel pad to accommodate the wells and expects the drilling will require an expansion of the Sak Core Area participating area.

Given the success of two recent wells at Drill Site 1C, ConocoPhillips plans to drill four more this year — two producers and two injectors — and is considering three others.

Tarn

The Tarn satellite is also getting considerable investment.

At the end of 2014, the Tarn participating area had 69 active wells at two drill sites, 2N and 2L — up from 61 active wells through 2013 and 63 active wells through 2012.

Tarn produced 7,700 bpd in 2014, up from 5,600 bpd in 2013 and 7,100 bpd in 2012.

After deferring four wells in 2013, ConocoPhillips drilled nine development wells at Tarn in 2014. The success of the first six wells prompted the decision to drill three more wells.

•Well 2N-323A is a rotary sidetrack slant producer brought online in May 2014. The well was producing 360 bpd by the end of 2014.

•Well 2L-322A is a new horizontal producer brought online in August 2014. The well was producing 380 bpd by the end of 2014.

•Well 2N-322 is a new horizontal producer brought online in October 2014. The well was producing 650 bpd by the end of 2014.

•Well 2L-318 is a new horizontal injector brought online in November 2014. The well was injecting 4,250 bpd of water per day by the end of 2014.

•Well 2L-314 is a new slant producer brought online in November 2014. The well was producing 274 bpd by the end of 2014.

•Well 2N-303A is a rotary sidetrack slant producer brought online in November 2014. The well was producing 740 bpd by the end of 2014.

•Well 2N-337C is a rotary sidetrack slant injector brought online in December 2014 and is currently awaiting hook-up.

•Well 2N-350A and Well 2N-319A are rotary sidetrack slant producers put into production in January and February 2015, respectively.

This year, the company is planning a five-well program and might drill more, depending on results. They would be: the horizontal multi-stage producer 2N-336, the slanted injector 2N-312 and the horizontal multistage producers 2L-308, AL-328 and 2L-316.

The drilling campaign in 2014 and 2015 is delineating the Bermuda sands at Tarn, according to ConocoPhillips. The company has been encouraged so far by results of drilling into the Purple interval and is evaluating the Cairn and Esker intervals.

Tabasco and Meltwater

At the end of 2014, Tabasco had the same well profile as the year before: 12 wells at Drill Site 2T — nine producers and three injectors — of which only seven were active.

Tabasco produced some 1,549 gross bpd in 2014, down from some 1,711 gross bpd in 2013 and up from 1,076 bpd in 2012, according to ConocoPhillips.

Although Drill Site 2T has several empty slots for both production and injection wells from the initial phase of development, ConocoPhillips is currently focusing on enhanced oil recovery and isn’t planning any exploration or development drilling this coming year.

At the end of 2014, Meltwater had 17 actives wells at Drill Site 2P, up from 15 active wells in both 2013 and 2012, according to ConocoPhillips. Meltwater produced some 1,439 gross bpd in 2014, down from 1,971 bpd in 2013 and 2,719 bpd in 2012.

Although recent activities at the field have been limited to maintenance and repairs, the company wrote that it is analyzing development opportunities, including coiled tubing sidetracks and producer-to-injector well conversions, “in the light of new seismic data, recent surveillance findings, absence of injection water supply and business climate,” language identical to an assessment the company made in its previous development plan.

—Eric Lidji