Exploration is slated to begin this winter on a prospect south of Prudhoe Bay on Alaska’s North Slope, Pioneer Natural Resources Alaska said in an application it filed with the Alaska Division of Oil and Gas Aug. 29. Pioneer, on behalf of itself and partner ConocoPhillips, applied to form the NE Storm unit on some 16,500 acres on seven state oil and gas leases south of Prudhoe Bay.
The application includes a proposed four-year plan of exploration with two wells, one to be drilled this winter and the other no later than the winter of 2007-08, although Pioneer said in the application that while the plan is to drill the first well this winter, “weather, construction and rig issues may not allow this aggressive plan to be completed as we desire.”
Pioneer has a 50 percent working interest in the leases and will be the operator; ConocoPhillips Alaska holds the remaining 50 percent interest.
NE Storm is part of a 130,000 acre area called Storms Lead where Pioneer is partnering with ConocoPhillips.
Scott Sheffield, Pioneer Natural Resources chairman and chief executive officer, told a July symposium that the Storms area represents a mid-term prospect for the company, one of a number of prospects the company has on the North Slope where it has interests in 1.6 million acres.
In a Sept. 1 analysts’ call on Pioneer’s plans to divest deepwater Gulf of Mexico properties Sheffield did not mention the Storms Lead prospect, but said Pioneer will “continue to have a focus on exploration. We’ll be refocusing a lot of our personnel in the deepwater Gulf of Mexico into Africa and also the North Slope.”
He said the company has “a great inventory in West Africa and Alaska that we will continue to drill over the next several years.”
Pioneer plans “a fairly aggressive drilling program starting in December on the North Slope, focused on near-return production prospects…,” he said.
Ivishak target
While no specific well locations are given in the unit exploration plan, a Hailstorm prospect is identified on a map accompanying the application on state lease ADL 390472, in section 2 of township 9 north, range 13 east, Umiat Meridian. Pioneer told the state the first exploration well would be on that lease; the second would be on ADL 389096, ADL 389097 or ADL 390492.
“Prospective intervals … may include but are not limited to the Ivishak formation,” Pioneer said.
Pioneer said the exploration wells would be drilled deep enough “to penetrate the top 100 feet of the Ellesmerian Ivishak section correlative to the interval” in the Hemi Springs Unit No. 3 well between 9,803 feet and 9,903 feet measured depth. ARCO Alaska drilled that exploration well in 1985. It was a vertical hole with true vertical and measured depths of 10,059, spudded March 4, 1985, and completed and plugged and abandoned April 6, 1985.
Two leases expire this year
Five of the seven leases proposed for inclusion in the NE Storm unit were acquired by Pioneer in the state’s 2003 North Slope areawide lease sale and expire in 2011; the other two were acquired by ConocoPhillips in the state’s 1998 North Slope Sale 87, and expire Oct. 31. Formation of the unit would extend those leases.
Pioneer told the state that if the first well is not drilled by June 1, 2006, the unit would terminate and the working interest owners would pay the state one-year deferral payments, $25,600 for ADL 389096 and $25,330 for ADL 389097, the leases which would have expired.
The second well would be drilled in the winter of 2007-08 or earlier and the working interest owners would commit in writing by Sept. 1, 2007, to drill that well by June 1, 2008, or pay two-year deferral payments of $51,200 for ADL 389096 and $50,660 for ADL 389097, and those leases and ADL 390492 and ADL 390497 would contract out of the unit.
If the commitment for the second well were made, but it was not drilled, the three-year deferral payments would be $76,800 for ADL 389096 and $75,990 for ADL 389097, and the same four leases would contract out of the unit.
Ken Sheffield, president of Pioneer Natural Resources Alaska, told the Resource Development Council’s annual conference in Anchorage last November that the companies were “moving forward with a 3-D seismic survey” at Storms Lead.
Pioneer said in its application that after drilling the 2006 exploration well the companies would evaluate well results in conjunction with the 3-D seismic data acquired in 2005 to determine future activity.
