The state has approved the formation of the Pikka unit.
With the June 18 decision from the Alaska Department of Natural Resources, Repsol E&P USA Inc. will become operator of a new unit including some 63,304 acres covering 33 state of Alaska and joint state and Arctic Slope Regional Corp. leases between the Colville River unit, the Oooguruk unit and the Placer unit in the central North Slope. (see map page 28)
The state approved the unit retroactive to June 1, 2015.
Repsol has been extensively exploring the region since it acquired the property from the Armstrong subsidiary 70 & 148 LLC and GMT Exploration Co. in 2011. The region is sometimes called the “billion-dollar fairway” because of its proximity to major fields and yet only in recent years have oil companies made a realistic push to develop the area.
The local subsidiary of the Spanish major applied for the unit in February 2014 but state officials decided the original application was incomplete, triggering a series of meetings and revisions over the past year. The application was deemed complete in March 2015.
With the existing Qugruk unit, nearby, Repsol now operates two North Slope units.
Previous exploration
The acreage in the unit was first explored during the wave of North Slope exploration associated with the discovery of the Prudhoe Bay field in the late 1960s, although only five wells had been drilled within the current boundaries by the time Repsol began its current campaign in early 2012: the Colville Delta State No. 1 in 1970, the Colville Delta No. 25-1 in 1986 and the Kuukpik No. 3, Till No. 1 and Colville River No. 1 in 1993.
Early exploration in the region focused on “large structures with Ellesmerian sequence targets in the late 1960s to the mid-1970s,” shifted toward “combination structural/stratigraphic prospects in the Beaufortian sequence in the mid-1970s through the mid-1990s” and now emphasizes “stratigraphic and combination traps with multiple reservoir targets in the Beaufortian and Brookian sequences,” according to the state.
The region was included in 3-D seismic campaigns in 2000, 2008 and 2012.
Repsol has drilled at least nine wells, two pilot holes and two sidetracks within the boundaries of the unit since it began exploring the region in early 2012. Of those, only the results of the Qugruk No. 2 well have been released publically, although Repsol has announced several discoveries in the area, including one from this past drilling season.
In June, Repsol touted “better-than-expected” results from a three-well campaign completed this past winter and committed to a fifth season of exploration next winter.
Still, the company said it is unlikely to sanction development until early 2016.
Second plan of exploration required
“Through careful interpretation of 3-D seismic and analyses of previously drilled wells in the area, as well as Repsol’s recent drilling activity, Repsol has identified multiple potential hydrocarbon accumulations and reservoirs over a large area in several stratigraphic intervals. Follow up drilling and testing is required in order to delineate and progress to commercial development,” DNR Division of Oil and Gas Director Corri Feige wrote.
In its first plan of exploration for the unit, Repsol proposes drilling three wells: Qugruk 8, Qugruk 9 and Qugruk 301. The company completed all three wells this past winter. This posed a problem, as state regulations require a plan of exploration to propose upcoming drilling commitments rather than list previous work. The state is allowing Repsol to use the recently completed wells for its first plan of exploration but is requiring the company to submit a second plan of exploration by October detailing exploration plans for 2016.
The Pikka unit is unusual in that some of the leases are held jointly by the state and ASRC, through the terms of a previous settlement in the region. The two landowners included provisions in the unit agreement outlining arbitration proceedings should a conflict arise. The provisions are based on language in the Colville River unit agreement, which similarly governs a unit containing both state and Native land allotments.
