Kerr-McGee is two for two in Alaska, announcing a second successful drilling season with appraisal and exploration wells on Alaska’s North Slope at prospects offshore the Kuparuk River and Milne Point units.
Kerr-McGee Oil & Gas Corp. said March 15 that it has tested the Schrader Bluff reservoir at its Nikaitchuq No. 4 horizontal appraisal well. The company said the well tested at rates up to 1,200 barrels per day during periods of the initial test, with the oil testing at 16 to 17 degrees API oil.
The viscous Schrader Bluff formation, called West Sak at Kuparuk, is under production at three fields onshore: the ConocoPhillips Alaska-operated Kuparuk River field and the BP Exploration (Alaska)-operated Milne Point and Prudhoe Bay fields. Both BP and ConocoPhillips have recently begun large-scale Schrader Bluff-West Sak developments using horizontal wells.
Kerr-McGee, a wholly owned affiliate of Oklahoma City-based Kerr-McGee Corp., said it also encountered the same Schrader Bluff interval at the Tuvaaq exploration well, some three miles to the west of Nikaitchuq No. 4, in the adjacent unit.
Kerr-McGee operates Nikaitchuq with a 70 percent working interesting; Armstrong Alaska holds the remaining 30 percent.
Armstrong began acquiring leases in state waters in the Beaufort Sea in 2001, assembled the three adjacent prospects — Oooguruk, Tuvaaq and Nikaitchuq — and brought in operators Pioneer Natural Resources and Kerr-McGee.
Pioneer discovered oil at Oooguruk in 2003 and Kerr-McGee announced discoveries at Nikaitchuq in 2004.
The three prospects, Pioneer-operated Oooguruk and Kerr-McGee-operated Tuvaaq and Nikaitchuq, are adjacent offshore exploration units in the shallow waters of Harrison Bay. Exploration and appraisal drilling is done during the winter season from ice islands.
Kerr-McGee said it has increased its stake in Tuvaaq by acquiring an additional 40 percent working interest from Pioneer Natural Resources. Kerr-McGee now holds an 82 percent working interest in Tuvaaq and is the operator. Armstrong holds the remaining interest in Tuvaaq.
Kigun in Kuparuk River unit
Based on the results of drilling, Kerr-McGee said it is drilling a sidetrack, the Kigun well, to earn additional acreage.
The Kigun target is on ADL 355024, which is part of the ConocoPhillips Alaska-operated Kuparuk River unit. Kerr-McGee will operate Kigun with a 55 percent working interest upon completion of the drilling operations.
Kerr-McGee did not say if the prospect would remain in the Kuparuk River unit if the well proves successful.
“We are encouraged with the results we’ve seen thus far in Alaska,” Dave Hager, Kerr-McGee’s senior vice president responsible for oil and gas exploration and production, said in the company’s statement. “Although we still need to complete the appraisal program, based on initial evaluation, it appears the Schrader Bluff interval might be developed throughout much of our 36,000 acres in the Nikaitchuq and Tuvaaq area.”
Hager, speaking at the A.G. Edwards’ Energy Conference in Boston March 15, said the company is targeting two reservoirs, the shallower Schrader Bluff and the deeper Sag River. The second horizontal appraisal well, the Nikaitchuq, is testing the Sag River formation; slides accompanying Hager’s remarks described the No. 3 well as drilling a new fault block. “We did test the Sag River at one of our vertical wells last drilling season at a rate of 960 barrels a day, 38 degree API,” he said. “What we want to see now is what will it do out of a horizontal well.”
Results from the Tuvaaq well, Hager said, prove “the existence of the Schrader Bluff formation, the shallower formation, three miles to the west of Nikaitchuq.” The Kigun prospect, he said, is being drilled to earn that acreage.
Hager said Kerr-McGee believes “that the Schrader Bluff may be well developed over much of the approximately 36,000 acres in the Nikaitchuq, Kigun and the Tuvaaq areas.”
Onshore, he said, the Schrader Bluff is being developed on 160-acre spacing, and with “approximately 36,000 acres gross … I think you can see the potential that exists with this particular program.” One of the slides accompanying Hager’s remarks showed a resource of 30 million to 60 million barrels for the company’s Alaska discoveries now being appraised.
Ataruq next
Kerr-McGee’s 2005 drilling season program includes the two appraisal wells at Nikaitchuq and the exploration well at the Tuvaaq prospect. The Nikaitchuq No. 4 horizontal appraisal well tested the Schrader Bluff interval, while the Nikaitchuq No. 3 horizontal appraisal well currently is being drilled to test the Sag River formation, the company said.
In 2004, Kerr-McGee announced successful exploration and appraisal wells on the Nikaitchuq prospect, with the vertical Nikaitchuq No. 1 testing at rates of more than 960 bpd of 38 degree API from the Sag River formation. The Nikaitchuq No. 2 was drilled 9,000 feet southeast of the discovery well and successfully extended the accumulation down dip.
Earlier this year, Kerr-McGee acquired a 50 percent working interest in the Ataruq prospect onshore Alaska and is the operator. Kerr-McGee said it plans to drill the initial Ataruq exploration well following the Nikaitchuq appraisal drilling.
Hager said that once drilling is finished at Nikaitchuq, Kerr-McGee will drill an exploration well at the Ataruq prospect onshore. Ataruq is the prospect Armstrong assembled and called Two Bits on the western edge of the Kuparuk River unit.
“This is a project that’s south of the Nikaitchuq field,” Hager said. “They’re going to test the Kuparuk C and the Tarn formations.”
The slide accompanying Hager’s remarks described Ataruq as a potential extension of Kuparuk and Palm fields, and said Kerr-McGee, with a 50 percent working interest, plans one to two exploratory wells in the 2005 drilling season.
