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Vol. 21, No. 42 Week of October 16, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

A major new ERD rig

ConocoPhillips has commissioned drilling unit for Fiord West development


Petroleum News

ConocoPhillips Alaska has commissioned Doyon Drilling Inc. to build a new extended reach drilling rig for the North Slope, ConocoPhillips announced Oct. 6. The rig, the third new North Slope rig that ConocoPhillips has commissioned since 2013, will increase the surface area that can be accessed from a single drill site from 55 square miles to 125 square miles, thus reducing the oil development footprint on the North Slope, the company said.

The company said that the rig will initially target Fiord West, a hitherto undeveloped satellite oil field adjacent the Beaufort Sea coast, on the west side of the Colville River delta, in the extreme northwest of the Colville River unit.

Drill from existing pads

The new rig will be able drill to distances of more than 33,000 feet, compared with the reach of some 22,000 feet of current rigs, ConocoPhillips says. ConocoPhillips spokeswoman Natalie Lowman has told Petroleum News that the extended reach rig would allow Fiord West to be developed from existing drilling pads, probably the CD-2 and CD-5 pads. Thus, the new rig will avoid the need to build and access a new drilling pad at a remote location in the Colville River Delta region.

However, ConocoPhillips has yet to sanction a Fiord West development or publish any data on the oil resource in the satellite. But, in addition to Fiord West, the rig will have application in other North Slope developments, and possibly for exploration drilling, Lowman said. And, with the rig being mobile, other North Slope operators could potentially use it, she said.

“The new ERD rig is good news for ConocoPhillips and for the state,” said Joe Marushack, president of ConocoPhillips Alaska. “Despite the current challenges facing our industry, we are planning for the future and pursuing new development opportunities. Adding the ERD rig to our rig fleet on the North Slope is a potential breakthrough event. It could enable increased oil production by reducing the cost of developing economically challenged or previously unreachable resources.”

“Doyon is proud of the contract to build an ERD rig for ConocoPhillips Alaska,” said Doyon President and CEO Aaron Schutt. “The addition of this rig to Doyon Drilling’s fleet means more jobs and more opportunities for development. This is great news for Doyon’s shareholders and for Alaskans.”

The design of the new rig will involve a particularly powerful top drive, capable of delivering the necessary torque to the huge length of subsurface drill pipe. High capacity pumps will push drilling mud at a relatively high pressure down the drill pipe, Lowman told Petroleum News. And, to accommodate the long wells, the rig will handle casing that is longer and heavier than normal, with a surface casing diameter of 16 inches rather than the traditional 12.5 inches. Consequently, the rig derrick will have capacity to handle more steel than in a traditional rig, Lowman said.

Agreement with the state

The new rig comes in association with an agreement between ConocoPhillips and the state of Alaska over continuing to hold the state leases associated with Fiord West as part of the Colville River unit. According to correspondence in 2015 and 2016 between ConocoPhillips and Corri Feige, then director of Alaska’s Division of Oil and Gas, the Fiord West leases had originally been scheduled to leave the unit at various dates in 2009 and 2010, unless the leases became included in a field participating area by that time. However, in March 2009 ConocoPhillips requested that the leases should remain in the unit until corresponding dates in 2015 and 2016. Apparently, the division approved the extension, subject to development incentives.

In May 2015 ConocoPhillips requested another delay to the contraction of the unit, this time until Nov. 30, 2025. As part of the conditions for the request, ConocoPhillips committed to pay $750,000 to the state and Arctic Slope Regional Corp., and to commission the construction of a new extended reach drilling rig for use in the Colville River unit. ASRC, as well as the state, owns royalty interests in the unit. ConocoPhillips also committed to a performance bond for $10 million to secure the spudding of a well. The first spudding of a Fiord West well must happen by June 30, 2021, with oil production to start no later than Nov. 30, 2022, if ConocoPhillips is to continue to hold the Fiord West leases.

The approved request also included a commitment to contract by Aug. 31, 2016, the construction of the new drilling rig. A recently approved amendment to the original request extended the deadline for the rig construction contract to Sept. 30, 2016 - that commitment has now presumably been met.

In an Oct. 6 press release, Gov. Bill Walker praised ConocoPhillips for moving ahead on the rig contract with Doyon.

“I applaud ConocoPhillips and Doyon for their work to spur production during fiscally challenging times,” Walker said. “This is welcome news, as it fulfills lease terms for Fiord West, which is near Alpine in the Colville River unit. As our oil pipeline sits three-quarters empty, construction of an extended reach drilling rig will have a much-needed multiplier effect for the state’s economy.”

Mentioned in 2009

In 2009, at around the time that ConocoPhillips originally asked the state to allow the Fiord West leases to remain in the Colville River unit for an extended period of time, the company filed a permit application with the U.S. Army Corps of Engineers for the development of the CD5 Alpine field satellite in the National Petroleum Reserve-Alaska. That permit application outlined possible further oil developments around the Colville River unit, including a potential development at Fiord West.

ConocoPhillips said that Fiord West could be developed from either side of the Nigliq Channel of the Colville River but that the company was evaluating placing the Fiord West pad on the west side of the channel to minimize additional infrastructure in the Colville River Delta. The subsequent development of CD-5 included the construction of a bridge over the Nigliq Channel.

In its Corps of Engineers permit application ConocoPhillips mentioned positive results from the Char No. 1 exploration well, drilled in 2008, as confirming a potential satellite development at Fiord West. Given the length of time since that well was drilled, the Alaska Oil and Gas Conservation Commission has published the data from the well. And that data confirms that ConocoPhillips did indeed make an oil find.

Oil in Kuparuk and Nechelik

The well penetrated the Nanushuk formation; the Torok formation; the HRZ; the Kuparuk D and C sands; and the Nuiqsut, before bottoming out in the Nechelik formation at a vertical depth of 7,647 feet. Oil flow testing was conducted from the Kuparuk and the Nechelik.

Reports on the production testing in the Kuparuk indicated flow rates of some 3,750 barrels per day of light, 37 API, oil. Flow testing in the Nechelik showed 28 API oil flowing at some 270 barrels per day. These were flow rates achieved through perforations in the near vertical well casing in the appropriate rock intervals - production rates, if the oil pools are developed, would depend on the well completion and oil production strategies employed and could presumably be higher. In the Colville River unit oil fields ConocoPhillips generally uses a system of horizontal injection and production wells.

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