The odds of ASRC Exploration LLC becoming a producer in the near future increased in mid-2016, when the operator applied for an extension of the terms of its Placer unit.
In its request, the exploration subsidiary of Arctic Slope Regional Corp. told state officials that the Placer No. 3 exploration well from early 2016 had expanded the known size of the Placer reservoir and also appeared to be capable of producing economically.
According to a July 26 letter to the Alaska Department of Natural Resources and an associated plan of development, the well “confirmed extension of the Placer reservoir beyond the central Placer No. 1 location.” As of now, the Placer No. 3 well only identified one productive interval at the unit. But the company intends to determine, at a later date, whether other zones at the unit also have the capability to be productive.
Although the company asked for a five-year extension to the unit terms, Department of Natural Resources Commissioner Andrew T. Mack only approved a two-year extension, giving the company until September 2018 to complete the next stage of its activities.
The state felt that a five-year extension “would be contrary to the public’s interest in maximizing competition among parties and offering acreage for lease if resources are not diligently developed” and a shorter extension balanced the needs of the company and the public. Without an extension, the leases would become available to other operators.
Without an extension, the unit would have expired in September 2016.
Under its first plan of development, ASRC intends to “re-evaluate and incorporate new seismic into our model to complete geological mapping of the area; perform reservoir engineering for reserves estimates; perform facilities engineering for a development plan; and perform economic evaluations with the goal to sanction the project development.”
Between September 2016 and September 2017, according to the plan, ASRC Exploration will use previous wells to estimate the “extent, size and continuity of all producible reservoirs;” will obtain information from the “CGG Tabasco 3D seismic” and merge the findings into other seismic surveys to better map the geologic structure; and will develop a high-level cost estimate for infrastructure. And it would start discussions with Brooks Range Petroleum Corp. and ConocoPhillips Alaska Inc. about sharing existing facilities.
Between September 2017 and September 2018, the company would use the results of its reservoir mapping to plan future development well locations, begin engineering work for drilling pads, roads and pipelines, and propose the first participating area for the unit.
In the nearly 13 years ASRC Exploration has been pursuing the Placer project, the region between the Kuparuk River unit and the Colville River unit has become increasingly active. Brooks Range Petroleum Corp. is working to develop the Southern Miluveach unit to the south. A joint venture led by Armstrong has announced the massive Pikka/Horseshoe discoveries stretching throughout the region. And ConocoPhillips is currently looking to explore the Putu prospect in the area south of the Colville River unit.
Two decades
Through its various subsidiaries, Arctic Slope Regional Corp. has been an active landowner and oil field services provider on the North Slope for many years.
Nearly 20 years ago, the company decided to take a more active role in exploration and began negotiating a “mentoring” agreement with BP Exploration (Alaska) Inc. in 1999.
The agreement signed in March 2003 established “a framework for sharing data and technical knowledge,” including information about in-unit and near-unit oil and gas investment opportunities on the North Slope, the two companies said at the time.
In its first project under the agreement, ASRC farmed in acreage at the Placer prospect located west of the Kuparuk River unit. ConocoPhillips Alaska Inc. drilled the Placer No. 1 and Placer No. 2 exploration wells in early 2004. Through its farm-in, ASRC acquired a 35.7 percent working interest in the Placer No. 1 well. Although the well appeared to have favorable results ConocoPhillips and its other partners never pursued development.
ASRC acquired the Placer prospect in a March 2006 lease sale, the Placer No. 1 well in June 2010 and a license over an earlier seismic survey of the region by early 2011.
In the midst of those negotiations, ASRC also created the subsidiary ASRC Exploration to serve as its operating arm for future exploration and development projects. One of the first projects of the subsidiary was acquiring a minority interest in the Badami unit from BP. The company continues to hold a minority interest in the eastern North Slope unit.
With the five-year leases at Placer about to expire in early 2011, ASRC Exploration applied to form the Placer unit over four state leases covering some 8,769 acres. The state instead approved a 1,480-acre unit covering portions of four leases around Placer No. 1.
The company argued that the larger unit was necessary to explore beyond the Placer No. 1 well. If the reservoir expanded far enough to the south, for instance, it would present an opportunity to partner with Brooks Range Petroleum Corp. on a regional development.
Although the two companies were unable to come to terms on a program, the state ultimately approved the unit expansion in November 2014. The expansion required ASRC Exploration to post a $2.5 million performance bond by mid-January 2015 and meet a series of commitments culminating in a well by May 2016.
ASRC Exploration completed the 6,380-foot nearly vertical Placer No. 3 well in March 2016, according to Alaska Oil and Gas Conservation Commission records.
In late 2016, ASRC Exploration acquired oil and gas leases in the Camden Bay region of the Beaufort Sea from Shell, as well as data for the Sivulliq and Torpedo prospects.
At the time, ASRC was still waiting for governmental approval of the transfer and was also looking into extending the leases beyond their October 2017 expiration deadline.
