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Vol. 21, No. 3 Week of January 17, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

Placer program OKd

ASRC Exploration gets blessing from state for one-well program this winter


For Petroleum News

The state of Alaska has approved an exploration program at the Placer unit.

The decision allows ASRC Exploration LLC to proceed with plans to drill the Placer No. 3 exploration well this winter at the North Slope unit northeast of the village of Nuiqsut.

The approval covers an outline described in a plan of operations the Arctic Slope Regional Corp. subsidiary had submitted to state officials toward the end of last year. The company must still obtain various individual permits - including an Alaska Oil and Gas Conservation Commission drilling permit - before work in the field can actually begin.

The program includes three weeks of construction on an ice road and ice pads and two weeks of mobilizing a drilling rig to the location, which sits nearly at the end of the existing North Slope road system beginning at Deadhorse. The company will be using the Brooks Range Petroleum Corp.-operated Mustang pad at the nearby Southern Miluveach unit for housing, equipment maintenance and storage throughout the duration of the project.

Drilling is expected to last approximately one month, followed by demobilization of the rig, well testing and temporary suspension of the well before complete demobilization.

The company is planning a 500 square foot well site of approximately 6 to 18 inches of ice and a second 150 square foot staging pad around the existing Placer No. 1 well. The company is planning a 35-foot wide ice road running approximately 9 miles from the Mustang Pad Access Road near Lake K210 to the new Placer No. 3 well site. The company is also planning a 1.3-mile spur road connecting Placer No. 3 to Placer No. 1.

That the program is heavily utilizing the Mustang road and pad fulfills one of the side goals of those infrastructure projects. The Alaska Industrial Development and Export Authority helped finance the road and pad to improve the economics of developing the Southern Miluveach unit as well as other prospects nearby, including the Placer unit.

A decade in the making

ASRC Exploration is continuing an exploration effort started by ConocoPhillips Alaska Inc. more than a decade ago. ConocoPhillips drilled the Placer No. 1 and Placer No. 2 wells in 2004 in the narrow fairway between the Kuparuk River and Colville River units.

Today, the region is more crowded. The Placer unit borders the ConocoPhillips-operated Kuparuk River unit to the east, the Caelus Natural Resources Alaska-operated Oooguruk unit to the north and the Armstrong Oil & Gas-operated Pikka unit to the west. The Brooks Range Petroleum-operated Southern Miluveach unit is a short distance to the south.

The 6,900-foot Placer No. 3 well is intended to delineate earlier discoveries. The nearly vertical well will have slight displacement - approximately 60 feet - over its depth.

Although the program only covers a single well, the state expects ASRC Exploration to seek permission for additional exploration wells, if the current program is successful.

ASRC Exploration acquired the Placer prospect in a March 2006 lease sale. Arranging the exploration program took longer than expected. The company only acquired the Placer No. 1 well in June 2010, which pushed against the five-year term of the leases. An effort to form the Placer unit created conflict between the company and the state over how much of the area should be eligible for unitization. Those delays were compounded by unsuccessful efforts to negotiate a regional exploration program with other companies.

In November 2014, under a new administration, the state agreed to expand the Placer unit and required the company to post a $2.5 million performance bond and meet a string related of work commitments culminating in drilling an exploration well by May 2016.

Placer No. 3 will be the first exploration well operated by ASRC Exploration.

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