Alaska producers are cracking the code in tapping a huge resource of thick “viscous” oil on the North Slope. The latest project, called North East West Sak, or NEWS, is now producing above projections and was brought in at almost half of estimated costs, said officials with ConocoPhillips, which is operating NEWS.
The company’s success has led it to plan an expansion into the second phase of development called Eastern NEWS, now scheduled for a startup in 2023.
For decades companies have worked on ways of economically exploiting the West Sak, a large deposit that overlays conventional oil reservoirs on the Slope.
Efforts were frustrated, however, by the cool, thick nature of the oil - it flows like cooking oil, companies say - along with weak, crumbling sandstone reservoir rock that broke loose to clog wellbores and damage equipment.
Now new drilling and production technologies and years of tinkering, mainly with ways of controlling the loose sand, have turned the corner, making the West Sak wells profitable at current oil prices, Michael Driscoll, ConocoPhillips’ supervisor of viscous development, said in an interview.
ConocoPhillips, BP and Hilcorp Energy, all North Slope producers, are producing from viscous oil deposits in conventional fields they operate, but ConocoPhillips has been the most constant in exploiting the resource.
Work began in mid-1980sWhen work on West Sak viscous oil began in the mid-1980s the best well rates were 250 barrels per day, with flow rates impeded by the cool temperature of the oil, which is produced from a shallow reservoir, relative to crude produced from deeper conventional reservoirs, where oil is warmer and flows more easily.
An added complication was the loose nature of the sandstone, which tended to break apart, releasing sand when oil was extracted. This led to holes being formed in the rock, called “worm holes,” which allowed productive zones to be bypassed.
Early experiments with screens to keep sand out of the well bores failed when screens became clogged. Other efforts, on earlier West Sak wells, involved just letting the sand flow out with the oil. But then the sand had to be removed from the wells and pipeline, which became expensive.
What didn’t help the West Sak economics was the lower quality of the oil, ranging from 16 to 19 degrees API gravity compared with Prudhoe Bay oil at 29 degrees API.
Despite these problems the huge oil-in-place resource was a tempting target. State geologists estimated the viscous oil resource at 5.5 billion barrels to 7.5 billion barrels overlaying the Kuparuk, Prudhoe Bay and Milne Point fields.
Although only a small part of this will be economically produced, it’s still a lot of oil.
Multilateral wellsConocoPhillips is now boosting West Sak well rates to rates of 5,000 bpd by using multilateral wells, where separate producing legs are drilled off a single vertical well to surface.
At ConocoPhillips’ latest West Sak development, in its NEWS project in the Kuparuk River field, five horizontal producing legs, each about 7,000 feet in length, feed oil into the vertical well.
Drilling horizontal multilateral wells was a technique pioneered by ARCO Alaska, ConocoPhillips’s predecessor on the North Slope, and later BP, primarily to tap thin lateral oil sands in the West Sak and conventional fields that were economically marginal.
The lateral horizontal wells are exposed to much more of the oil-bearing rock than would be the case with a conventional vertical producing well and having several of them shares the cost of the vertical well and surface infrastructure.
There are longer single lateral producing wells being drilled on the North Slope but the West Sak wells are challenging because they are shallow, at depths of 6,000 feet, compared with deeper conventional wells at depths like 9,000 feet, said Ryan Phelps, staff geologist on the project.
Drilling shallow requires the drillers to turn the vertical surface well at higher angles to reach 90 degrees, which isn’t easy. Keeping the drill bits in the West Sak sand layers, which can be as thin as five feet in thickness, is also tricky, Phelps said.
Wells expensiveMultilateral wells are expensive - each of the horizontal legs at NEWS takes about 50 days to drill. But the wells produce more oil, enough to compensate for the higher costs, said Federico Caldelas, senior reservoir engineer on NEWS.
Driscoll said ConocoPhillips is also making progress on sand control, using a new type of ultra-fine mesh screen that seems to be working.
Another problem that developed when waterflooding was introduced, in an attempt to boost production rates, were “breakthroughs” of water through loose rocks so water went straight to the producing well instead of pushing oil ahead of it to the well.
This problem, technically called a “Matrix Bypass Event,” has bedeviled all companies working on viscous oil. At NEWS it is now being mitigated by using a down-hole device that targets micro-applications of water to specific layers of oil-bearing sand, a Waterflood Regulation Valve. These have been used for some time in other North Slope fields, like Prudhoe Bay, but this is the first application in the viscous oil deposits. “We’re now able to surgically put the water exactly where we want it be,” Driscoll said.
November 2017NEWS began operating in November 2017, about three months ahead of schedule, and is now producing about 10,000 bpd with three producers currently on line. A fourth well will start producing in mid-September, which will boost output. ConocoPhillips had estimated peak production at 8,000 bpd initially.
Driscoll said the higher production is a result of better-than-expected reservoir performance and growing experience in working with the reservoir. However, ConocoPhillips has also reduced the cost of the project by 45 percent, he said, through aggressive efforts at cost-cutting and managing development more efficiently.
The lower production cost is really the result of a concentrated effort to cut West Sak expenses made after oil prices plummeted in 2015. NEWS was just beginning development then, “but management halted the program and told us to find ways to cut costs,” Driscoll said.
The team got creative. Among several measures, water-based drilling fluids were substituted in the plan, for at least some wells, in lieu of more expensive oil-based drilling fluids. This change was made after the company determined the water-based fluid could be as safe and effective as oil-based fluid.
Drilling fluids are critical to the safe operation of drilling. They are used during drilling to sustain pressure down in the well, preventing an oil or gas “blowout,” an uncontrolled release, as well as to lift rock and cuttings out of the drill hole to the surface for disposal.
These steps now made ConocoPhillips more confident it can put viscous into the company’s long-term North Slope development plans, company spokesperson Amy J. Burnett said. “This has now gone mainstream for us,” she said.
The company is now planning its new phase, Eastern NEWS, in an adjacent area. It is planned to be producing in 2023, according to a ConocoPhillips presentation to investors made July 16.
Driscoll said he believes the same kind of incremental technical leaps that have made West Sak viscous oil economically viable can be applied at Ugnu, the huge heavy oil resource that has also be identified on the slope. Ugnu oil is even thicker or more difficult to produce than the viscous oil.
Editor’s note: Tim Bradner is editor of the Alaska Economic Report and is 2018 Atwood Professor of Journalism at the University of Alaska Anchorage.