Kerr-McGee has filed applications to develop its Nikaitchuq unit off Alaska’s North Slope. A coastal pad at Oliktok Point — which would be built first — and as many as three offshore pads would produce up to 60,000 barrels per day of oil and minor quantities of natural gas, if the entire project is constructed.
Kerr-McGee and its partner Armstrong have not yet sanctioned this development, but told regulators as many as 170 wells could be drilled and production could run through 2026, beginning at the Oliktok Point pad as early as next year.
Kerr-McGee said the project would be constructed in phases with initial production from only one or two of four potential sites.
Work would begin this year on the Oliktok Point production pad and gathering lines to the Kuparuk Pipe Line, and would include drilling operations on the pad with as many as four wells.
Offshore, work could begin on the west and central production pads this winter, but Kerr-McGee told regulators those pads would probably not be constructed until the winter of 2006-07. Construction timing has not been determined for the east production pad.
The production islands will be built in shallow water south of protective natural barrier islands. “The existing barrier islands have been avoided to eliminate potential habitat conflicts with local residents and biota,” Kerr-McGee told regulators.
The west production pad would be some 4.5 miles northwest of Oliktok Point; the central production pad would be 3.7 miles east and a little north of the west pad; the east production pad would be 4.7 miles east and a little north of the central pad. The central pad is just south of Spy Island and the east production pad is just south of Leavitt Island.
There would be some 20 wells at Oliktok Point and about 50 wells on each offshore pad.
Oliktok Point both drilling and processing
Three-phase flow — the oil, natural gas and water combination that comes out of a well — would go from the offshore pads to a production facility at Oliktok Point in what the company calls a “pipe-in-pipe” pipeline. A conductor pipe will provide protection and also leak detection around the pipe-in-pipe containing the crude oil. The conductor pipe and any attached lines and cables would be placed in a trench below the seafloor.
Crude oil processed at the Oliktok Point facility would be transported in a gathering line to either Kuparuk River unit Drill Site 3R or directly to the Kuparuk Pipe Line. Kerr-McGee said the capacity of the Kuparuk River unit system is not sufficient to handle peak flows from Nikaitchuq, “and methods for system expansion are currently being evaluated.”
A 10-inch gathering line would be needed to move processed crude oil from Oliktok Point to Kuparuk, and that line could be placed on existing pipe racks, could be buried as a pipe-in-pipe system in the road or put on a new pipe rack next to the existing one.
Kerr-McGee said it expects to complete preliminary engineering studies this year and construct coastline and possibly offshore gravel production pads in late 2005 or early 2006, with drilling operations beginning at Oliktok Point in 2006 and possible production from Oliktok in 2006.
Placement of onshore gathering lines and completion of installation of the processing facility would take place in early 2006.
There would be drilling at offshore and onshore locations for at least two to three years after each pad is constructed. Once drilling is complete, the offshore production pads will be unmanned.
Offshore drilling restrictions
This development will produce from two formations, the Schrader Bluff and the Sag.
Kerr-McGee said the Schrader Bluff formation wells would be drilled year-round, because those wells will not be able to flow to the surface without artificial lift, so blowouts — unassisted flow of fluids to the surface — couldn’t occur from Schrader wells.
Because Sag formation wells could flow to the surface unassisted, those wells may be subject to seasonal drilling restrictions.
“Both the Schrader Bluff and Sag formations will require some form of artificial lift and reservoir pressure maintenance,” Kerr-McGee told regulators. The Schrader wells would not flow to the surface without assistance, and while Sag wells would flow to the surface at a maximum unassisted rate of some 1,000 bpd, they can flow at higher rates with artificial lift and reservoir pressure maintenance.
Kerr-McGee said that because of higher costs associated with operating in deeper water north of the barrier islands, “it is not believed that development of the Schrader Bluff formation in these areas is economically feasible.”
The Schrader Bluff wells at Nikaitchuq will have a depth of 3,500 to 4,000 feet, the Sag formation wells a depth of 5,000 to 7,000 feet.
Production in a tank
The wellheads will be contained in a tank system with remote leak detection systems and recovery systems, and will be equipped with pumps so that any “leaking fluids can be automatically recovered” and sent to the fluid transport line.
Peak production is estimated at 15,000 bpd from Oliktok Point, which would produce from the Schrader Bluff formation; 20,000 bpd from the west production pad, which would produce from both the Schrader and Sag formations; 15,000 bpd from the central production pad, also both Schrader and Sag; and 10,000 bpd from the east production pad, which would produce only from the Sag formation.
