After spending more than a year evaluating drilling results, Linc Energy Ltd. has considerably expanded its proposal for developing the Umiat oil field on the North Slope.
The Australian independent recently outlined a program calling for approximately 13 drilling pads to accommodate 150 wells with drilling to begin as early as 2021. The program is twice as large as and would take several years longer than a previous version.
The company has drilled two exploration wells in recent years at the known oil field in the foothills of the Brooks Range Mountains and the National Petroleum Reserve-Alaska.
Umiat No. 18 in early 2013 took a vertical core sample. Umiat No. 23H in early 2014 followed up with the first horizontal well ever drilled at the remote field. A subsequent flow test yielded a sustained rate of 250 barrels per day of 38.5 degree API gravity crude oil.
Those wells formed the foundation for reservoir modeling efforts currently under way.
The company is envisioning a drilling program with wells laid out of a 40-acre pattern, with wells every 450 feet and horizontal laterals measuring approximately 3,000 feet.
The program outline is the most detailed development proposal yet from Linc and is significantly larger than ideas the company presented seven months ago. In an annual report from late October 2014, after both wells were drilled, the company anticipated “that the initial development of Umiat could include the drilling of up to 70 wells.”
The current program also offers a more detailed development timeline. The company expects permitting and engineering to continue through 2019 and procurement, fabrication and installation to continue through 2023. The company would begin drilling the Lower Grandstand formation in early 2022 and the Upper Grandstand in early 2023.
Those dates are far more specific than previous forecasting from the company.
In August 2012, before it began drilling, Linc announced an “aggressive timeline” to bring Umiat into production in five to seven years, with peak production of 50,000 barrels per day. By October 2013, after completing only one of a proposed four-to-five-well program, Linc said it planned “to aggressively develop this field once commerciality is determined” but no longer offered a specific timetable for bringing the field online.
A production forecast shows the field coming online in 2023, peaking at 50,000 barrels per day by 2026 and declining gradually to approximately 5,000 bpd by 2047.
Although discovered nearly 70 years ago, the Umiat oil field has remained undeveloped because of its remote location and complex geology. Linc believes it has solved the latter challenge by combining horizontal drilling with a well-tinkered completion strategy.
The former challenge remains formidable, especially at current oil prices.
The previous exploration campaigns required Linc to build a 102-mile snow road connecting Umiat to the Dalton Highway. A development would require a gravel road or a complex transportation scheme to carry equipment and supplies to the existing Umiat airstrip. And a successful development would need to support a 100-mile pipeline.
The State of Alaska spent years studying a proposed “Road to Umiat,” only to set the project aside amid criticism from nearby villages, skepticism from lawmakers and a budget shortfall that made grand infrastructure projects unfeasible for foreseeable future.
Although it surely would have welcomed a publicly funded road, Linc always maintained it could make Umiat economic even if it had to finance the road itself.
Engineering work over the past two years initially identified 12 potential routes for connecting the field to existing infrastructure. Of those, six were believed to be viable based on allowable road grades and attempts to avoid environmentally sensitive areas.
The company is currently comparing three alternatives (see map).
The Toolik East route would branch in a northwesterly direction from the Dalton Highway north of Pump Station 4 and the Toolik Research Station. The Franklin Bluffs route would head south-southwest from the Franklin Bluffs staging area north of Pump Station 2. The Meltwater route would use existing roads through the Prudhoe Bay and Kuparuk River units and continue south and then southwest along a newly built road.
