The Alaska Department of Natural Resources' Division of Oil and Gas posted on its website this morning its Dec. 7 approval of Shell Offshore Inc.'s application to form the West Harrison Bay unit in the shallow state waters of the Beaufort Sea (see related story in Petroleum News' Sept. 6 issue).
The 81,000-acre unit application filed June 27 included a plan of exploration, or POE, in which Shell committed to drill two wells within five years, which the agency also approved effective Dec. 7.
Shell told the division it does not intend to operate the West Harrison Bay unit's 18 leases; rather it applied for the unit to prevent the leases from expiring, expecting to bring in a partner in 2021 to share the risks of exploration and possible development, at which time it will designate its partner as operator.
Review of the confidential data and interpretations of that data provided by Shell "reasonably supports an interpretation" that the unit encompasses the minimum area required to include all or part of several potential hydrocarbon accumulations (PHAs) in the Nanushuk and Torok formations," Division Director Tom Stokes wrote in the decision.
"The area encompassing the PHAs … will require extensive drilling, testing, and additional delineation work to determine its commercial viability," he wrote.
Although the unit area "saw scattered exploration efforts during the 1970s and 1980s," it "remains lightly explored today," Stokes said, noting no wells have been drilled within the unit boundary.
The West Harrison Bay unit lies approximately 7 miles north of the Bear Tooth unit and 13 miles northwest of the Colville River unit, both of which are operated by ConocoPhillips.
In the POE, Shell also committed to several non-drilling activities, including completing a data gap and alternatives analysis to determine what additional studies are required to advance exploration activities in the unit, initiating an exploration phase project scoping, and finalizing subsurface well design and layout to optimize the reservoir.
Shell further committed to acquiring (and providing to the division) additional seismic information that can be interpreted to support the presence of a prospect(s) within the designated "flex wave area" of the unit by no later than the end of September 2022.
Although Shell provided the additional seismic information on Nov. 19, the division has not validated the dataset.
Shells' well commitment is to drill one well in the West Harrison Bay unit no later than two years from the effective date of the unit agreement or two wells by no later than five years from the effective date. If the wells are not drilled within that timeframe, then the $3.25 million performance bond posted by Shell must be surrendered in full to the department, and the unit will automatically terminate five years from the effective date.
The initial POE period runs from Dec. 7 through Dec. 6, 2021. A second POE is due Oct. 6, 2021.
- KAY CASHMAN
See story in Dec. 13 issue of Petroleum News, available online Friday, Dec. 11, at www.petroleumnews.com.
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