In Shell's Oct. 6 proposed second plan of exploration for the West Harrison Bay unit (posted this morning) the company asked Alaska's Division of Oil and Gas for both relief from having to drill down to the deeper Torok and for an extra year before it has to name a new unit operator.
That new unit operator, Shell told the division, will drill two exploration wells at West Harrison Bay: the first in the winter drilling season of 2023-24 and the second in the winter of 2024-25.
In both cases, the operator will complete the wells to penetrate and log the Nanushuk formation and, assuming the success of that exploration well, a sidetrack or additional well to evaluate the Nanushuk formation.
Shell told the division that during the past year it has "worked diligently" to identify another company(ies) to acquire an interest in the West Harrison Bay unit leases, take on the role of unit operator and share the exploration risk and cost associated with advancing the understanding of the resource potential of the shallow water Beaufort leases.
Shell said it had "made solid progress" toward that objective prior to the Covid-19 pandemic and the resulting collapse in oil "prices.
"While oil projects on the North Slope remain attractive from the standpoint of geologic potential, price and the fiscal assumptions that are expected to prevail in the coming decades, the challenges posed by the continuing economic uncertainty resulting from the Covid-19 pandemic have impacted Shell's ability to bring another company(ies) to this project in a number of ways," the company said.
"Covid-19 makes marketing the project more challenging as all meetings and negotiations have to be held virtually, and because the timing of execution of the project is uncertain due to logistical restrictions to operations, including surveying; and, until very recently, the low oil price suppresses the cashflow available to prospective investors for new projects and management appetite for new, higher risk exploration projects," Shell told the division.
Which is why the company requested on Oct. 6 an additional year "to identify another company(ies) to acquire an interest in the leases, take-on the role of unit operator, develop additional information regarding the hydrocarbon potential of the leases, evaluate the economic issues around any future development, and prepare a comprehensive plan of development based on the additional required geologic information" that will be gathered from the proposed well drilling and testing.
- KAY CASHMAN
See full story in Oct. 17 issue of Petroleum News, available Oct. 14 at www.PetroleumNews.com
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