Vol. 28, No.14 Week of April 02, 2023
Providing coverage of Alaska and northern Canada's oil and gas industry

Advancing on all fronts

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Commitment from two participants for funding, high probability of third source

Kay Cashman

Petroleum News

Following is a March 27 Q&A with Jade Energy LLC’s top executive Erik Opstad, followed by previously reported excerpts from Petroleum News to provide background.

Q. Kay Cashman: The last time I interviewed you, you were working on raising money for the Sourdough oil development on Alaska’s eastern North Slope adjacent to the ANWR 10-02 Area where, as operator, Jade Energy is 100% owner of ADL 343112 Area F, Tract 32, in the eastern North Slope’s Point Thomson unit. Have you raised any of those funds?

(See map in the online issue PDF)

A. Erik Opstad: Yes, we have a commitment from two participate and high probability of a third source. More details will come later.

Q. Kay Cashman: What about permitting and regulatory approvals? On Dec. 21 Jade cleared one of its last major government approvals when Alaska’s Division of Oil and Gas approved your fifth plan of development to drill a development well in the Sourdough project in first or second quarter 2024. That POD runs from Jan. 1 through Dec. 31, 2023. Are you continuing to work on permitting?

A. Erik Opstad: Yes, we’re moving ahead on permitting pretty much on all fronts. For example, our spill plan was approved by the state a week ago and we’ve submitted our polar bear plan to U.S. Fish and Wildlife Service.

Q. Kay Cashman: What is the situation with selecting a drilling rig for the Jade 1 well?

A. Erik Opstad: We’re working on finding a rig that can come in overland on snow roads versus ice roads, using the methods and techniques developed in the National Petroleum Reserve-Alaska over the past several drilling seasons. This approach is expected to be a lot more cost efficient for the Sourdough project.

Q. Kay Cashman: Didn’t your company, ELKO, do that for 88 Energy’s two Merlin wells?

A. Erik Opstad: Yes, we used a snow road built by Cruz Construction to mobilize All American Rig 111 into the NPR-A to drill Merlin 1 and then last season, to mobilize Doyon Arctic Fox #1 to the Merlin-2 drill site that was roughly 110 miles southwest of the KRU 2P-Pad.

Q. Kay Cashman: Are you or ELKO involved in drilling the 88 Energy well Hickory 1?

A. Erik Opstad: No.

Two conditions

As previously reported in PN, in its approval of Jade’s fifth POD, the Division of Oil and Gas imposed two conditions:

• On or before July 1, 2023, Jade will provide evidence to the division that Jade has funding for the well it plans to drill in Q1/Q2 of 2024.

• On or before Sept. 1, 2023, Jade will provide to the division a rig contract for the well planned to be drilled in 2024.

Drilling targets

As previously reported in PN, Tract 32 holds two of the mid-1990s Brookian oil discovery wells, Sourdough 2 and 3. BP drilled the 12,562-foot Sourdough No. 2 well in March 1994 and the 12,475-foot Sourdough No. 3 well in March 1996.

In its fifth POD, Jade noted that Brookian reservoirs have been encountered by “numerous wells” drilled in and near the Point Thomson unit since the 1970s, including BP’s two Sourdough discovery wells, which BP estimated held 100 million barrels of recoverable oil.

On the currently suspended Sourdough 3 well, initial BP well testing offered 2,700 barrels of oil per day from a stimulated vertical well, but Opstad previously told PN he expected that a 5,000-foot horizonal completion would produce significantly more oil than that.

Well design

In the last 60 days of the fourth POD Jade worked hard on well design.

This element gained special attention largely due to a change in Jade’s focus early in 2022.

During the first through third PODs, design for a Jade 1 appraisal well was nothing more than a simple throw way posthole.

As the true cost of remote operations east of the Point Thomson unit’s Central Pad started to emerge, Jade began to question the economic viability of a throw way posthole.

“Although we still needed to drill a pilot hole deeper than either existing Sourdough wells (SD2 & SD3) to evaluate potential additional reserves atop the Hue Shale … it didn't make financial sense to plug and abandon that wellbore,” Jade told the division.

Rather, the company decided to change the well design “whereby we would plugback from the pilot hole TD, then complete the well as a horizontal sidetrack.”

“Although more expensive than an abandoned pilot hole, this plan makes better use of the capital and was quickly embraced by our investor community,” Jade said.

“Further to this subject, stakeholders recently suggested that a similar workover and horizonal sidetrack completion of Sourdough 3 might also add considerable value to the drilling program,” Jade said Nov. 1.

“We haven't looked at this suggestion in any detail yet, but it is certainly a potential task for the sixth POD and one that we have already worked on a preliminary basis,” Jade said.

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