Vol. 26, No.49 Week of December 05, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Maybe 3 wells

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88 Energy, GB Pantheon, possibly another, plan North Slope off-road drilling

Kay Cashman

Petroleum News

While northern Alaska operators are faced with increasing costs due to shortages of workers, vehicles and equipment on top of supply chain delays, 88 Energy and Great Bear Pantheon still appear to be moving forward with their off-road winter drilling plans for two North Slope winter exploration wells in early 2022. A third company, Eni US Operating, hasn’t yet made its intentions public about an offshore exploration well planned for April.

According to four reliable Petroleum News sources, well service costs have increased as much as 35-40% this year over last year.

In October, 88 Energy said it had contracted with Doyon Drilling for use of the Arctic Fox rig to drill the Merlin 2 appraisal well. On Nov. 24 the company said it had selected “locations” for the well, where it aims to begin drilling by February. (See map in the pdf and print versions of this story.)

88 Energy told investors Merlin 2 will be drilled east and downdip of Merlin 1, “in an area expected to display thicker reservoir sections along with higher permeability and porosity.”

Merlin is seen by the company as a possible 652 million barrel exploration target with an estimated geological chance of success of 56%.

Permitting and planning are at an advanced stage, 88 Energy told investors.

The location chosen for Merlin 2 was preferred among three potential sites. 88 Energy said the other two locations can potentially be used at a later stage for follow up wells.

Merlin 1 results

88 Energy also said its post well evaluation of Merlin 1, which was drilled in March to a depth of 5,267 feet in the National Petroleum Reserve-Alaska, has successfully demonstrated the presence of oil in multiple stacked sequences in the Cretaceous Nanushuk formation (N20 and N18 targets). An additional new target, the N19 sand, that was not previously mapped, also returned a strong hydrocarbon signature following geochemical analysis.

Analysis indicated 41 feet of net log pay across the three reservoir intervals, which are in the Nanushuk Grandstand sands.

These sands, 88 Energy said, show close correlation to the Lower Grandstand sands seen in 88 Energy’s nearby Umiat field and petrophysical analysis has returned 138 feet of possible net pay.

In addition, 88 Energy said geochemical analysis of the cores from Merlin 1 established the “presence of a light oil with an estimated API gravity between mid-30 to low-40 API.”

Erik Opstad oversees 88 Energy drilling operations in Alaska and is a state of Alaska certified professional geologist who has worked the North Slope for 36 years, including a stint with BP in various roles.

Great Bear Pantheon’s plans

In Great Bear Pantheon’s upcoming North Slope winter drilling campaign, it aims to re-enter and test all untested zones of the Talitha A well it drilled last winter and to drill the Theta West 1 well. The Theta West ice pad will be 10 miles west of the Talitha pad. (Another possibility, Pantheon said Nov. 17, is instead of Theta West is its nearby Alkaid prospect.)

The company expects to see the same zones and more in the Theta West well, and the expected recoverable resource amounts are gargantuan for the $770 million market cap Pantheon Resources, a London-based, AIM listed company.

“At least a billion” barrels, Bob Rosenthal, Pantheon’s technical director recently told Petroleum News in early November. “We think we’ve got one of the largest discoveries made in the world in the last year.”

North Slope operator and a Pantheon subsidiary, Great Bear Pantheon, or GBP, considers Theta West 1 to be an appraisal well of last winter’s discovery at Talitha, Rosenthal said.

The Talitha well was drilled and logged to the base of the Kuparuk formation, with sidewall cores taken from each potential reservoir interval (Kuparuk, Lower Basin Floor, Upper Basin Floor Fan sequences, Slope Fan and Shelf Margin Deltaic horizons). Although seasonal restrictions and operational prudence did not allow time for a flow test at all potential reservoir intervals, a flow test was conducted at the deepest of those intervals, the Kuparuk.

Petroleum News sources say GBP has under contract much of the equipment and supplies it needs to complete its drilling plans due to the fact it was willing to put money down for many of the essentials.

That information coincides with what Pantheon said Nov. 17 - that it had entered into a short-term draw down facility of US$1.5million with an existing shareholder.

The company said the funds would be used to secure equipment, goods and services ahead of the planned North Slope winter drilling program.

Pantheon said global supply chain constraints have lengthened the lead times for securing equipment for its Alaska drilling campaign and it needed to order key equipment and materials to minimize the risk of disruption to drilling operations.

The “facility is a precaution against short-term supply issues by ensuring we are prepared as possible for drilling and testing in the New Year,” said Jay Cheatham, chief executive of Pantheon.

The company has, “subject to funding, secured the services of the Nordic-Calista No. 3 rig and crew, as previously used for the drilling and testing of Talitha A.”

Farmout or funding

On Nov. 17 Pantheon repeated what it previously said: that it must complete either a farmout or funding in the final quarter of this year to have sufficient resources for the upcoming winter drilling and testing campaign and for ongoing working capital.

The company said it is actively engaged in negotiations for a potential farmout and funding options, adding that it is optimistic about completing its financing objectives this quarter.

Pantheon said the necessary permitting applications have been submitted “in good time and the company has lined up the contractors and supplies required to complete the operational program in its entirety.”

“As always,” Cheatham said, “we must caution that there can be no guarantees until a financing deal is signed.”

In parallel, Pantheon said it has “continued its technical work to further increase our understanding of the assets ahead of the drilling campaign.”

Pantheon’s top official in Alaska is Patrick Galvin, Great Bear Pantheon’s chief commercial officer and general counsel and former commissioner of the Alaska Department of Revenue.

Nikaitchuq NN-02 possible

There is an outside chance that Eni US Operating, a subsidiary of Italian multinational Eni S.p.A., will spud its second Nikaitchuq North extended reach exploration well in second quarter 2022. The Alaska Beaufort Sea prospect is in a federal OCS unit, Harrison Bay block 6423, which is approximately 6 miles from the Spy Island Drill site in the state of Alaska Nikaitchuq unit.

In its 14th plan of development for the Nikaitchuq unit, which runs from Oct. 1 through Sept. 30, 2022, operator Eni told Alaska’s Division of Oil and Gas that facility upgrades will be completed to support the planned Nikaitchuq North exploration well.

NN-02 was supposed to be drilled this coming winter unless Eni requested another extension from the feds.

As of the morning of Dec. 1, Eni had not requested an extension, per the Bureau of Safety and Environmental Enforcement’s press secretary Sandy Day.

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