APA: Lagniappe update
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Three-rig drilling operations continue on eastern North Slope
Kay Cashman Petroleum News
When asked for an update on the eastern North Slope drilling program operated by Bill Armstrong's Lagniappe Alaska, Alex Franceschi, a spokesperson for APA Corp.'s Apache Corp., sent Petroleum News the following statement on April 8: "The three rig drilling operation is ongoing and we have no results to report at this time. We plan to provide an update after we finish the drilling program and analyze the technical data."
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Lagniappe, APA and Santos are partners in a two-year exploration program on a 148-lease block south of Badami. Their goal is to drill six wells in the 275,000 acres, three each winter season, starting with first quarter 2024.
Armstrong's work led to the discovery of Pikka, a billion-barrel new field now under construction west of Prudhoe Bay. He thinks there are new oil discoveries to be made east of Prudhoe Bay, also in the Brookian.
In a text to Petroleum News before the partnership deal was struck between APA, Santos and Lagniappe, Armstrong described the area as "defined off of high effort, reprocessed modern 3D. Really exciting stuff. Big targets," adding there has been "virtually no prior drilling in the area. The wells that have been drilled have great shows and some have bypassed pay on old logs."
On Feb. 22, when asked to provide more color on the risk profile for the exploration drilling program APA Corp. is invested in on Alaska's eastern North Slope, the company's CEO and President John J. Christmann said, "these are 3D and amplitude supported but this is a step-out in an area where there is risk associated with it so I'm not going to give you a number on a ratio. We're going to drill three wells and they are risky but they're high reward."
At the same Feb. 22 conference call covering fourth quarter and full year 2023 financial and operational results, Christmann asked Tracy Henderson, the company's exploration manager, to expand on his response and she said: "What interested us in the block was that we do see materiality with these prospects that warranted exploration."
He also turned to her when asked whether the partners were searching for Pikka lookalikes. Henderson said: "Yes, I would agree with that. We're looking at more play types like Pikka and Willow on the other side of Prudhoe Bay. And that is the Brookian play we're going to be exploring for in a younger sequence but it's absolutely the same geologic model and set up that we expect to see. Basically, just farther east than it's been explored for."
At the time the three partners made their deal in 2023, Santos Managing Director and CEO Kevin Gallagher said he was "pleased we've reached this agreement to farm down our exploration assets in Alaska. This transaction demonstrates the continued level of interest in exploration and development projects in the region, a tier one jurisdiction with supportive stakeholders and prospective undeveloped acreage."
Partner split APA holds a 50% working interest in the 148-lease block; Lagniappe and Santos each hold a 25% interest.
In 2024, APA had said it planned to invest $1.9 billion to $2.0 billion in upstream oil and gas capital worldwide. APA said it would invest for the long term by directing $100 million of the upstream budget toward exploration activities predominantly in Alaska.
"In Alaska it is a position that sits between Prudhoe Bay and ANWR in the Brookian play, so we've entered into the area where we have analogues there that have worked, but they are in an area where that play has not really been explored for. So we're testing in an underexplored region, As John said, we are drilling three wells in this winter season. All of those will spud in Q1," Henderson said.
We've "got good seismic control and they're fully supported so we feel good about them but it IS exploration," Christmann said.
The partners are looking at drilling three more wells next winter, so a total of six wells with three rigs drilling simultaneously. Under the terms of the deal between the three working interest owners, initial exploration activities during the two-year exploration phase will be undertaken without cost to Santos, which is concentrating on development of Pikka Phase 1 west of the central North Slope.
Better oil All reports say the play concept in the Lagniappe-operated acreage to the east is very similar to the Brookian at Pikka. Multiple zones, onshore, good gravity oil, reasonably close to infrastructure.
But the targeted objectives are slightly younger than what Santos and partner Repsol have at Pikka et al but with better reservoir qualities -- porosity and permeability -- even though they are deeper.
There have been very few wells drilled in and near Lagniappe's South Badami area -- and most of those wells were drilled in the 1970s trying to find another Prudhoe Bay, but almost all of the wells bypassed good oil shows, Armstrong said in a 2021 interview.
Prior to finding all of that oil in the Brookian Nanushuk formation west of the central North Slope most people were saying the North Slope had very little remaining potential. The Nanushuk at Pikka changed all that.
Bad weather In a Feb. 26, 2024, text Armstrong updated Petroleum News on Lagniappe drilling program where the company was using three drilling rigs to simultaneously drill three exploration wells.
The Doyon 141 drilling rig was delivered to the King Street-1 well location, the Nabors 105-E rig to the Voodoo-1 site and the Doyon Arctic Fox rig to Sockeye-1.
"Our drilling is just now starting," Armstrong wrote.
"Warm weather, then really windy weather has delayed our program a couple of weeks."
But more unusually bad weather followed and continued to plague drilling operations -- more wind, snow and below normal temps.
What impact these conditions have had on drilling and possible flow-testing operations is unknown, but PN sources say all three wells will be completed this season.
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