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Vol. 24, No.36 Week of September 08, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

Jade postpones Sourdough well; couldn’t get barge, rig into pier

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Kay Cashman

Petroleum News

Based on results from a bathymetric survey conducted on July 31, Jade Energy executive Erik Opstad told Petroleum News Aug. 30 that the barge carrying the drilling rig for the eastern North Slope Sourdough prospect was not able to get into the Point Thomson unit’s service pier this summer, so the appraisal well planned for this coming winter will have to be deferred until the first quarter of 2021.

“It’s going to require some light dredging,” he said, to remove the silt.

The Alaska-based independent had everything lined up to drill Jade No. 1, an oil well, in the first quarter of 2020 in the Sourdough prospect on ADL 343112 in area F of the Point Thomson unit.

The state lease, the most southeasterly in Point Thomson and adjacent to the western border of the ANWR 1002 area, holds two mid-1990’s Sourdough oil discovery wells that were drilled by BP (at the time partnered with Chevron). In a 1997 press release BP estimated Sourdough held 100 million barrels of recoverable oil.

Jade holds a 95% working interest in the lease, per a farmout agreement with Point Thomson operator ExxonMobil and the other working interest owners. The deal with Jade also satisfied drilling requirements the Thomson unit owners had with the state of Alaska.

In November, as part of the farmout, Exxon assigned a 63% working interest in ADL 343112’s Tract 32 to Jade, retaining a small overriding royalty. In July, BP did the same, transferring its 32% working interest and keeping a small overriding royalty, leaving just ConocoPhillips 5%.

The Exxon and BP assignments gave both North Slope producers some skin in the game, fully aligning them in delivering a successful Sourdough development.

Opstad says he expects Jade to have 100% working interest by the end of year.

How does Hilcorp’s recently announced acquisition of BP’s assets in Alaska bode for Jade and its plans at Sourdough?

“Jade is the operator of Sourdough and the relationship between Jade and Hilcorp is governed by the farmout agreement Jade previously executed with BP.”

“I haven’t talk to them (Hilcorp) yet … while BP was very good to work with, I have no reason think that Jade’s relationship with Hilcorp won’t be equally open and constructive,” Opstad said.

Sourdough and KIC wells

At the time the first two Sourdough wells were drilled, BP and Chevron were and until Hilcorp’s purchase of all BP’s assets in Alaska closes next year still technically are, partners in KIC No. 1, the only well ever drilled in the ANWR 1002 area.

The results of the KIC well and both Sourdough wells are confidential except to a very few, including BP and soon Hilcorp.

In the 1990s BP’s Sourdough discovery would have required processing facilities and a 50-plus-mile pipeline to the start of the trans-Alaska oil pipeline at Prudhoe Bay.

But proximity to the existing infrastructure and pipeline connection at Point Thomson has changed the situation for Sourdough.

As of March 31, 2019, the Point Thomson line was capable of shipping 70,000 barrels of liquids per day and could be expanded, per its owners.

Drilling, development plans

Jade plans to first drill a vertical pilot hole to true vertical depth then plug it back and drill a high angle penetration into the Brookian reservoir, noting it “firmly believes … the deployment of horizontal production wells is a critical element in commercializing the PTU Brookian opportunity in Area F, as well as its adjoining areas.”

Upon completion of “drilling and extended production testing, analysis of that data will be integrated into the Jade 3D Brookian seismic model,” the company said in filings with the Alaska Department of Natural Resources’ Division of Oil and Gas.

With those results in hand, Jade will put together a third plan of development and submit it to the division.

The company’s first plan of development for Area F was approved April 4 by acting Division of Oil and Gas Director James Beckham.

In his approval, Beckham said that based on analysis of the appraisal well data, Jade “will move forward accordingly with additional development at Area F and adjoining areas in the 2020-2021 winter drilling season (presumably now changed to 2021-2022). Current plans include drilling an additional lateral into the Brookian reservoir and production testing. The need for additional delineation wells and the overall economic feasibility of a field development program at Area F will be considered following the 2020-2021 season.”

- KAY CASHMAN



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