Vol. 25, No.03 Week of January 19, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Placer resurrection

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AEX files for Corps permit; unit in default, working with DNR on resolution

Kay Cashman

Petroleum News

The dispute between the Alaska Department of Natural Resources’ Division of Oil and Gas and ASRC Exploration appears to be close to resolution, with permitting of the Placer unit moving forward.

In mid-December AEX applied for a key Placer permit with the U.S. Army Corps of Engineers per a public notice posted by the agency Jan. 15.

The Placer unit had been terminated by the division in July, but an email from DNR Deputy Commissioner Sara Longan with the following statement from Commissioner Corri Feige confirmed a settlement is in the works: “ASRC Exploration LLC and the Department of Natural Resources continue to work closely together to move the Placer unit forward into development and, ultimately, production. We are hopeful to resolve soon.”

What changed for AEX is not clear at this time. It is possible the company found a partner, as it had put the 8,768-acre Placer unit on the market in May.

Permit application details

The Corps permit applied for by AEX is for work in waters of the United States, specifically involving the Miluveach River, with the possible result of connecting Placer to the nearby Mustang field operated by Brooks Range Petroleum Corp., where Placer oil might be processed.

Per the 30 day public notice, the project site is located within sections 4, 9, 15, 15, 22, 26, 27 of township 11 north, range 7 east, Umiat Meridian; Latitude 70.31429º N., Longitude 150.3745º W.; near the village of Nuiqsut. The proposed gravel road will take off from the existing gravel road between the Mustang pad and the Mustang gravel pit near section 35 of township 1N, range 7E, UM.

The Mustang pad is about 45 miles west of Deadhorse and can be accessed via the Spine Road. The purpose of the Corps permit is to “develop oil within the Kuparuk C reservoir, contained within the Placer unit,” the public notice said.

The work AEX proposes is to discharge approximately 68,000 cubic yards of gravel to construct a seven-acre gravel pad, the top width of which varies between 250 and 400 feet and the bottom width varies between 270 and 420 feet, with a length of 1,000 feet. The pad will be 5 feet high (with 2:1 fill slope.).

Approximately 325,000 CY of gravel will be used to build a seven-mile access road. The dimensions of the road will be 24 feet wide at the top, 44 feet minimum bottom width, 5 to 6 feet high, 2:1 fill slope.

The road will have a 37-acre footprint; the total footprint of the single-pad Placer project would be 45.5 acres.

Oil to Pikka or Mustang

In its Corps application, AEX said a three-phase pipeline with vertical support members will transport fluids from the pad to a “nearby processing facility.”

While the processing facility was not named, the maps provided by AEX in its Corps application show the pipeline connecting to the nearby Mustang field pad.

However, in paperwork filed in the last year with the state, AEX has said it was looking at either piping its oil to the new Pikka development that is expected to produce its first oil in 2022 or to take it to Mustang, which is currently utilizing an n early production facility, prior to constructing a larger permanent facility.

Detring Energy Advisors of Houston, Texas, which was retained by AEX to market Placer, said in an advertisement that the unit has a development-ready project with the Kuparuk C reservoir and the potential for additional stacked plays in the Alpine and Nanushuk intervals.

Placer, Detring said, could have 110 million barrels of original oil in place, with between 35 million and 45 million barrels of oil recoverable across all horizons, noting Placer is in a good neighborhood, with the ConocoPhillips’ Kuparuk River oil field on the east and bordering the Oil Search-operated Pikka unit on the west.

“Well and analog data indicate the field is an ideal development candidate due to favorable average porosity (23.4 percent), high permeability (430 mD), and light oil viscosity (26.2API @ 1.51-1.85cP),” Detring said, adding, the “reservoir model indicates Kuparuk C development generates $107 million PV-10 value (BTAX) and greater than 8,000 barrels per day of oil peak rate utilizing two producers and two injectors.”

Detring also said that of three wells drilled to date in the Placer unit, two are usable for future development.

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