Vol. 25, No.42 Week of October 18, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

The magic number

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Two companies say they’ll drill a total of 3 ANS exploration wells, 7 possible

Kay Cashman

Petroleum News

Two junior oil companies are planning to drill a total of three exploration wells this winter on the North Slope - and a senior might drill as many as four wells if Ballot Measure 1 is defeated.

Australia independent 88 Energy Ltd., a Perth-based ASX and AIM listed firm, is moving forward with plans to drill two exploration wells in the National Petroleum Reserve-Alaska on acreage it acquired in an off‐market takeover from XCD Energy. The wells will be drilled by one of 88 Energy’s three operating subsidiaries, Accumulate Energy Alaska, which is run by long-time Alaska geologist Erik Opstad.

Pantheon Resources, owner of Great Bear’s North Slope oil and gas assets, is also planning to drill an exploration well in the 2020-21 winter season via its new Alaska operating arm, Great Bear Pantheon.

The timing of Talitha 1’s drilling was initially subject to securing a farm-in partner, but Patrick Galvin, Great Bear Pantheon’s chief commercial officer and general counsel, told Petroleum News Oct. 12 that the company is moving ahead on permitting the well without a partner. Galvin is a former commissioner of the Alaska Department of Revenue and former petroleum land manager for the Alaska Department of Natural Resources.

The North Slope’s most active explorer, ConocoPhillips Alaska, could drill as many as four exploration wells this coming winter, but the company put almost all of its North Slope investment plans on hold until after the Nov. 3 vote on Ballot Measure 1, which would increase the state’s severance tax by 150-300% depending on the price of oil.

The ballot measure “is targeted specifically at Prudhoe, Kuparuk and Colville. It is targeted at the backbone of industry. If those three fields aren’t healthy nothing is going to work very well,” ConocoPhillips Alaska President Joe Marushack said in a recent presentation to the Alaska State Chamber.

In the previous winter of 2019-20, the company drilled three of its planned six to seven exploration wells before it cut the season short because of concerns for worker safety connected to COVID-19. The three wells drilled were two Tinmiaq wells near the company’s big Willow discovery and a rank exploration well in the Harpoon prospect.

ConocoPhillips had hoped to complete up to three wells at Harpoon and four Tinmiaq wells in the season.

At the time the company had all its permits to drill the additional three to four wells.

88 targeting Nanushuk

The main target of 88 Energy’s two wells is the prolific Nanushuk reservoir.

The Harrier and Merlin prospects, where the wells will be drilled, are in XCD Energy’s 195,000-acre Peregrine block. On Jan. 21, 2020, XCD managing director Dougal Ferguson told Petroleum News that Merlin is considered a direct analogy to ConocoPhillips’ Willow oil discovery, while ConocoPhillips’ Harpoon prospect “is interpreted to lie on the same sequence boundaries as the Harrier prospect.”

Harrier and Merlin lie between the Umiat oil field to the south and Willow and Harpoon to the north.

Opstad told PN that the Nanushuk can be reached at less than 5,000 feet in the area, while a third prospect in the Peregrine block, Harrier Deep, has a Torok objective at about 10,000 feet. It will not be drilled in the 2020-21 winter season.

The shallower Nanushuk wells, Harrier 1 and Merlin 1, do not require the use of a rotary rig, or an ice road that is needed to transport the heavier traditional North Slope exploration rigs, allowing Accumulate to use a less expensive lightweight workover or coiled tubing rig that can be moved off-road in pieces by tundra-safe track vehicles on snow trails. Although the use of lightweight, portable rigs and snow roads was studied and considered by XCD, Armstrong, and Oil Search, 88 Energy will be the first to conduct such a program on the North Slope.

Early production the goal

Galvin said the Talitha 1 well will require a 7-mile ice road from the Dalton Highway west to the well location.

It will be followed by a development well at Great Bear Pantheon’s Alkaid project, but the timing of Alkaid drilling is subject to securing a farm-in partner.

A new Alkaid well has the potential to be completed as a producer via the “installation of an Early Production Unit facility,” Galvin earlier told Petroleum News in an email.

Alkaid, which has the advantage of being located along the Dalton Highway and trans-Alaska oil pipeline, factors that “could expedite low cost early production,” he said.

The Talitha project contains “three mutually exclusive and independent geological formations with different reservoir trap geometries, qualities and risk profiles,” Galvin said.

All three formations were penetrated and confirmed to be oil bearing in the Pipeline State No. 1 well drilled in 1988 by ConocoPhillips Alaska predecessor ARCO Alaska. The Talitha 1 well will offset Pipeline State No. 1.

In late March 2020, Great Bear Pantheon announced that it had completed its analysis of the shallowest of these three horizons, the “Shelf Margin Deltaic,” a Brookian aged reservoir, which it estimated to contain 1.8 billion barrels of oil in place with a P50 technically recoverable resource of 483 million barrels of oil. These numbers were “significantly higher” than pre-analysis expectation, Galvin said.

The two deeper zones at Talitha, the Brookian Slope Fan System and the Kuparuk “also offer significant potential,” with the company due to complete its analysis of the Kuparuk and provide resource estimates “in the near future,” he said.

Great Bear has drilled three wells off the Dalton Highway to date - two are plugged and abandoned (Alcor 1 and Merak 1) and one well, Alkaid 1, is suspended.

The Alcor and Merak wells were drilled in 2012, Alkaid 1 was in 2015 and re-entered and flow tested in the 2018-19 winter season.

The suspended Alkaid 1 well is some 2-1/2 miles west of the Dalton Highway and northwest of the Phecda Road Pad site. That well was drilled from an ice pad.

Pantheon said after the well was flow tested in 2019 that it confirmed a new Brookian light oil discovery just west of the Dalton Highway. The company now views the Phecda prospect as part of Alkaid.

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