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Vol. 25, No.14 Week of April 05, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil Patch Insider: Last ERD rig module moves to Alpine to drill Fiord West; AOGA rescheduled; China produces record hydrates; Trump meets with oil executives - April 05, 2020

Click here to go to the full PDF version of this issue, with any maps, photos or other artwork that appears in some of the articles.

Kay Cashman

Petroleum News

On March 27 the last piece of the big extended reach drilling rig, Doyon 26, left Deadhorse for the CD2 pad in the Colville River unit northwest of the main Alpine field. The derrick and floor section were pulled by three big haul trucks cabled together (see photo in pdf and print versions of this issue).

After the rig is assembled in late April it will target the Fiord West Kuparuk reservoir for its initial wells. Discovered in 1996, Fiord West has not been developed by its operator, ConocoPhillips, because it’s in an environmentally sensitive area along the coast and couldn’t be accessed.

Also known as the “Beast,” Rig 26 can reach reservoirs some 7 miles from its surface location. This means the 9.5 million pound high-tech ERD rig will be able to develop 154 square miles of reservoir versus the standard 55 square miles accessed by other North Slope rigs.

Fiord West is projected to produce 20,000 barrels of oil per day at its peak.

The wells will be drilled into the 12,015-acre Fiord West Kuparuk participating area, which is jointly managed by the State of Alaska, Arctic Slope Regional Corp. and the U.S. Bureau of Land Management and includes state and joint state-ASRC and BLM leases.

The Fiord West Kuparuk PA is about a mile west of the Fiord Nechelik PA - an area with seven exploration wells, six of which encountered the Lower Cretaceous Kuparuk River formation.

Using a standard rig, ConocoPhillips drilled one well in the new Fiord West Kuparuk PA with production from that well already online.

The 9.5 million pound ERD rig - weight equivalent to almost 10 fully loaded Boeing 747s - has four 2,200 horsepower mud pumps.

It can burn a mix of processed field gas and diesel. Doyon 26 can displace about 50% of the diesel required to operate the rig, which will be a big savings for ConocoPhillips, both in terms of cost and emissions.

ConocoPhillips Alaska has been working on the rig from initial FEED, or front end engineering design, studies and concept stage for about four years. During construction they had assistance from ConocoPhillips Canada.

The team recognizes what a game changer this will be for ConocoPhillips in Alaska, said Paul McGrath, ERD project director.

The CD2 pad was extended to 12 acres to accommodate the ERD rig and development.

Other drilling rigs do not have the capability to access Fiord West without building a new gravel pad, additional pipelines and more roads - hence increasing the development footprint in an environmentally sensitive area.

About 65 Doyon employees will work on Rig 26. Workers will also be needed for camps, transport and other oilfield support services.

- KAY CASHMAN

AOGA conference rescheduled

Originally scheduled for May 28, the Alaska Oil and Gas Association’s annual conference has been rescheduled to July 30.

“Due to the recent outbreak of COVID-19 and the unknowns around its resolution, our team feels that postponing this year’s annual conference would be in the best interest of the health and safety of all participants,” AOGA said on its website.

The big annual oil and gas conference will be held at the Dena’ina Civic & Convention Center in Anchorage.

Sponsorship, exhibitor and individual registration information can be found at www.aogaconference.org

- KAY CASHMAN

China produces record amounts of hydrates

In 2017 China announced that for the first time it had extracted gas from an ice-like solid, methane hydrate, under the South China Sea. Methane is the primary component of natural gas, which in the icy solid is trapped in a lattice of water molecules.

Methane hydrates hold vast reserves of natural gas and are often referred to as “fire ice” or “flammable ice” because when the methane is released it will burn when it encounters fire.

The U.S. Department of Energy says the world’s methane gas hydrates supply could be as much as 250,000 to 700,000 trillion cubic feet.

Many other regions including Alaska’s North Slope and off the west coast of Japan are working on how to tap those reserves, but extraction is extremely difficult and expensive - i.e. not cost-effective.

Officially known as methane clathrates, they are formed at sub-zero temperatures and under high pressure and can be found in sediments under the ocean floor as well as beneath permafrost on land.

Gas can be released from hydrates through a combination of elevating the temperature or reducing the pressure causing them to break down into water and methane gas, the primary component of natural gas. One cubic meter of the compound releases about 164 cubic meters of gas.

According to a March 30 article in OilPrice.com, the Chinese claim they have produced a record amount of hydrates - 861,400 cubic meters.

Hydrates may be more abundant than all other hydrocarbons taken together: oil, gas and coal, OilPrice.com reported.

Intriguingly, methane hydrate disassociation has been credited for sustained gas production from the East Barrow gas field at the western end of the North Slope. If this theory for gas production from the field proves correct, the phenomenon would demonstrate the possibility of continuous gas production from hydrates through depressurization of the hydrate resource.

- KAY CASHMAN

Trump meeting with U.S. oil executives

President Trump is meeting with U.S. oil industry leaders at the White House on April 3 to discuss ways to help the domestic oil and gas industry as companies are “ravaged” by a price war between Saudi Arabia and Russia and falling demand for energy due to the coronavirus outbreak.

Executives from Exxon Mobil, Chevron, Occidental Petroleum and Continental Resources are among those that have been invited to meet with the president.

First reported by The Wall Street Journal, Trump confirmed the meeting at a White House press briefing the evening of April 1.

“I’m going to meet with the oil companies on Friday,” he said. “I’m going to meet with independent oil producers also on Friday, or Saturday, maybe Sunday. We’re having a lot of meetings on it.”

The Journal reported that topics to be raised at the meetings will include a tariff on Saudi Arabia oil coming into the U.S. and a Jones Act waiver that would allow non-American ships to transport oil and other goods between U.S. ports.

Such waivers have been used by the federal government before during emergency situations, and at least once to bring a jack-up drilling rig into Alaska’s Cook Inlet.

Trump also said he had recently spoken with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war and within a “few days” lower production in order to help bring oil and gas prices back up.

“Worldwide, the oil industry has been ravaged,” he said. “It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal,” he was quoted as saying in press coverage.

A source familiar with Trump’s plan told Reuters that oil refiners and small producers would also be represented in the meetings.

- Petroleum News



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