Vol. 24, No.49 Week of December 08, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

All not so shiny

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Jepsen: Investment in Alaska North Slope core fields rivals new fields

Kay Cashman

Petroleum News

In his presentation at the Resource Development Council’s annual conference in Anchorage in November, Scott Jepsen talked about the North Slope’s reemergence as an oil province due to big new oil discoveries at Pikka and Willow, expanding the depiction of the renaissance by adding the North Slope’s three major producing, or core, fields - Prudhoe Bay, Kuparuk and Alpine/Colville River - to the new fields.

Furthermore, Jepsen, who is a senior vice president at ConocoPhillips Alaska, said that the capital investment planned for the three core fields in the next 10 years rivals that proposed for new discoveries - $11 billion for the core fields compared to $13 billion.

And while the three older core fields are “not the shiny new toy out there that gets so much attention,” they are vital to present and future oil production in Alaska, he said.

Currently the three core fields yield “80% of the oil production that’s coming from the North Slope,” Jepsen said. It’s “critical that the infrastructure that these fields support stays healthy,” because “the economics of the new fields are reliant” on the continued health of the core fields.

Spending the $11 billion

There is a “tremendous” amount of work being done at the core fields; in fact, what’s anticipated for the next decade is “pretty much on the same scale” as that planned for new discoveries, Jepsen said.

The goal of the $11 billion (gross) in capital that will be spent through 2029 in the Colville River unit which includes the Alpine field and in the Kuparuk River and Prudhoe Bay units, is to produce an additional “380 million barrels plus or minus, in that same timeframe. Of course, we’ll have more production beyond that. This is just the production through 2029,” Jepsen said.

“We’re talking about incremental production coming out of these fields of 150,000 barrels per day from all this work,” he said.

Jepsen outlined the work in core field projects as the following: Fiord West, west of Alpine in the Colville River unit; Narwhal CD8 drill site in the Colville River unit south of Alpine; Nuna in the Kuparuk River unit; Eastern NEWS in the Kuparuk River unit; I and M pads in the Prudhoe Bay unit; and VBLX in the Prudhoe Bay unit.

He said a final investment decision has not been made on most of the projects.

Narwhal and Fiord West

In the Colville River unit “we have the Narwhal development with production as early as 2022 from the CD4 pad; and a new pad called CD8 could come on production in 2025,” Jepsen said.

The Doyon 26 extended reach drilling rig, the largest mobile land rig in North America, is currently being reassembled in Deadhorse for use on the North Slope by ConocoPhillips.

Jepsen confirmed the ERD rig would first drill the Fiord West prospect, where the company has six wells planned from the CD2 pad starting early in second quarter 2020.

Fiord West, expected to produce 20,000 barrels of oil per day at its peak, “is an area we couldn’t access without this rig. It has been on our books for 20 years or so. We hadn’t figured out a way to do it economically or get the permits necessary to build the facilities even if it made economic sense because it’s an area (along the coast in wetlands) that’s pretty environmentally sensitive,” Jepsen said.

That changed with the high tech ERD rig able to tap 154 square miles of reservoir versus the standard 55 square miles.

Nuna prospect

In the northwest corner of the Kuparuk River unit, ConocoPhillips plans to develop the Nuna prospect, which it acquired earlier this year.

“We expanded the Kuparuk River unit so we could produce Nuna through the Kuparuk facilities. It makes it more cost efficient and easer to produce,” involving less new infrastructure, Jepsen said, noting the company has “about a winter’s worth of work with … 400 people on site to get everything ready to go.”

ConocoPhillips expects to do most of that that work this winter with production scheduled for 2022.

Unlocking more viscous oil

“And then we have Eastern NEWS, which is an extension of our successful West Sak program” in the Kuparuk River unit, Jepsen said.

In the adjacent BP-operated Prudhoe Bay unit, the Prudhoe owners (including ConocoPhillips) are “considering I pad and M pad” for viscous oil development, as well as a project “we call VBLX that is changing the recovery mechanism extending into different parts of the reservoir which will get additional production out of Prudhoe Bay,” he said.

“And of course, we’re going to have additional development drilling going on in the core reservoirs” of the three core areas.

Improvements in technology

A lot of what ConocoPhillips is now doing on the North Slope “couldn’t be done without the breakthroughs we’re seeing in drilling technology,” Jepsen said, pointing to one breakthrough that occurred this year when the company drilled its first and record breaking coiled tubing well in the West Sak.

Retrieving difficult-to-flow, viscous oil from the unconsolidated sands of the West Sak is challenging. (BP produces viscous oil from the equivalent Schrader Bluff formation in the adjacent Prudhoe Bay unit.)

“Viscous oil … is something that all of us - BP, Hilcorp and ConocoPhillips - have been trying to move the needle on to get production out of this huge resource,” Jepsen said.

The advantage of coiled tubing drilling is that it is “more cost-effective, more efficient - it opens up more opportunities for us,” he said.

So, according to Jepsen, this past summer when ConocoPhillips drilled the longest coiled tubing well to date at 8,183 feet, and first used CTD in West Sak, it was a “big step forward in commercialization” of the viscous resource and contributes to the extra 150,000 barrels of oil per day that will come from the three core fields in the next 10 years.

So, what could go wrong?

First and foremost, an increase in oil taxes, Jepsen said. “It could put a big damper on activity.”

Editor’s note: Learn more in the second part of this story in next week’s Petroleum News.

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