KRU expansion sought

Additions would allow Conoco to incorporate recent discoveries in existing PAs

ERIC LIDJI

For Petroleum News

ConocoPhillips Alaska Inc. wants to expand the Kuparuk River unit and two participating areas within the unit to better incorporate several recent discoveries and developments.

The largest oil company in the state is seeking permission to add a lease along the southern boundary of the North Slope unit and to include 18 additional leases already within the unit to either the Kuparuk participating area or the West Sak participating area (see map, page 22).

The former expansion would include lease ADL 392364 into the unit boundaries, expanding the total unit size by 2,560 acres. The latter expansion would add portions of 11 tracts (including ADL 392364) covering some 11,900 acres to the Kuparuk participating area and eight tracts covering some 6,100 acres to West Sak participating area. All the relevant tracts and leases are currently held by production from the unit.

The expansion would allow ConocoPhillips to more easily utilize existing facilities to develop reserves discovered in the expansion regions, according to the company. The precise amounts of the potential reserves have been kept confidential by the state.

“The reserves discovered thus far in the Expansion Area are not large enough to support the costs of full processing facilities. Even if stand-alone development were economic, there would be economic waste due to the existence of duplicate facilities and services,” the company wrote in its application, which was recently released for public comment.

The Division of Oil and Gas is taking comments on the plan through Aug. 10.

The proposed expansions correlate with much of the recent activity at the unit.

The proposed expansion of the Kuparuk participating area would include two blocks - one associated with Drill Site 2S and Drill Site 2M and the expansion lease in the south.

The company is currently developing Drill Site 2S in the southwest corner of the unit, with plans to start production by the end of the year. DS-2S will be the first new drill site at the unit since 2003. Drill Site 2M, to the north, has seen some drilling in recent years.

The unit expansion at ADL 392364 would incorporate a lease in the vicinity of Drill Site 2E, Drill Site 2F and Drill Site 2G, where ConocoPhillips has been focusing a noticeable portion of its development drilling budget at Kuparuk in 2014 and for this coming year.

Altogether, ConocoPhillips said it has drilled five wells into the expansion acreage in recent years. Those include wells 2E-01, 2F-21, 2F-22, 2G-17 and 2M-36. All five of those wells encounter hydrocarbons in paying quantities, according to the company.

The expansion associated with Drill Site 2S would incorporate portions of ADL 25590, ADL 25603, ADL 355608, ADL 380053 and ADL 380051 to the participating area. The Drill Site 2M expansion would add portions of ADL 390503, ADL 25565 and ADL 25590. The southern expansion would add ADL 39264, ADL 25668 and ADL 25605.

The proposed expansion of the West Sak participating area would include a block near Drill Site 1H, where ConocoPhillips is in the early stages of a $450 million expansion program projected to come online in 2017 and produce 8,000 barrels per day at its peak. The expansion would add portions of ADL 47449, ADL 25638, ADL 25637, ADL 25636, ADL 25639, ADL 28242, ADL 25649 and ADL 28243 to the participating area.

ConocoPhillips has drilled two recent wells in the proposed West Sak expansion area: 1C-150 and 1C-151. Both encountered commercial hydrocarbons, the company said.