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XCD opening Peregrine farm-out at NAPE
Larger maiden prospective oil resource of 1.6B barrels released in independent ERCE report for North Slope Nanushuk, Torok project Kay Cashman Petroleum News
XCD Energy is launching its farm-out campaign for Project Peregrine on Alaska’s North Slope at NAPE in early February, XCD managing director Dougal Ferguson told Petroleum News Jan. 21.
“We have kept it as broad as possible to attract as many players - large and small - as possible,” he said, meaning XCD will be offering both a full option to access all three onshore prospects with a mean unrisked recoverable prospective resource of 1.6 billion barrels of oil, as well as a low-cost alternative that would drill only the shallow Nanushuk play in the Merlin and Harrier prospects, which contain approximately two-thirds of Peregrine’s total oil.
The shallow Nanushuk prospects require drilling to only about 5,000 feet to fully test, whereas the third prospect, the Harrier Deep, is a Torok objective at about 10,000 feet.
Whereas the shallower Nanushuk Merlin and Harrier prospects can be drilled with a smaller, likely workover rig, the Harrier Deep prospect would require a conventional rotary rig., although it can be drilled from the same well bore as the Harrier.
In addition to the rotary rig being more expensive, it would also require the building of ice roads, whereas a smaller rig could be transported via less expensive snow trails.
“We think we can drill both Merlin and Harrier (two shallow wells) for $15 million-plus. We are working on that project as we speak and would hope to have that properly costed within the next month or so,” Ferguson said.
Initially XCD talked about the possibility of drilling this summer with a smaller rig.
“We are still talking with the guys about the possibility of summer drilling - but to be honest - we probably couldn’t make this summer even if all the stars aligned,” Ferguson told Petroleum News.
“We are talking about a helicopter transportable rig, but we are also now looking at potentially using a workover rig that can be transported on snow trails.”
Independent report boosts resource estimates The interview with Ferguson was spurred by a Jan. 21 announcement from XCD about a new, much larger maiden prospective oil resource of 1.6 billion barrels from an independent report generated by ERC Equipoise, or ERCE.
The estimate is significantly higher than the internal estimate of 255 million barrels of oil that XCD announced for one of its primary objectives in September, three months prior to the company adding four new oil leases to its project by being top bidder for the acreage in the December federal lease sale in the National Petroleum Reserve-Alaska.
The earlier internal estimate only included one horizon from the Merlin prospect, which has now been matured to a mean resource estimate of 622 million barrels of oil as a result of multiple horizons being able to be intersected from one Merlin location.
The report also identified a new target, the Harrier Deep, which carried an unrisked mean of 572 million barrels of oil.
The data used to compile the independent prospective resource report included reprocessed 2D seismic data, basin modelling, petrophysical analysis of publicly available wells and historical geological records. The data was compiled and interpreted by XCD and was reviewed, validated and in some cases modified independently by ERCE.
How compares to Willow, Harpoon The 100% XCD-owned Project Peregrine covers an area of more than 195,000 acres within NPR-A.
The leases, which have a five to ten-year period remaining, are about 22 miles south of ConocoPhillips’ owned and operated Willow discovery, which XCD said is estimated to contain up to 800 million barrels of oil equivalent (see map adjacent to this story in the pdf or print version).
ConocoPhillips “is drilling four appraisal wells at Willow and up to three exploration wells at its Harpoon prospect, located about 15km (9 miles) northwest of XCD’s Harrier prospect. The Willow oil field is considered a direct analogy to XCD’s Merlin prospect while Harpoon is interpreted to lie on the same sequence boundaries as the Harrier prospect.”
According to Ferguson, “this is based on the 2D USGS data that we reprocessed where we have lines over both Willow and Harpoon. We …. assume they (ConocoPhillips) must be confident in what they see on the 3D - which we don’t have.”
XCD believes success at Harpoon would “materially upgrade” XCD’s Harrier prospect.
“Any success from the activity going on around us should really change people’s view on this highly prospective area and attract more interest in the company and the area as results are announced,” Ferguson said.
When asked whether XCD would accept a farm-in partner who wanted to take over operatorship of Project Peregrine, Ferguson said, “If we introduce an experienced operator, we are more than willing to hand over the reins, but if it is a consortium of smaller players, we may decide to retain operatorship.”
If a major comes in as a partner and wants to shoot 3D seismic “and drill with a traditional drilling rig, that’s fine by us; but the low-cost drilling option also opens doors for mid to large independents that might feel they have missed the Nanushuk boat. They can have a crack at the shallow targets for a fraction of the cost and still find near a billion barrels, if successful,” Ferguson said.
XCD is planning to lock in a farm-in partner in time to begin exploration drilling during next winter’s drilling season.
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