Providing coverage of Alaska and northern Canada's oil and gas industry
October 2020

Vol. 25, No.41 Week of October 11, 2020

Placer facility sharing talks continue

AEX files fifth POD for small North Slope field, which it has had up for sale; details plans to move ahead with development in 2021

Kristen Nelson

Petroleum News

ASRC Exploration LLC, or AEX, operator of the small North Slope Placer unit, is continuing facility sharing discussions for Mustang with the Alaska Industrial Development and Export Authority and is continuing work on acquiring permits for Placer development, the company told the Alaska Department of Natural Resources’ Division of Oil and Gas Oct. 2 in the fifth proposed plan of development for Placer.

The fifth POD covers the 2021 calendar year.

During 2020, under the fourth POD, AEX said it received its 404 permit from the U.S. Army Corps of Engineers, and its Section 401 water permit from the Alaska Department of Environmental Conservation, filed an oil discharge prevention and contingency plan renewal application with DEC and is working with the North Slope Borough on a material sale contract for gravel and on NSB rezoning for the Placer leases.

Continuing discussions

AEX said it continued facility sharing discussions with Mustang unit operator Brooks Range Petroleum Corp. until AIDEA began foreclosure proceedings against Mustang.

On Sept. 11, AEX said in its Oct. 2 filing, it executed a nondisclosure agreement with AIDEA to begin discussions on a development and facility sharing agreement related to Mustang “and is currently engaged in such discussions with AIDEA.”

(On Sept. 16 the AIDEA board passed a resolution approving negotiation and execution of a debt settlement/restructuring agreement and authorizing the sale of Mustang leases to Finnex LLC; see story in Sept. 20 issue of Petroleum News.)

AEX said it had been unable to move forward with its road and pipeline survey, facility front end engineering and design and other applications and permits for ice road construction due to the Mustang foreclosure, but said it would “initiate these activities as soon as a Facilities Sharing Agreement is in place.”

In paperwork filed with the state in 2019, AEX said it was looking at sending its oil to either the new Pikka development or to Mustang.

AEX put Placer on the market in 2019, retaining Detring Energy Advisors of Houston to sell the North Slope unit and related assets. Detring described Placer as offsetting multiple prolific oil fields and said it included a development-ready project in the Kuparuk C reservoir and the potential for additional stacked pays in the Alpine and Nanushuk intervals.

Other plays

AEX said it evaluated oil shows from Nanushuk sandstones in the Placer No. 1 and No. 2 wells in 2019.

“Our seismic interpretation of the merged, reprocessed 3D seismic data over the Placer Unit indicates a major change in the basin architecture between the Nanushuk 3 development in the Pikka Unit and the Placer Unit. The sand development in Placer 1 and 2 wells is related to a back-stepping transgressive system. AEX has continued the analysis of the Nanushuk interval because it could be a potential satellite development from the Placer Unit,” the company said.

AEX said the surface location of Oil Search Alaska’s Mitquq wells is about half a mile east of the Placer unit boundary. AEX noted a January 2020 release from Oil Search describing 180 feet of oil pay and 17 feet of gas pay in the Mitquq No. 1 and said that well targeted “the same trend AEX had previously identified.”

AEX said public well results from the Mitquq No. 1 well appear “to have validated AEX’s asserted interpretation of the Nanushuk interval and has de-risked the Nanushuk in the eastern part of the Unit.”

Plans under review

Based on geologic and geophysical analysis of the eastern Nanushuk, AEX said it was reviewing its development plan for the unit. It said preliminary studies indicate the eastern Nanushuk could be developed from the Placer No. 1 pad and said in its 404 permit it “designed the drill site to be large enough to accommodate additional wells.”

AEX said it is refining the number of wells it would take to develop the eastern and western Nanushuk Topset within its leases and finalizing well design.

Fifth POD

For its fifth POD, covering the calendar year 2021, AEX said long-range activities “include plans to delineate all underlying oil or gas reservoirs, bring the reservoirs into production, and maintain and enhance production once established.”

The Kuparuk C would be the anchor productive interval within the Placer unit, the company said, and based on recent engineering work the plan would be to develop the Kuparuk C reservoir with two horizontal multistage fracked producers and two injectors.

The 404 Corps permit received earlier in the year allows construction of a gravel pad in the vicinity of the Placer No. 1 well, AEX said. That pad would be accessed via a gravel road and a three-phase pipeline would move fluids from Placer to the Mustang facility.

As part of the Kuparuk C drilling plan, AEX said pilot holes would be extended to test the Alpine C.

Eastern Nanushuk Topset sands have been evaluated and will be included in future development plans, the company said, and it “will continue the geological and reservoir engineering work on these prospects to delineate these potential reservoirs.”

Development activities

Key development activities in the fifth POD include:

*Finalizing a facility access agreement for throughput into the Mustang facilities and pipeline;

*Starting facilities FEED once the facilities sharing agreement is in place;

*Restarting discussions with the North Slope Borough on rezoning for the Placer leases;

*Starting work for needed state and federal permits;

*Conducting a pre-build survey for road, pipeline and pad layout by the end of June 2021;

*Obtaining master service agreements with contractors for ice road, civil and gravel work during the first and second quarters of 2021;

*Starting ice road construction in the fourth quarter of 2021 to lay gravel for road and pad in the first quarter of 2022; and

*Expediting and conducting civil engineering FEED for gravel placement for road and drill pad to Mustang in June 2021.

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