|
State approves shrunken Qugruk Repsol originally proposed a 98,852-acre unit, but will only get 12,065 acres; company must drill this year or lose unit Eric Lidji For Petroleum News
The Alaska Department of Natural Resources has approved a request by Repsol E&P USA Inc. to form the Qugruk unit on the North Slope, but in a significantly reduced form.
While Repsol originally proposed a 98,852-acre unit over 49 state leases, the state ultimately approved a 12,065-acre unit over six leases just east of the Colville River unit.
The Jan. 26 decision requires Repsol to post a $20 million bond by Feb. 15 that will only be returned if the company drills, tests, plugs and abandons the Qugruk No. 4 well by June 30, 2012. The unit terminates if Repsol fails to drill any wells by June 30, 2012.
The decision found that Repsol “has identified numerous high quality prospective targets over a large area in multiple stratigraphic intervals which will need to be drilled in order to prove up, which they propose to do in part during the proposed initial unit plan,” but also found that unitization of the leases was “not technically supported.” The large bond combined with the commitment to drill this year is meant to protect the state’s interests.
The state increased the lease rental rates of four leases — ADL 391160, ADL 391161, ADL 391162 and ADL 391164 — from $3 per acre to $4.50 per acre starting Aug. 31, 2012, the date those leases would otherwise expire if not included in the unit.
The unit boundaries proposed by Repsol included leases owned by ConocoPhillips Alaska Inc. and Anadarko Petroleum Corp., Pioneer Natural Resources Alaska Inc. and Paul Craig and Peter G. Zamarello, but those owners did not sign the unit agreement.
Repsol owns a 70 percent interest in its leases, while partners 70 & 148 LLC and GMT Exploration Co. LLC. split the remaining 30 percent interest and signed the agreement.
Well count dropping Qugruk No. 4 is one of four well locations Repsol originally proposed as part of a one-year plan of exploration for the unit, and the only one inside the new unit boundaries.
The well would be located in the nearshore waters of the Beaufort Sea.
Repsol initially planned to drill as many as 15 wells this winter — five vertical wells with two sidetracks at each location — but reduced its well count to 12 to alleviate the concerns of local residents. The North Slope Borough subsequently told the company it could only run three rigs this winter, effectively dropping the well count to nine.
| 