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North Slope exploration units approved Drilling at Cronus, NE Storm this winter; Cronus now includes AVCG interest; Anadarko commits to 2006-07 well at Jacob’s Ladder Kristen Nelson Petroleum News Editor-in-Chief
On Oct. 27 and 28 the Alaska Division of Oil and Gas approved three North Slope exploration units: Cronus, Jacob’s Ladder and NE Storm. Two of the approvals, Cronus and NE Storm, include a first well this winter season; the first well at Jacob’s Ladder will be drilled in the 2006-07 winter season, and the division said one of the prospects in that unit represents “a previously unrecognized play type on the North Slope of Alaska.”
ConocoPhillips Alaska is the Cronus operator — the prospect is west of the company’s Meltwater field.
Anadarko Petroleum Corp. holds the leases at Jacob’s Ladder some 10 miles southeast of the Prudhoe Bay field.
Pioneer Natural Resources Alaska is the operator at NE Storm south of Prudhoe Bay. Pioneer has a 50 percent working interest in the leases; ConocoPhillips Alaska owns the other 50 percent. AVCG partner in Cronus At the time ConocoPhillips filed its Cronus application in August it was the sole owner of the leases, but has subsequently assigned 30 percent of its working interest to AVCG. ConocoPhillips plans the first well on the two-lease 11,343 acre unit this winter season. Based on results of the first well, geologic and engineering studies are planned for 2006. A participating area will be formed, a second plan of exploration submitted or a second exploration well drilled in the third year of the initial plan or earlier.
The leases were originally part of the larger Southeast Delta exploration unit, dissolved in 2003 when ConocoPhillips elected not to drill the Cronus well. The proposed Cronus target is Albian-aged submarine fan turbidite sands in the Torok formation, correlative to the section in the Nanuk No. 1 well 16 miles to the northwest. Failure to drill the first well by July 1, 2006, will result in automatic termination of the unit. Anadarko will drill in 2006-07 When Anadarko applied to form the Jacob’s Ladder unit in July it told the state it would “endeavor to secure a three-party partnership: for the unit prior to June 1, 2006, and notify the state of its 2007 exploration program by that date. If the working interest owners decided to drill an exploration well and the well was not completed by June 1, 2007, Anadarko proposed in its application to pay the state a cash penalty of $275,000.
The 37,982-acre 18 lease unit is approximately 10 miles southeast of the Prudhoe Bay field.
The division said in its decision that the plan of exploration “was subsequently modified by negotiation” between the division and Anadarko.
The lease delay payment if a well is not drilled could top $1 million.
The new exploration plan calls for Anadarko to commit by June 1, 2006, to drill an exploration well by June 1, 2007, or pay a lease delay payment of $374,440 and the unit will terminate. If Anadarko commits to drill the lease delay payment can be deferred until June 1, 2007, but interest will be charged at 5.75 percent resulting in a June 1, 2007, delay payment of $394,912.80.
If Anadarko has committed to drill but does not complete a well by June 1, 2007, it will pay a lease delay payment of $628,376 in addition to the year-one payment of $394,912.80 and the unit will terminate.
If the well is drilled, the division said, neither payment is due. New play type at Jacob’s Ladder The division said the objectives at Jacob’s Ladder include reservoirs of both the Lisburne and Sadlerochit groups.
“The Lisburne prospect represents a previously unrecognized play type on the North Slope of Alaska. Analogs for the play type have been identified in the Yates field of West Texas, the Golden Land field of Mexico and the Vuktyl field of Russia. Karstification on carbonate strata appears to be the critical element leading to the economic success of these fields,” the division said.
“It has been proposed that the Lisburne (Wahoo formation) prospect may yield a range of 20-660 million barrels of oil equivalent and the Sadlerochit (Ivishak formation) prospect may yield a range of 50-800 million barrels of oil equivalent,” the division said.
Among the economic benefits to the state of approving this unit, the division said assessment of the leases “allows evaluation of a previously unrecognized play type on the North Slope of Alaska.”
Two wells have been drilled within the northeastern confines of the proposed unit, the division said, although neither those wells, nor others in the area, “encountered economic petroleum reserves in either the Sadlerochit or Lisburne intervals. Heavy oil and dead oil shows, however, were quite common.” Pioneer plans Hailstorm, Thunderhead wells Pioneer Natural Resources Alaska’s initial plan of exploration at NE Storm includes an exploration well in each of the two identified prospects, the division said. The unit plan calls for Pioneer to complete drilling operations on the Hailstorm well by June 1, 2006; commit in writing to drill the Thunderhead well by Sept. 1, 2007; and drill the Thunderhead well by June 1, 2008.
“The primary exploration target is the Ivishak sandstone, with the possibility of encountering other hydrocarbon-bearing sandstones,” the division said. There are no wells in the proposed unit area. “Prospects consist of structural closures in the Ellesmerian that have been defined by 3-D seismic mapping,” from a 3-D program shot by BP Exploration (Alaska).
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