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W Harrison Bay unit OK’d
State of Alaska approves new Beaufort shallow water unit; 2 well commitment Kay Cashman Petroleum News
On Dec. 8 the Alaska Department of Natural Resources’ Division of Oil and Gas posted on its website a Dec. 7 approval of Shell Offshore Inc.’s application to form the West Harrison Bay unit in the shallow state waters of the Beaufort Sea west of the central North Slope.
In a Dec. 9 statement to Petroleum News Shell spokesperson Cindy Babski made it clear Shell will not operate the leases.
“The unitization term ends in December 2025 (per the Dec.7 approval), allowing Shell time to pursue a commercial agreement with an alternative operator. Shell has no intention of operating these leases, which were originally purchased in 2012 and were due to expire in 2022. Shell will transition to an alternative operator and fully divest out of the venture. We have sold or relinquished all our frontier licenses in Alaska and have no plans for frontier exploration offshore Alaska,” Babski said.
The 81,000-acre unit application included a plan of exploration, or POE, in which Shell said two wells would be drilled within five years, which the agency also approved with the unit formation effective Dec. 7.
Shell told the division it does not intend to operate the West Harrison Bay unit’s 18 leases; rather it applied for the unit to prevent the leases from expiring, expecting to bring in another company to operate in 2021.
Shell picked up the West Harrison Bay leases in 2012 “because prospectivity was recognized in the Brookian and Beaufortian megasequences,” the company’s application said, noting it redirected focus to these leases, and “generated five stand-alone prospects in the Nanushuk formation and multiple leads in both the Torok formation and Jurassic Alpine-like plays.”
Review of the confidential data and interpretations of the data provided by Shell “reasonably supports an interpretation that the unit encompasses the minimum area required to include all or part of several potential hydrocarbon accumulations (PHAs) in the Nanushuk and Torok formations,” division Director Tom Stokes confirmed in the Dec. 7 decision.
“The area encompassing the PHAs … will require extensive drilling, testing, and additional delineation work to determine its commercial viability,” he said.
Although the unit area “saw scattered exploration efforts during the 1970s and 1980s.” it “remains lightly explored today,” Stokes wrote, noting no wells have been drilled within the unit boundary.
The West Harrison Bay unit lies northwest of the Oil Search-operated Pikka unit, approximately 7 miles north of the Bear Tooth unit (specifically directly north of the Willow discovery) and 13 miles northwest of the Colville River unit, both of which are operated by ConocoPhillips.
Second POE due Oct. 6, 2021 In the POE, Shell also committed to several non-drilling activities, including completing a data gap and alternatives analysis to determine what additional studies are required to advance exploration activities in the unit, initiating an exploration phase project scoping, and finalizing subsurface well design and layout to optimize the reservoir.
Shell further committed to acquiring (and giving to the division) additional seismic information that can be interpreted to support the presence of a prospect(s) within the designated “flex wave area” of the unit by no later than the end of September 2022.
Shell provided the additional seismic information on Nov. 19. The division has not yet validated the dataset.
One well is to be drilled in the West Harrison Bay unit no later than two years from the effective date of the unit agreement - or two wells by no later than five years from the effective date. If the wells are not drilled within that timeframe, then the $3.25 million performance bond posted by Shell must be surrendered in full to the department, and the unit will automatically terminate five years from the effective date.
The initial POE period runs from Dec. 7 through Dec. 6, 2021. A second POE is due Oct. 6, 2021.
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