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Phillips Alaska applies for SE Delta unit Exploration plan would hold five leases set to expire in March with two wells, one to be drilled this winter, one next Kristen Nelson PNA News Editor
Phillips Alaska Inc. has applied to the Alaska Division of Oil and Gas for approval of the SE Delta unit in an area between the Colville River unit and the Kuparuk River unit on the North Slope.
Phillips has 100 percent of the working interest in the proposed unit area and is the designated SE Delta unit operator.
The company is proposing that seven oil and gas leases be included in the unit, approximately 31,802 acres, the purpose of which is to allow exploration and development on a unit-wide basis instead of on a lease basis.
The seven leases form an approximately rectangular-shaped block off the southeast corner of the Kuparuk River unit.
A five-year primary term is requested for the unit agreement. Unless extended by inclusion in the unit, five of the leases expire March 31. One lease expires Oct. 31, 2005, and one lease expires June 30, 2006. Two prospects Phillips has identified two potentially oil-bearing prospects within the SE Delta unit area, both in the Torok formation: Atlas and Cronus.
Drilling operations would be completed at the Atlas well by June 1. “The Atlas well will be drilled as a winter operation from an ice pad and will be drilled to depths sufficient to penetrate the Torok formation or 6,200 feet TVD, whichever is the lesser depth,” Phillips told the state in its plan of exploration.
The Atlas prospect is in the north/northeast portion of the proposed SE Delta unit. Commitment is to drill wells Phillips said that failure to drill the Atlas well to completion by June 1 “will result in automatic termination of the SE Delta unit and the automatic and immediate surrender of all leases included in the unit area that are beyond their primary term when the unit terminates.”
Phillips has agreed to commit in writing on or before June 1 to drill an additional exploratory well within the proposed SE Delta unit — the Cronus well. That well will be drilled on or before June 1, 2002. The Cronus prospect is in the south/southwest portion of the proposed SE Delta unit.
If Phillips fails to commit to drill the Cronus well by June 1, 2001, the leases over the Cronus prospect would contract out of the SE Delta unit. If the well is not drilled by June 1, 2002, the Cronus leases would be contracted out of the unit.
In addition, if a commitment is made to drill the Cronus well, but the well is not drilled by June 1, 2002, Phillips would pay the state a penalty of $300,000.
If both wells are drilled to completion, the plan of exploration would expire June 1, 2003, but Phillips proposes that if both wells are drilled, it would have the option — but not the obligation — to extend the plan of exploration until June 1, 2004, by drilling an additional well or completing a sidetrack greater than 500 feet from one of the original well bores. In that case, a second plan of exploration would be submitted 90 days prior to the expiration of the first plan.
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