Providing coverage of Alaska and northern Canada's oil and gas industry
March 2007

Vol. 12, No. 10 Week of March 11, 2007

Oil Patch Insider

Nabors builds exploration rig for Chevron; Brooks Range group acquires Bachner acreage; Hints of success from Talisman/FEX’s NPR-A drilling

Nabors Alaska Drilling is building a lightweight, high-tech AC drilling rig at the request of Chevron, which plans a multi-year drilling program on the North Slope starting next winter.

Nabors Rig 106 for Chevron and Rig 105 for Anadarko Petroleum (see last week’s Insider) will be the first “purpose-built AC rigs for the North Slope,” Dave Hebert, Nabors’ general manager for Alaska, told Petroleum News March 7.

The only other AC rig on the North Slope, he said, will be Nabors Rig 19E, which is being modified for use at Pioneer Natural Resources Alaska’s Oooguruk oil development.

“The modification is being done right now on the North Slope and will be finished by April 1,” Hebert said. The rig’s new name will be 19AC.

Rig 106, will be used first in July at Chevron’s Happy Valley field on the Kenai Peninsula to drill two to three wells and then brought to the North Slope “in the Dec. 1 timeframe,” Hebert said.

The rig will be used, he said, at Chevron’s half-million-acre White Hills exploration block, which is south of Kuparuk and southwest of Prudhoe Bay in the central North Slope. Scott Davis, vice president and midcontinental business unit leader for Chevron North America, said in January the company expects to drill four wells in White Hills in the winter of 2007-08.

“The thought behind rigs 105 and 106 was to build rigs that could be broken down into lightweight modules with a maximum weight of 36,000 pounds per load,” Hebert said, “by doing that you can conceivably start moving out earlier in the season with rolligons or Tundra Cats.”

“By their nature … light-weight loads are easier to transport in elevations,” Hebert said, referring to the increase in both elevation and hilliness as you move south away from the shore of the Beaufort Sea and closer to the northern Brooks Range Foothills.

As the winter season progresses and ice road systems between locations become capable of supporting heavier loads, you can reduce the overall number of rig loads by leaving multiple components pinned together, Hebert said.

“There’s a lot of versatility with these rigs,” he said. “For exploration the fact that these rigs are small, have less pieces to move, are lighter, and more versatile makes for much quicker rig up and rig down time. The new AC technology should aide in rig up and down time, too, because you won’t be hooking up chains between old-style components. … AC is definitely the technology of the future,” allowing enclosed drillers cabins that use joy stick controls instead of a conventional brake handle for operating the draw works.”

When asked what the difference was between the two new rigs, Hebert said Rig 105 will be able to drill slightly deeper than Rig 106: “Rig 105 is slightly larger and has a 500,000 pound hook load. Rig 106 has a 350,000 pound hook load.”

How long would it take to get a new rig built for Alaska?

Hebert said, rigs such as 105 and 106 which are being built in Calgary would take roughly 12 months.

—Kay Cashman

Brooks Range group acquires Bachner acreage, commences North Shore seismic

The Brooks Range Petroleum Corporation Group said March 7 that it has acquired the majority of the North Slope leases held by the Bachner-Forsgren-Feddersen group, some 126,990 gross acres in four key areas, including Gwydyr Bay, Colville Delta, Point Thomson and Camden Bay. The acquisition represents a 70 percent increase in BRPC Group’s acreage, bringing its gross acreage to more than 300,000 acres after the transaction closes and leases are issued from the October State of Alaska lease sale.

BRPC Group also said it has begun its 130 square mile North Shore 3-D seismic survey, expected to be complete by March 31.

The BRPC Group consists of AVCG LLC, its operating subsidiary Brooks Range Petroleum Corp. and its co-ventures TG World Energy Inc., Ramshorn Investments Inc. and Bow Valley Alaska Corp. — collectively dubbed by their management as the BRPC Group.

BRPC Vice President of Land and External Affairs Jim Winegarner said the Bachner acreage acquisition, which consists of state leases acquired in areawide lease sales over the past few years, “makes the BRPC Group one of the largest exploration acreage ownership groups on the North Slope.”

The Gwydyr Bay area leases involve 5,115 acres east of the Milne Point unit, which are surrounded on three sides by the BRPC Group’s leasehold in an area where the group is drilling two exploration wells and acquiring 3-D seismic this winter.

The Colville Delta area leases are on 11,472 acres west of the Kuparuk River unit, adjacent to the northwest corner of the BRPC Group’s Titania leasehold and north of the group’s Cronus leases.

The Point Thomson area leases consist of 96,000 acres south of the recently terminated Point Thomson unit, west of the Arctic National Wildlife Refuge and east of the BRPC Group’s Slugger leasehold. The Yukon Gold No. 1 and Red Dog No. 1 wells were drilled on this block of leases.

The Camden Bay area leases involve 14,403 acres surrounding the ARCO Stinson No. 1 well, which was drilled in 1990, certified capable or producing, and granted extended well data confidentiality because of its proximity to unleased acreage within ANWR’s 1002 area.

The BRPC Group “paid an undisclosed sum of cash for the acreage, and Bachner will maintain an undisclosed overriding royalty interest in the acreage,” the group said in its release.

Larry J. Smith, BRPC’s chief geophysicist, said the geophysical contractor for the North Shore seismic program is Kuukpik Veritas.

“The survey will provide coverage of the BRPC Group’s acreage position in the Gwydyr Bay area, including the newly acquired Bachner lease,” Smith said.

—Kay Cashman

Rumors of oil finds at Talisman/FEX’s NPR-A wells

If you’ve heard that Talisman’s Alaska subsidiary, FEX, is getting good results from its exploration wells in the National Petroleum Reserve-Alaska (hauling truckloads of crude from its Simpson Lagoon drilling), you’re not alone.

But the only official word coming from the company has been statements made March 1 by top executives in Calgary to analysts in a conference call.

F.Y.I. Talisman, which has two rigs at its disposal, is drilling the Aklaqyaaq No. 1 and the Amaguq No. 2 wells right now. The company also hopes to drill the Aklaq No. 6 this winter. Like all exploration drilling programs on the North Slope this winter, weather got in the way. Most drilling programs got under way in February, not December or January.

Following is what the bigwigs at Talisman had to say in the Q&A following their presentation:

Q: I know you’re still drilling ahead with Alaska right now, but can you give us any additional color as to just how well the progress is going so far?

A: Talisman CEO Jim Buckee: “I think I can say a number of things. First of all, I think there are six or seven wells drilling up there (referring to work of all operators) and we all spud approximately the same time in mid-February ... so, you know, the weather conditions affect everybody. Now that we’ve started drilling, though, the operation’s been going very well. ...We have seen some uphole gas. Hydrocarbons are not a problem. ... Do you want to say anything, Ron?”

A: Ronald J. Eckhardt, executive vice president, North American operations: “The biggest issue so far has been lack of snow, and ... we started a little later because it was warm; then once we got going there wasn’t a lot of snow. And you need snow to make the roads smooth. There’s these bumps called ‘hummocks,’ and because we couldn’t fill in between the bumps, the move went a little bit slower, and that’s why we fired up a little bit late. But, as Jim said, the rigs seem to be working pretty well, and we’re making pretty good progress now.”

Q: Then just in terms of releasing results on any of this ... I guess you’ve accumulated much of the land you were looking for, so is there anything that’s going to be slowing you down in terms of providing indications, at least in terms of how well the program went, by May or June?

A: Buckee: “We’ve discussed this quite a lot, and there’s a natural inclination, you know to … get all the results in … because we don’t want to get excited and then depressed ... and so we wait and give a balanced ... review at the end. But from a land perspective I ... don’t think there’s any hindrance, at least on Amaguq.”

Q: Has the company ever commented on what the P-50 reserve potential might be for these three Alaskan prospects?

A: Buckee: “We have, and ... we have to be careful about terminology here. ... ‘Prospective resource’ is the new word, and ... Amaguq can be very large, and ... John ... I think they’re both in several hundred millions and Amaguq, in my mind can be a billion.”

A: Executive Vice President of Exploration John ‘t Hart: “Yeah, actually Aklaqyaaq could be the biggest, but as you know I don’t want to quote numbers right here, but Jim is quite correct in the hundreds of millions of barrels for a P-50 (median reserve potential) number, is the ... right number, but a significant upside to these numbers.”

Q: On Alaska what is the lead time? If we do see some success here, when would we actually see this onstream?

A: Eckhardt: “In Alaska the timeline’s pretty long ... very, very best — you know miraculous — would be 2012; I think 2014 — 13, 14 is probably better.”

—Kay Cashman & TIM KIKTA

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