|
Phillips targets West Sak If this year’s viscous wells prove successful, company will submit 50-well development at Kuparuk for board approval at end of year; $100 million Alpine facility expansion to go to Phillips’ board in third quarter Kristen Nelson PNA Editor-in-Chief
Phillips Alaska Inc. is not doing any major projects on the North Slope in 2002, but the company is preparing to take two projects in the hundred-million-dollar range for board approval in the third and fourth quarter.
1999, 2000 and 2001, said Kris Fuhr, manager of Phillips Alaska’s project group, “were extremely busy years both for ourselves and BP,” with billion-dollar projects at Alpine for Phillips and at Northstar for BP and Phillips’ Meltwater development at a couple of hundred million.
Those big projects created an abnormal capital spend compared to what it has been over the last 20 years, Fuhr said Feb. 20 at the Pacific Rim Construction, Oil and Mining Expo, and Phillips expects the next couple of years will be a more normal spending pattern for the company, with capital expenditures in the $550-$600 million range, excluding tanker fabrication.
“The $550-$600 million this year is about evenly split between drilling capital and surface facility capital,” he said.
He also said that cost management will continue to be rigorous for North Slope work. The oil basins on the North Slope are pretty mature and margins are low so a “$15-$16 a barrel oil world is very tough for us to generate acceptable returns…
“We’ve been rigorous about cost for 10 years and that’s not going to change,” he said. Alpine facility expansion The biggest near-term project Phillips is working on is Alpine facility expansion, Fuhr said.
“We’re very fortunate. We’ve actually located this field where the reservoir is exceeding our expectations. It will provide a key stepping stone as we look to monetize other opportunities both around Alpine and even farther west,” he said.
Alpine was designed to be an 80,000 barrel a day plant.
“We started bringing wells on, they exceeded our expectations,” Fuhr said, and early de-bottlenecking at the plant has brought it up to 95,000 barrel a day capacity.
Third quarter this year Phillips Alaska expects to ask for board of director approval for a $100 million project to do additional de-bottlenecking, Fuhr said, to take the plant up to some 130,000 barrels a day. That work would be done in 2003 and 2004.
Fuhr said core Alpine production “would keep that facility full even at those extended rates for a couple of years. And then it does help us accelerate the opportunity around some additional satellites and resources in the near area.” Kuparuk projects There are probably over a billion barrels of additional reserves remaining to be produced at Kuparuk, Fuhr said, but there is a “tremendous amount of work to do in the old core, anchor fields.
“We’ve gotten all the easy barrels. We’ve gotten all the cheap barrels.
To produce additional barrels at Kuparuk, Phillips is extending enhanced oil recovery—natural gas liquids from Prudhoe blended with Kuparuk residue gas and injected as miscible flood “to sweep through the reservoir and mobilize oil that didn’t move when we water flooded it.
“We’ve been very aggressive; and we’re doing that again this year; about $15-$20 million spend on a yearly basis to expand this to new pads,” Fuhr said.
Gas handling capacity is also being expanded at Kuparuk, he said, and that project, which will increase gas throughput capability, is about midway to completion.
The other Kuparuk project this year is the 3S pad, which will allow production from the Palm discovery. This satellite follows Tabasco, Tarn and Meltwater development and “helps flatten decline” in Kuparuk production, Fuhr said, and keep Kuparuk lifting costs competitive. Monetizing West Sak The largest unmonetized oil reserve on the North Slope is probably West Sak, Fuhr said. It’s been well known for more than 25 years “and we’ve essentially been working this problem now for 20-some years,” he said.
Multi-lateral wells, with “two or three penetrations through the reservoir horizontally from one well bore… are helping to make these wells produce at competitive rates,” Fuhr said, and if this year’s drilling program is successful, the company hopes to take a significant West Sak development to its board of directors at the end of the year.
The company has done a fair amount of West Sak work in the pad 1C and pad 1D areas at Kuparuk, he said, and sees opportunity at the 1J pad.
Phillips is currently producing about 7,000 barrels a day out of West Sak, Fuhr said, and expects “to be producing about 50,000 barrels per day from West Sak by the end of the decade.” Fifty wells possible In the last couple of years, Fuhr told PNA, West Sak development has been at Kuparuk drill sites 1C and 1D, with 10 to 20 well developments “trying to prove up technology and cost” and looking at well productivity “so you can get a complete economic picture.”
The next major development step — if the numbers prove up — will be a 50-well project at pad 1J. Fuhr said 1J is an existing Kuparuk pad and there is room on the gravel for 50 wells.
“From a facility cost perspective, it’s not that expensive a deal — the well cost is a big deal,” he said. If the production is there, he said, then you have to look at Kuparuk infrastructure. Do you need more pumps to move water? Do you need more power?
“But you need to bring rate on before you start investing in that… So it’s a challenge,” he said.
| 