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How many wells? North Slope exploration activity this winter could be the lowest since the start-up of the trans-Alaska pipeline or 50 percent higher than last year Kay Cashman PNA Publisher
In August and September North Slope operators told PNA and state agencies they plan to drill between six and 11 conventional exploration wells on the slope this winter.
Anything less than six wells would make this winter the slowest exploration season on the North Slope since before the start-up of the trans-Alaska pipeline in 1977.
A crap shoot In the last few weeks seven of the possible 11 North Slope exploration wells have either been canceled or postponed, hit with lawsuits from environmental interests, or are having trouble getting permits.
But there have also been recent indications that ConocoPhillips Alaska Inc. will drill three additional wells for a total of seven, the same number of wells the company drilled on the North Slope last year and three more than the four wells already included in the 11 possible for this winter, bringing the high-end estimate to 14 wells, two short of the 16 exploration wells drilled on the North Slope in 2001.
But two of those 14 wells have either been canceled or postponed until the winter of 2004, leaving the high-end estimate at 12 wells.
Of those 12 wells, three are having trouble getting permits, one is facing lawsuits and three (ConocoPhillips) are speculative.
So, taking into account the wells that have been canceled or postponed, the final number of exploration wells drilled on the North Slope this winter could be as low as four — the lowest number since the start-up of the pipeline — or as high as 12, a 50 percent increase over the eight wells drilled last winter.
Here’s the information. You be the judge.
Company by company Anadarko Petroleum Corp., which is a partner in the Alpine field and operated on Alaska’s North Slope for the first time last winter when it drilled at Altamura in the National Petroleum Reserve-Alaska, told PNA July 11 it planned to drill one conventional well on the North Slope this winter in either the Brooks Range Foothills, NPR-A or the western North Slope.
The most likely drilling targets, state agency paperwork later indicated, were Arctic Char and Dolly Varden, both foothills prospects.
Anadarko spokeswoman Anne Vincent recently told PNA the company had postponed drilling a well this winter and is instead talking about drilling as many as three prospects in 2004.
Anadarko also plans to drill two shallow gas hydrate wells on the North Slope this winter as part of a research project partly funded by the U.S. Department of Energy. In terms of dollars spent and future oil production and revenues to the state are concerned, those wells are not significant.
DEC stops clock on Armstrong wells, but NSB issues permits Armstrong Resources LLC, a Denver-based independent that picked up its first Alaska oil and gas leases in October 2001, told PNA in June it was filing permits to drill one to three wells this winter in the shallow waters of the Beaufort Sea between Thetis Island and the ConocoPhillips-operated Kuparuk River unit.
The state Division of Governmental Coordination said Sept. 19 that its permitting review for Armstrong’s wells had been suspended at the request of the state Department of Environmental Conservation, oil spill review section.
In a Sept. 26 interview with DEC’s Lydia Minor, PNA was told that the agency was continuing to work with Armstrong and hoped to have everything in place to officially re-start the permitting clock in the near future.
DGC told PNA in late September that the North Slope Borough had already approved development and ice road permits for the Kuparuk-Thetis project, as well as determined that Armstrong’s plan of development was consistent with Title 19 and the borough’s coastal management program.
But the permitting clock won’t be re-started until DGC gets the go-ahead from DEC. As of Oct. 10 that had not happened.
AVCG postpones Sak River well until 2004 Alaska Venture Capital Group LLC, a Kansas-based independent and BP Exploration (Alaska) Inc.’s partner in the Sakonowyak River exploration unit in Gwydyr Bay next to the Northstar unit, told PNA in June that AVCG would fund and BP would drill the Sak River No. 1 well this winter.
But that project has been postponed until 2004, state officials told PNA in early October.
BP had also tentatively planned to drill an exploration well in the eastern North Slope’s Slugger prospect. The well was to be funded by farm-in partners, but Slugger drilling was officially canceled by BP in mid-September. It is not included in the six to 11 or four to 12 well counts at the beginning of this article.
BP told agencies at a mid-August meeting that it will focus on development field work.
ExxonMobil told PNA in September it plans no exploration drilling this winter.
McCovey threatened by lawsuits EnCana Corp., which has a drillship in position in the central Beaufort Sea to drill an exploration well at the McCovey prospect this winter, is on track with its program. However, Anchorage attorney Nancy Wainwright, representing two different clients, has filed lawsuits in federal court against agencies involved in permitting the prospect.
A state official told PNA Oct. 9 that the state does not, at this time, expect the court to issue an injunction which would delay drilling.
ConocoPhillips and Chevron are also partners in the McCovey unit.
Winstar looking at second quarter Winstar LLC, an Alaska-owned independent oil company headed by former ARCO Alaska Inc. executive Jim Weeks, has postponed its first quarter exploration well on its lease north of Kuparuk until second quarter, Weeks told PNA Oct. 9. The 1,280-acre offshore lease is one-half mile northeast of Oliktok Point and used to be part of BP’s Milne Point unit.
“Negotiations with Phillips for access have taken longer than we had hoped,” Weeks said.
Another reason for the delay is the company is trying to reduce the “risk of the process” for its partners by employing technology that can give the firm a better idea of where the hydrocarbons are. (Watch for a story in PNA later this month.)
ConocoPhillips: the great unknown Phillips Alaska Inc. (now ConocoPhillips Alaska) told state agencies at a mid-August meeting that it plans to drill one to four exploration wells this winter in NPR-A and on state and private lands west of Kuparuk. (This past winter the company drilled three wells in NPR-A and four on state lands.)
But after its parent company’s first board meeting in late September, ConocoPhillips Alaska began filing additional permits, telling at least one agency official it was not going to file any permits it did not intend to drill. (Permits are generally good for two to three years.)
Industry sources told PNA last week that ConocoPhillips could drill as many as seven exploration wells on the North Slope this winter.
Here are the permits the company has either filed or has indicated it intends to file this fall: two wells at Puviaq, NPR-A (applications submitted); one well at Carbon, NPR-A (staked); one well at Grandview, NPR-A (staked); one well at Summit, NPR-A (staked); one well at Powerline, NPR-A (staked); three wells at Oberon (applications expected shortly); one well at Titania, Arctic Slope Regional Corp. land (applications submitted); three wells at Placer (applications expected shortly); one well at Cronus (applications submitted).
Titania and Oberon are exploration wells but also tied to proposed unit expansions in the Colville River unit, which contains the Alpine field.
Doyon, Nabors rigs in position In reviewing the locations of drill rigs on the North Slope, a number of rigs could be moved into position to drill at least eight exploration wells for ConocoPhillips this winter.
Nabors Rig 16E is on location at Puviaq in NPR-A where ConocoPhillips is expected to drill one or two wells.
Doyon Rig 19, currently doing infield production drilling for ConocoPhillips at Alpine, is reportedly getting via air freight a newly designed, lighter rig floor from Dreco in Nisku, Alberta, that will increase Rig 19’s mobility for exploration drilling. (Doyon Drilling did not confirm this information and was not prepared to discuss Rig 19 at this time.)
Once the ice roads are in, Doyon rigs 19 and 141 and Nabors 7ES and 245 could be used for exploration drilling on the slope.
Rig 141 is under contract to BP at this time but will soon be under contract for ConocoPhillips at Meltwater. It was pulled off infield work last year to do exploration drilling for ConocoPhillips. The other three rigs are already under contract to ConocoPhillips. Company spokeswoman Dawn Patience told PNA Oct. 7 that the ConocoPhillips board has not officially approved funds for any North Slope exploration wells, but will meet in December to finalize the 2003 budget.
A flat year PNA’s take on the situation?
We predict a flat year; eight total exploration wells drilled on the North Slope, which is the same number drilled last winter. Critical to that scenario: EnCana drilling McCovey; Armstrong getting its permits and drilling two to three wells; ConocoPhillips drilling four wells; Winstar getting access from the Kuparuk unit partners and drilling one well.
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