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BP backs Sourdough
Another Point Thomson owner joins Jade, Exxon in drilling old oil discovery Kay Cashman Petroleum News
Under a proprietary farmout agreement BP Exploration (Alaska) transferred its working interest in the North Slope Sourdough oil discovery to Jade Energy, joining ExxonMobil in backing Jade’s appraisal and possible development of the untapped eastern North Slope field.
The deal, which involved BP assigning its 32.326% interest in project lease ADL 343112, Tract 32, Area F to Jade, gives the North Slope producer some skin in the game, fully aligning the company with fellow major Exxon and independent Jade in delivering a successful Sourdough development.
West of, and adjacent to, the Arctic National Wildlife Refuge 1002 area and within the boundaries of the Exxon-operated Point Thomson unit, two Sourdough wildcat wells were drilled in the mid-1990s by BP (at the time partnered with Chevron) before any other oil fields had been developed in this part of the Slope (see adjacent map).
BP and operator Chevron, which has since sold its Point Thomson and most other Alaska assets, were, and still are, partners in the KIC No. 1, the only well ever drilled in the ANWR 1002 area.
BP announced the Sourdough discovery in 1997 - a discovery that would have required a 50-plus-mile pipeline to the start of the trans-Alaska oil pipeline at Prudhoe Bay, far too much expense for what BP said in 1997 was 100 million barrels of recoverable oil. Crude prices at the time didn’t help as they were falling, eventually reaching $10 a barrel in 1998.
Overriding royalty portions The working interest assignment from BP to Jade was filed July 17 with the Alaska Department of Natural Resources’ Division of Oil and Gas.
Combined with the working interest previously assigned by ExxonMobil, Jade now holds a 95% working interest in the project lease. The remaining 5% is currently retained by ConocoPhillips.
The total overriding royalty held by BP, Exxon and Conoco on the Sourdough lease segment is 3.19%. Exxon’s 62.674% assignment to Jade gave it a 2% overriding royalty in the new Sourdough project, while BP’s 32.326% working interest gave it a proportionate 1.03% override.
“We are pleased that BPXA has joined ExxonMobil in supporting Jade’s ongoing Sourdough appraisal effort and we look forward to BPXA collaboration toward delivering a successful project for the benefit of all stakeholders,” Erik Opstad, Jade’s managing director, said in a July 20 email following a query from Petroleum News.
The state lease segment is the most southeasterly acreage in the Point Thomson unit and contains the Sourdough 2 and 3 wells, across the river from the 1002 area of ANWR, a narrow strip of coastline that was set aside for potential development by Congress because of its hydrocarbon-rich geology.
Both wells are under state confidentiality protection.
Exxon and BP’s agreement with Jade on the new Sourdough well will allow the companies to upgrade and supplement the data they already have on the 1002 area, especially since more advanced technology is being used to locate, drill and assess the new Sourdough well, Jade No. 1.
The farmout agreement with Jade also satisfied drilling requirements the Point Thomson unit owners have with the state of Alaska.
First new well in early 2020 Sourdough operator Jade plans to drill Jade No. 1 in the first quarter of 2020.
In the Alaska independent’s multiyear oil discharge prevention and contingency plan application with the Alaska Department of Environmental Conservation, the primary target of Jade No. 1 is the “Point Thomson Brookian resource, which is 25 API gravity oil, contained within the over-pressured reservoir sands found throughout the PTU and nearby Badami oil field.”
Along with recent 3D seismic work, “this well will allow Jade to evaluate and then select an option for development of the Brookian reservoir,” the company told DEC.
Based on analysis of Jade No. 1 data, the division’s acting Director James Beckham said April 4 that Jade “will move forward accordingly with additional development at Area F and adjoining areas in the 2020–2021 winter drilling season. … The need for additional delineation wells and the overall economic feasibility of a field development program at Area F will be considered following the 2020–2021 season.”
Jade’s members and managers are Anchorage-based Erik Opstad and
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