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BlueCrest seeking Cosmo unit Independent wants to unitize its acreage off Anchor Point to better coordinate development and exploration activities Eric Lidji For Petroleum News
BlueCrest Alaska Operating LLC wants to form a new Cosmopolitan unit.
The local subsidiary of the Texas-based independent is asking the state to form a seven-lease unit over 22,535 acres off Anchor Point. The unit would include ADL 18790, ADL 384403, ADL 391899, ADL 391900, ADL 391902, ADL 391903 and ADL 391904.
BlueCrest is in the early stages of developing oil from the Hemlock and Starichkof formations at the prospect. But, as the company wrote in its application, the leases also contain shallower oil accumulations, natural gas accumulations and exploration prospects, all of which must wait for the current development program to get under way.
Unitization is most commonly used to efficiently divide royalties among various working interest owners, although the state has formed units over leases owned by a single company, as is the case at Cosmopolitan, to prevent waste and avoid duplication. By unitizing the leases, BlueCrest believes it can balance its current and future plans in a more efficient way. Unitization holds leases, which gives operators a chance to conduct activities on a broader scale, without having to worry about individual leases expiring.
The infrastructure planned for the current development program would improve the economics of future plans, according to the company. The company is developing the deeper oil accumulation using directional wells from an existing onshore drilling pad and associated onshore facilities to be built soon. The future prospects would largely require offshore facilities, such as one or more platforms to target prospects farther offshore.
The request is unusual - although not unprecedented - because a good portion of the land under discussion was previously included in a “Cosmopolitan unit.” The unit was terminated when operator Pioneer Natural Resources Alaska Inc. sold the prospect.
The state is taking comments on the proposal through April 27.
One-year POD The request included a proposed plan of development from August 2014.
The plan proposes a five-year schedule for starting production from the onshore facilities by early 2016 and subsequently constructing the offshore facilities. The 44-well program would include 20 onshore oil production wells, 10 onshore injection wells and two onshore disposal wells and 12 offshore wells divided between two monopod platforms.
The plan divides work between the current oil campaign and a future gas campaign. The oil development in primarily focused in the center of the proposed unit, with exploration activates primarily located on leases the north and the south, according to the company.
The prior exploration activities at Cosmopolitan have discovered potentially commercial hydrocarbons within 10 Tyonek formation intervals. Those include oil in the Hemlock, the Starichkof and the Lower Tyonek and gas in the Lower Tyonek and Upper Tyonek.
A gas development program on leases ADL 391899, ADL 391900 and ADL 391902 would be evaluated in 2015 and 2016, according to the company, which has previously expressed caution about advancing an expensive gas development in the region without more certainty about the market opportunities. The company has been in talks with WesPac Midstream LLC to partner on a development and marketing plan for the gas.
The August 2014 plan also calls for drilling the offshore Cosmopolitan State B1 exploration will this year on ADL 384403 to test oil and gas zones. The oil zones would be plugged and the gas zones suspended for future development, according to the plan.
BlueCrest has asked for the plan to go into effect for a one-year term, which would allow the company to amend the plan easily based on information gleaned this year. Such amendments would include more detailed plans for delineation and exploration activities.
In February 2015, the state approved the basics of a plan to expand an existing gravel pad on private land north of Anchor Point to support as many as 33 development wells.
A long history The current program builds upon a discovery Pennzoil made in 1967 but never pursued.
ARCO Alaska began sniffing around the prospect in the 1990s and handed over the reins to Phillips Inc. as part of a larger sale of assets. Phillips formed a state-federal Cosmopolitan unit in 2001 and drilled the Hansen No. 1 well from an onshore pad.
Through a merger, ConocoPhillips took over the project in 2002. The company drilled and tested the Hansen No. 1A sidetrack in 2003. Pioneer Natural Resources Inc. came on as a minority partner in 2005 and helped fund a 3-D seismic program over the leases.
After drilling the Hansen No. 1A-L1 lateral sidetrack in 2007 and stimulating the well in 2010, Pioneer launched a pilot project to truck Cosmopolitan oil to market. Over several months, Pioneer trucked some 33,000 barrels of oil to the Tesoro refinery in Nikiski.
(BlueCrest is also currently planning to truck Cosmopolitan oil to market.)
Eventually, Pioneer decided against continuing the project and sold the leases to the Australian independent Buccaneer Energy Ltd., which partnered with BlueCrest.
Those companies drilled the offshore Cosmopolitan No. 1 well using the Endeavour jack-up drilling rig and announced various shallower oil and gas discoveries in addition to the known accumulations. They intended to drill a second well to appraise the discoveries, but Buccaneer later sold its stake to BlueCrest in a failed attempt to avoid bankruptcy.
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