The Explorers 2018: Eni returns to exploration with Nikaitchuq North No. 1

The company hopes that the wildcat well on federal leases north of the Nikaitchuq unit can double its existing resource base

Eric Lidji

for Petroleum News

Eni US Operating Co. Inc. returned to Alaska exploration after an 11-year hiatus.

The local subsidiary of the Italian-based major spud the Nikaitchuq North No. 1 exploration well in late December 2017 in the waters north of its offshore Nikaitchuq unit. The company said that it expected operations on the 35,000-foot ultra-extended reach well to last between 70 and 80 days - suggesting an end to operations in March.

By the start of April, Eni had yet to release results from the program and the well had yet to appear on weekly Alaska Oil and Gas Conservation Commission completion reports.

Rather than build a new offshore drilling site, Eni drilled Nikaitchuq North No. 1 from its existing Spy Island drill site using Doyon Rig 15. According to published plans, the well had a vertical depth of 8,131 feet and a measured depth of 34,150 feet. “It will be the longest extended reach well in the state,” Eni U.S. Vice President for Environment and Quality Whitney Grande told the Resource Development Council in November 2017.

Eni previously said that the results of Nikaitchuq North No. 1 would determine whether the company would also drill a sidetrack this winter and would return to drill a Nikaitchuq North No. 2 well next winter. The proposed follow-up would have a vertical depth of 8,329 feet and a measured depth of 38,173 feet. The overall results of the Nikaitchuq North program are expected to guide Spy Island activities for years to come.

The Nikaitchuq North No. 1 well was set to pass through ADL 388571, ADL 388574, ADL 388583 and ADL 391283 and the federally managed Harrison Bay Block 6423 unit.

Eni became the operator of the Nikaitchuq North leases in May 2016, obtained federal unitization of the leases in February 2017 and received approval from the federal Bureau of Ocean Energy Management for its Nikaitchuq North exploration plan in July 2017.

Development work

Aside from a brief foray on the Kenai Peninsula in the 1960s through its subsidiary Agip Petroleum, Eni started its tenure in Alaska in 2005, when it acquired a minority interest in several North Slope prospects from Armstrong Alaska Inc. Those assets included three offshore prospects in the Beaufort Sea - Nikaitchuq, Tuvaaq and a stake in Oooguruk - and two onshore prospects on the central North Slope - Maggiore and Rock Flour.

Within a few years, Eni had acquired the outstanding interest in most of those properties, with the notable exception of Oooguruk, where it retained a 30 percent working interest.

Like many new Alaska operators, Eni retained exploration and development prospects at first, but shifted its focus after early exploration setbacks and development successes.

The company drilled explorations wells at Maggiore and Rock Flour in 2007 but relinquished both prospects in 2010. The following year, the company farmed-out its North Tarn prospect, near the Kuparuk River unit, to Brooks Range Petroleum Corp. (The prospect is now the long-delayed Mustang field at the Southern Miluveach unit.)

Eni retained its interest in the Oooguruk unit. Pioneer Natural Resources Alaska Inc. brought the unit online in 2008 and later sold it to Caelus Natural Resources Alaska Inc.

Being a minority partner at Oooguruk provided Eni with a learning experience about Arctic operations and the particular challenges of working in Alaska. The company merged the Nikaitchuq and Tuvaaq prospects into a single unit, and, in January 2008, it sanctioned a $1.45 billion development program at the expanded Nikaitchuq unit. The company brought the unit into production in February 2011, after a yearlong delay that appeared to have been caused primarily by poor weather and a missed Arctic sealift.

Eni always planned two initial development phases for Nikaitchuq: an onshore program from the Oliktok Point Pad and an offshore program from the new Spy Island Drillsite.

The company completed its initial drilling program from the Oliktok Point Pad in October 2012 and launched a continuous drilling program from Spy Island in November 2012 using Doyon Rig 15. The Spy Island program continued until December 2015, when the company suspended drilling operations at Nikaitchuq due to low oil prices.

Eni also undertook several ventures designed to improve production.

One set of activities involved expanding the capabilities of existing wells and improving new well design. Between mid-2013 and May 2014, the company added eight laterals to a selection of wells it had already drilled from the Oliktok Point Pad. In early 2013, the company drilled its first multilateral well at Nikaitchuq - a Spy Island Drillsite well with four laterals. In the third quarter of 2013, the company began adding a second lateral to all new production wells being drilled from the Spy Island drill site, which yielded five dual lateral wells by the time the company suspended drilling operations in late 2015.

A second set of activities may have inspired the current exploration program. These activities involved a geographic expansion of development. Between the third quarter of 2014 and the start of 2015, Eni drilled two dual lateral producers and two single lateral injectors west of the Spy Island Drillsite as part of the West Extension Project. The company launched the East Extension Project in the third quarter of 2015, but only completed one dual lateral producer before it suspended ongoing development activities.

The company also evaluated plans to target new formations, beyond the Schrader Bluff OA Sands. A pilot well drilled into the Schrader Bluff N sands did not lead to further activities. Discussions of a Sag River program never culminated in activities either.

In the course of those initial development activities, though, Eni drilled a 25,000-foot at Nikaitchuq. The extended reach well provided the company a real-life learning experience for the current Nikaitchuq North project. “So we’re using that same best practice, that same technology and moving it out to reach this federal lease,” Grande said.

Objectives

But aspects of the northward move suggest a more pronounced shift in strategy than those earlier expansion efforts. For starters, the Nikaitchuq North project involved a major change to drilling infrastructure. Eni upgraded Doyon Rig 15 to accommodate ultra-extended reach wells, increasing top drive torque to 72,000 foot pounds from 63,000 foot pounds and increasing the pressure rating for the drilling mud manifold, according to Eni.

In early 2017, Eni released and demobilized Nabors Rig 245, which had been drilling wells at the unit since at least early 2010. It also contracted the new Nordic Calista Rig No. 4, which is more suitable for workover activities than for development drilling.

Given the lack of previous drilling in the offshore region, Grande described Nikaitchuq North No. 1 as a wildcat. But he also expressed a company hope that the well would discover new oil resources that could potentially double the resource base at Nikaitchuq.

By adding reserves at Nikaitchuq, and increasing oil production, Eni would be able to take advantage of significant spare capacity at the Nikaitchuq production facilities.

The standalone processing facilities at Nikaitchuq currently handle some 20,000 to 25,000 barrels per day but have a capacity of 40,000 barrels per day and could be expanded to 50,000 barrels per day, Grande told the Resource Development Council.