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“No decline after ’99” — production grows in 2000 Phillips Alaska turns production decline around, looking to grow barrels of oil equivalent with combination of West Sak, satellites, discoveries, natural gas Kristen Nelson PNA News Editor
Alpine production has reached 45,000 barrels a day, on its way to 80,000 barrels a day by year end, Phillips Alaska Inc. Pres. Kevin Meyers told the Anchorage Chamber of Commerce Nov. 27.
And, Meyers said, that achieves ARCO Alaska's goal of "no decline after '99" — and in fact begins growing Phillips Alaska's production beyond historic levels.
Alpine production began Nov. 15, and Meyers said the gas train would be started up shortly to inject gas and water back into the field, “and shortly after that we should get up to our 80,000 barrel-a-day projected rate.”
Noting that Phillips’ share of Alaska production — oil and gas (in addition to North Slope crude oil production, both ARCO Alaska and Phillips had Cook Inlet gas production) — has been in decline, Meyers said that decline will be turned around this year, up some 40,000 barrels a day of oil equivalent from 1999. Production growth predicted In 2000, Phillips will average about 355,000 to 360,000 barrels of oil equivalent a day. In 2001, Meyers said, that will grow by about 40,000 barrels a day, coming close to 400,000 barrels of oil a day, "a step change, in large part driven by the fact that the Alpine field is coming on."
Phillips Alaska will use four strategies to grow its production.
In its existing fields, miscible injection enhanced oil recovery will be expanded. Miscible injection EOR was begun at Point McIntyre this year, Meyers said. Four more drill sites will be added to the Kuparuk EOR in 2001 and three more drill sites in 2002, on top of the 24 drill sites where Kuparuk EOR is already under way. Infield and peripheral drilling will continue, as will Prudhoe Bay reservoir pressure support, coiled tubing drilling and Kuparuk gas handling expansion.
Satellite development will include bringing on new satellites. Aurora came on this year, Borealis and Polaris will start up in 2001 and Meltwater, a discovery announced just this March south of Tarn, will begin producing in 2002.
At West Sak, where there are 16 billion barrels in place of heavy oil, Phillips is drilling horizontal multilateral wells and has three recent wells producing 800 barrels a day compared to previous wells in the field which averaged 180 barrels a day. The new horizontal multilateral well bores are 3,000 feet long — in the most recent well.
There are some questions which remain to be answered at West Sak, Meyers said. “Will the rates stay up? What happens when water break through?”
In 2001 Phillips plans six multilateral wells at West Sak and 12 injectors. “And if that works well, we eventually want to beef this up to where we have two rigs working fulltime on the West Sak, developing the core area,” believed to have 400-500 million barrels of recoverable oil.
Another part of Phillips' growth strategy is exploration. The Phillips' Alaska exploration team has a proven track record, Meyers said, with 15 reservoirs confirmed in the 1995-2000 period and 1.2 billion barrels of oil equivalent gross reserves found with a finding cost of 67 cents a barrel.
Last winter Phillips drilled nine penetrations — wells and sidetracks — and plans 12 to 15 this winter, Meyers said, most on the North Slope and one in Cook Inlet.
Meyers said Phillips will be drilling in the National Petroleum Reserve-Alaska again this winter. “No, I will not tell you what we found last year, but yes, we're excited to come back. You'll have to stay tuned until after this year's season to find out what exactly we might be finding out there.” Production to level, then rise Next year Phillips Alaska's share of Alaska production — barrels of oil equivalent — will be close to 400,000 BOE per day, Meyers said, an increase of about 40,000 from this year. “And our intent is, for the foreseeable future, to keep that about 400,000. We'll probably be vacillating between 375,000 to 400,000 barrels a day. … depending on field startup.” That is the target, Meyers said, for the next three to five years.
As more of the company's exploration program kicks in, “and we have the exploration success that we believe is going to be coming from that program,” Phillips expects to see production start to grow. By the end of the decade, production is expected to average 425,000 to 450,000 barrels a day.
Alaska region capital expenditures are estimated at $725 million for 2000 and projected at $775 million for 2001 and $810 million for 2002, including about $220 million in each of those years for the construction of the new millennium class tankers. Exploration and production expenditures are expected to increase over the next few years, he said, with $500-$600 million a year for exploration and production over the next few years. North Slope gas It is North Slope gas, Meyers said, that will really kick up Phillips' production in the future. Phillips Alaska expects that natural gas will add about 150,000 barrels a day of oil equivalent beginning later in the decade, with 2007 targeted for beginning of gas sales. Phillips is working on gas to liquids and liquefied natural gas, Meyers said, but the company's “primary option” is a gas pipeline to the Lower 48.
“With our existing oil projects we saw that we maintain our production level and grow it during this decade, gradually. You put North Slope gas on top of that you're now talking about Phillips Alaska production starting to knock on the door by the end of this decade of 550,000 barrels of oil equivalent per day. Now that number may not mean much to you, but if you go back and look at the history of ARCO and Phillips together in Alaska, we ain't been there before.
“It will take us to a place we've never been in terms of size of production of the asset.”
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