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Icewine vertical well planned this winter Multi-stage stimulation will be used; spud planned for first quarter of 2017 from Franklin Bluffs pad; break even estimated at $40 Petroleum News
Through its Alaska subsidiary Accumulate Energy, Australian independent 88 Energy Ltd. has changed the design of the well it will drill this coming winter from a lateral to a vertical completion with multi-stage stimulation. Its goal is still to farm-out the 272,000-acre Icewine project south of Prudhoe Bay on the central North Slope.
Icewine No. 2, designed to further evaluate the HRZ/HUE source rocks, will be spud in first quarter 2017 from the Franklin Bluffs pad, which has year-round Haul Road access and is the same pad that was used for Icewine No. 1, some 30 miles south of Deadhorse.
The unconventional development is expected to break even at slightly under US$40 per barrel oil. That is “contingent on further successful appraisal at Icewine No. 2; based on type curves from internal resource estimate combined with fiscal/cost assumptions,” 88 Energy said in a mid-September presentation.
The company and fellow independent and minority partner Burgundy Xploration were initially considering a lateral well with multi-stage fracturing, which would have provided points of comparison to the vertical Icewine No. 1 well drilled the winter of 2015-16, but as operator 88 Energy neared completion of its analysis of the $3 million 2-D seismic acquisition it commissioned in early 2016 over its leases west of the Haul Road, company officials decided a vertical completion with multi-stage stimulation made the most sense for several reasons, Paul Basinski, president and CEO of Houston-based Burgundy told Petroleum News Sept. 9.
The seismic survey covered some 420 linear miles using wireless recording nodes and geophones.
Vertical completion ‘positive implications for farm-out’ 88 Energy’s presentation included some of the reasons for the change in well design that Basinski mentioned, including having the funds in hand to drill the less expensive vertical well, a savings of US$5 million.
Another reason given was that a lateral well will only partially evaluate the flow potential of the entire HRZ/HUE source rock, one of the three stacked source rocks in the central North Slope.
There is also less drilling risk because a vertical completion is far less complex, and there are more drilling rigs available on the North Slope to drill such a well.
Vertical wellbores are more commonly used in other unconventional plays to both prove production potential and increase quality and depth of datasets, which has “positive implications for a farm-out,” 88 Energy said.
Although that was the only reference to a farm-out in the presentation, as drilling was getting underway in December 2015 for Icewine No. 1, 88 Energy described the project as an attempt to “better quantify risk so that a farm-out can be achieved in 2016.”
The company drilled Icewine No. 1 to 11,600 feet total depth and is in the process of finalizing the depth for the second well, a process expected to be finalized before fourth quarter.
Plans for Icewine include conventional exploitation In addition to completing and flow testing Icewine No. 2 in 2017, 88 Energy said it would be “drilling on neighboring acreage targeting conventional prospects” and that it did plan to “access conventional resource potential.”
The 2-D seismic acquired in the first quarter of this year was, among other things, designed to “identify large conventional leads in areas high ranked by regional play fairway mapping.”
The company said Icewine No.1 proved the presence of working petroleum systems in both the Brookian and Beaufortian sequences.
The mid-September presentation said there were oil and gas shows throughout the Brookian and a conventional discovery in the Kuparuk formation. And that the traps were “structural, stratigraphic or combination thereof.”
Seismic processing of the Icewine 2-D dataset was expected to be completed in mid-September.
The 2-D seismic was also intended to identify high grade prospective areas across the project’s acreage that would warrant future 3-D seismic coverage.
“The high recovery factor in all three cores taken, including the primary HRZ target and across the bottom seal for the HRZ (Pebble Shale), means that we have excellent data to use in the evaluation of the potentially huge unconventional prize on the Project Icewine acreage,” 88 Energy Managing Director Dave Wall said in a Dec. 28 drilling update for Icewine No. 1.
Earlier this year, DeGolyer & MacNaughton estimated that the HRZ shale at Icewine contained 985.3 million barrels of liquids in a mean case. The estimate included both oil and wet natural gas and condensate.
Internally, the two partners believe the prospect contains more than 2.6 billion barrels of liquids in a mean case. The difference, according to 88 Energy, comes from a disagreement over how much of the acreage is productive.
The second well, 88 Energy said, will test HRZ/HUE source rocks with “potential for significant resource upgrade.”
In previous presentations 88 Energy said it expected to drill as many as 1,200 wells to develop the entire Icewine prospect - between 10 billion and 21 billion barrels of oil in place, depending on the differing estimates.
The development would include 30 wells each from 40 pads, with eight processing facilities.
By comparison, more than 3,400 wells have been drilled to pursue the approximately 25 billion barrels of oil in place at the Prudhoe Bay unit.
Nothing like Icewine yet in world The Icewine project has been compared to the Eagle Ford shale of Texas, but the geology is different, Basinski said. The Alaska prospect is highly porous. Rather than traditional shale, “it’s a volcanic rock and there’s not a productive play like this in the world yet,” he said in a previous interview.
Burgundy acquired the initial Icewine acreage in 2012 and sold a majority interest in the prospect to Accumulate Energy Alaska in late 2014.
The project straddles the Dalton Highway, also known as the Haul Road, and the trans-Alaska oil pipeline.
88 Energy holds a 77.5 percent working interest in the acreage, Burgundy 22.5 percent.
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