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THE EXPLORERS 2005: New player: Eni Petroleum enters Alaska Houston affiliate of Italian major buys Armstrong’s assets; expected to hold 170 million barrels Kay Cashman Petroleum News
In late August 2005 Eni Petroleum picked up its first oil and gas leases in Alaska. Houston-based Eni Petroleum, which is the U.S. E&P affiliate of Italy’s Eni SpA, purchased the assets of Armstrong Alaska, which consisted of 341,500 gross (273,000 net) acres, part of 104 leases onshore and offshore the North Slope in state and federal waters. Eni said the reserves were “expected to exceed 170 million barrels.”
The deal with Armstrong Alaska included leases with 100 percent ownership, as well as Armstrong’s minority working interests with Pioneer Natural Resources and Kerr-McGee, including ownership in the Oooguruk and Nikaitchuq developments that are expected to be sanctioned before the end of 2005 for development.
The company declined to disclose the terms of its deal with Armstrong Alaska, an affiliate of Denver-based Armstrong Oil & Gas.
According to the Aug. 28, 2005, edition of Petroleum News, the mega-major entered Alaska after conducting an internal evaluation and regional studies that showed the North Slope and adjacent Beaufort Sea as areas with exploration potential for new oil and gas finds.
According to the article, Eni, which indicated it would establish a position in Alaska with an emphasis of consistent growth, is particularly interested in the Beaufort and adjacent Chukchi Sea, but is also open to expanding its Alaska asset position to other parts of the state.
In October 2005 Petroleum News sources said the company intends to open an Alaska office and has hired Chester (Chet) Paris, formerly with Armstrong, as ENI Petroleum’s representative in Anchorage.
Paris would report to Eni’s Houston office which manages the company’s E&P operations in the Gulf of Mexico and will also manage its Alaska operations. The Alaska manager would specifically report to Giuseppe Valenti, senior vice-president exploration.
In addition to Valenti, the Houston office management team contains the following individuals: Federico Arisi Rota, president and CEO; Adriano Mongini, senior vice president operations; Kelly Woomer, HR manager and spokeswoman; David Dougall, HSE manager.
According to the Aug. 28 article, Eni’s intention is to “bring its experience onboard while taking the time to understand the peculiarity and challenges of Alaska,” but “in the future the company will likely take a leadership role on Alaska prospects.”
Files for unit at Rock Flour On Aug. 25, the day after announcing its Armstrong acquisition — and before the lease assignments had been initiated — Armstrong, on behalf of Eni, filed an application to form the North Slope Rock Flour exploration unit adjacent to the southeast corner of the Kuparuk River unit and just west of the Prudhoe Bay unit.
The target? West Sak/Schrader Bluff viscous crude is the primary objective. Eni is also looking at Kuparuk C sands and seeing if the North Slope’s most viscous crude, the Ugnu, is commercial at depths comparable to West Sak/Schrader Bluff reservoirs now in production.
Once the lease transfers with Armstrong have been completed, Eni will take over as unit operator at Rock Flour.
ConocoPhillips and Pioneer Natural Resources also hold leases in the proposed 15,308-acre unit. Eni has 100 percent working interest in five of the eight leases; the other three leases are held 50 percent each by ConocoPhillips and Pioneer. Two of the Eni leases (acquired by Armstrong from Anadarko Petroleum in April) expire Nov. 30, 2005; inclusion of the leases in a unit would extend them for the life of the unit.
First well in 2007 The five-year exploration plan submitted for Rock Flour said an exploration well will be drilled in the 2006-07 winter drilling season, a second in the 2008-09 winter season and a third in 2009-10, all of which will be approximately 7,000 feet in depth.
In the meantime Eni will reprocess existing data and finalize well designs. After the first well is drilled results will be “integrated with planned additional geologic/reservoir studies and seismic acquisition through the remainder of 2007/2008,” work which will lead to a second well in the 2009 winter drilling season, “or earlier.”
According to the unit application plan, the second well would “test the limits and continuity of the primary Ugnu/West Sak/Schrader Bluff reservoirs over the southern portion of the proposed” unit; the third exploration well would “evaluate Cretaceous objectives over the northern portion of the proposed unit. It will refine Ugnu/West Sak/Schrader Bluff resource limits, as well as other potentially recoverable resources.”
Intervals to be tested “may include but are not limited to” the Cretaceous Ugnu sandstone, Cretaceous West Sak/Schrader Bluff sandstone and the Kuparuk “C” sand, the unit plan said.
ConocoPhillips produces from the shallow West Sak/Schrader Bluff and Kuparuk formations at Kuparuk; BP Exploration (Alaska) produces from the formations both at its Milne Point unit and at Prudhoe Bay satellites. The Ugnu, the shallowest and heaviest of the North Slope formations, is not yet in production anywhere on the North Slope.
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