Providing coverage of Alaska and northern Canada's oil and gas industry
October 2019

Vol. 24, No.40 Week of October 06, 2019

Producers Magazine preview: Brooks Range: Mustang almost there!

First small independent to go from discovery to production on North Slope, BRPC tells state

Kay Cashman

Petroleumn News

With approvals and permits in place, the first small independent to take an oil field from discovery to production on the North Slope will be delivering oil to the trans-Alaska pipeline sometime this quarter.

In a Sept. 30 filing of its seventh annual plan of development with the Alaska Department of Natural Resources’ Division of Oil and Gas, operator Brooks Range Petroleum Corp. said the holdup from anticipated first quarter startup for the Mustang project in the Southern Miluveach unit was in part tied to the early production facility, or EPF, being delayed, which in turn impacted some drilling.

That said, functional checkout of the EPF has begun, BRPC said in its proposed plan of development, or POD.

First oil from existing wells

BRPC drilled the Mustang discovery well, North Tarn 1A, in January 2012, and confirmed it at the Mustang 1 in February 2012.

Mustang is the first development in the Southern Miluveach unit, which is adjacent to the southwest edge of the Kuparuk River unit and sits in the increasingly crowded “billion-dollar fairway” - ARCO Alaska’s description of the land between the Kuparuk River unit and the Colville River unit, both now operated by ARCO’s successor, ConocoPhillips.

BRPC had originally planned to start the field using permanent 15,000 barrel of oil per day production facilities. However, that plan was based on a $120 oil price in 2014.

Following the subsequent oil price crash, the company had to put the project into “warm standby” mode before coming up with the plan to install the modestly priced temporary production facility.

The idea was to start production at relatively low rates and then, as production ramped up to about 6,000 barrels, use the revenue to upgrade the production facilities to a larger scale.

Planned initial production will be from two existing wells - North Tarn 1A and SMU M-02. Mustang 1A will be next but the suspended well “requires drilling lateral extension/possible sidetrack,” which will occur in January, BRPC said.

Up to four new wells will be drilled in 2020 - one scheduled per quarter, the company said.

Full development plans

Longer range proposed development activities remained much the same as originally planned, involving the following:

* Central processing facilities with a capacity to handle 15,000 bpd, 15 million standard cubic feet per day of gas, and 7,500 barrels of water per day.

* Drill site facilities.

* Non-process infrastructure including buildings and equipment.

* Up to 10 production wells and 11 injection wells.

Kuparuk sands

As far as plans for the exploration or delineation of any land in the Southern Miluveach unit not included in a participating area, BRPC said it continues to review all potential targets within the unit, including but not limited to the Kuparuk C and A sands, which the company has said are part of the Kuparuk oil pool that is a continuation of the Cretaceous age Kuparuk sands from the Kuparuk River unit.

The Kuparuk A sand consists of a relatively fine-grained shallow marine sandstone overlain by the coarser grained Kuparuk C sands. The Kuparuk A, with its fine grain size, is generally less permeable than the Kuparuk C. Both sands have porosities of around 22%.

The oil trap is formed by a major geologic structure called the Colville anticline. Oil is sealed in the Kuparuk sands by the overlying Kalubik shale, an extensive thick shale found in the region. Another impervious shale, the Miluveach, underlies the sands.

In a recent filing with the Alaska Oil and Gas Conservation Commission, Lawrence Vendl, BRPC’s exploration and subsurface development manager, said the Kuparuk oil pool within the Southern Miluveach unit lies between minus 5,800 feet true vertical depth subsea and minus 6,400 feet TVDSS.

More development specifics

Some of the details of BRPC’s proposed operations for the first year and beyond were:

* Studies for the tie-in of the seawater cross country pipeline to the Alpine seawater pipeline.

* Completion of the initial gas compression and water injection capabilities of the EPF that might continue into 2020.

* Planning activities focused on bringing the modules built for the Mustang operations center, or MOC, to the North Slope during 2020, transporting and integrating MOC 1 in first quarter 2021.

* Planning for integration and substitution of temporary EPF with the permanent MOC process modules.

* In addition to the four wells drilled in 2020, toward the end of that year and through third quarter 2021 six producer and seven injector wells will be drilled.

The surface location of the Mustang facilities, drill pads, roads, docks, causeways, material sites, base camps, waste disposal sites, water supplies, airstrips. etc. were also provided in the POD.

Water and gas injection

In June, the Alaska Oil and Gas Conservation Commission approved an application from BRPC to inject fluids at Mustang for pressure maintenance and enhanced recovery of hydrocarbons from the Kuparuk River oil pool within the Southern Miluveach unit.

Waterflood is planned first, followed eventually by lean or miscible gas flood.

Water will be produced water from the field and seawater from the ConocoPhillips seawater pipeline, with gas to be sourced from Mustang processing facilities.

The commission said the anticipated peak daily injection rate for individual wells would be 6,000 barrels of water and 6 million standard cubic feet of gas.

Water and water-alternating-gas injection into the Kuparuk River oil pool in the Southern Miluveach unit, AOGCC said, “will provide a substantial EOR benefit over primary recovery alone” and maximize ultimate recovery, as well as prevent waste.

Vendl told the commission that audited Kuparuk reserves are 21.2 million barrels of 1P (proven oil in place).

Presentation materials at an AOGCC hearing showed 2P at 32.8 million barrels 2P (probable) and 3P at 38.3 million barrels (possible) and showed primary recovery as estimated at 10-15% of original oil in place with waterflood adding 10-25%, for a total recovery after waterflood of up to 35%.

Vendl cited an average estimated recovery rate of 30% with waterflood, expected to rise to 40% with tertiary recovery.

Lease ownership

On the southwest edge of the Kuparuk River unit, Southern Miluveach unit working interest owners are Caracol Petroleum LLC, with approximately a 36% interest; TP North Slope Development LLC, 22.5%; Mustang Operations Center 1 LLC, 20%; Brooks Range Petroleum Corp., 10%; Nabors Drilling Technologies USA Inc., 6%; AVCG LLC, 4%; Mustang Road LLC, 1%.

Alaska-based Caracol is owned by a Singapore investment company.

The leases in the unit are ADL 390680, 2,560 acres; ADL 390681, 2,560 acres; ADL 90690, 640 acres; ADL 390691, 2,560 acres; and ADL 390692, 640 acres.

AIDEA support

The Alaska Industrial Development and Export Authority has been providing financing assistance for the Mustang project.

Bart Armfield, president and CEO of BRPC, commented on the value of the agency’s assistance, in particular the construction of the field’s gravel pad and the gravel access road to the pad.

With gravel infrastructure a key to accessing relatively undeveloped areas of the North Slope, several companies have been able to make use of the Mustang gravel infrastructure. For example, he said, Oil Search has been using the Mustang road for access to its work sites in connection with the neighboring Pikka development. And the Nanushuk access road will follow the existing Mustang road for 4.7 miles, although the exact length could vary slightly due to wider curves and other topographical features, Oil Search has said.

Workforce peak 90

Armfield is proud that his company is close to bringing Mustang into production.

The workforce at the site has peaked at about 90 people. Overall, 59 Alaska companies have been involved in the Mustang project, he said.

“We will be the first small, independent to go from actual discovery to production on the North Slope of Alaska,” Armfield said in April.

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