Providing coverage of Alaska and northern Canada's oil and gas industry
October 2020

Vol. 25, No.43 Week of October 25, 2020

The Producers magazine preview: Eni operates neighboring ANS units

Italian company hesitant to resume drilling at nearshore Oooguruk and Nikaitchuq units, plans to continue maintenance work

Eric Lidgi

for Petroleum News

The fates of the Nikaitchuq and Oooguruk units have long been intertwined.

Both prospects were discovered during related exploration efforts at the turn of the 21st century. In the years since, operators of both units have faced similar challenges, arising from the complications of working on nearshore prospects in the Arctic Ocean. The solutions brought to bear at one unit have often informed decision making at the other.

But the units are now more intertwined than at any point in their producing lives. After being a minority partner at Oooguruk for its entire existence as a producing field, Eni US Operating Co. Inc. is wrapping up its first year as the operator of the neighboring unit.


In its first year as operator of Oooguruk, the American subsidiary of the Italian major Eni Petroleum was hampered by a series of external factors, mostly arising from the impact of the coronavirus pandemic on the Alaska oil industry, and the North Slope in particular.

The proration of the trans-Alaska oil pipeline and the curtailment of the gas handling capacity at the Kuparuk River unit created secondary problems at Oooguruk. The unit produced 8,700 barrels of oil per day in March 2020 and just 6,300 bpd in May 2020.

Prompted by those infrastructure challenges and by the broader economic conditions of falling oil prices and declining demand, Eni deferred its original plans to conduct several workover projects in 2020 in advance of resuming the drilling of new wells at the unit in 2021. The company instead performed 15 maintenance and repair projects on 10 wells.

The company also undertook a range of other maintenance activities, including a gas debottlenecking project responsible for “several hundred” barrels per day of production.

Even with economic conditions now improving, Eni is hesitant to resume activities. The company is not planning drilling or workover projects for the coming development year, running through September 2021, although it is planning two well maintenance projects.

Further down the road, the company is evaluating two appraisal wells - ERD-N01 and ERD-N02 - on leases outside existing participating areas. The program would test the productivity and quality of oil on three leases beyond the reach of existing drilling but within the technical limitations of drilling technology from its offshore drilling pad.

Some of the challenges at Oooguruk this year are an extreme version of an ongoing challenge at the unit. The lack of independent infrastructure at the unit has forced previous operators to rely on infrastructure operated by neighboring ConocoPhillips.

ARCO Alaska Inc. discovered Oooguruk in 1992, and independent Armstrong Oil & Gas Inc. delineated the “Northwest Kuparuk” prospect in the early 2000s. Through a series of deals, Texas-based Pioneer Natural Resources Alaska LLC acquired a 70% interest and became operator of the unit, with Eni acquiring the remaining 30% interest.

After just five years of work, Pioneer brought the nearshore Oooguruk unit into production in June 2008, becoming the first independent producer on the North Slope.

In late 2013, after optimizing completion techniques at the unit and expanding the resource with a large discovery to the south called the Nuna prospect, Pioneer sold the Oooguruk unit to the independent company Caelus Natural Resources Alaska LLC.

Caelus was a smaller company with a history of short-term projects. The company announced major plans and even sanctioned the Nuna project. But when prices dropped in 2016, the company suspended regular operations and deferred development work. The company eventually sold its stake in Oooguruk to its partner Eni Petroleum in mid-2019.

Pioneer made a strategic decision to use facilities at the Kuparuk River unit rather than bear the expense of building independent facilities at Oooguruk. It occasionally struggled with the lack of control created by that decision, as did Caelus in its years as operator.

Eni recently launched a study to gauge the feasibility of installing partial gas processing facilities at the Oooguruk Tie-in Pad to avoid those Kuparuk River unit constraints. The company also launched a study looking at the possibility of connecting the power generation systems at Oooguruk and Nikaitchuq, to improve efficiency at both units.

Oooguruk produces from three horizons: the Oooguruk-Kuparuk participating area, the Oooguruk-Nuiqsut participating area, and the Oooguruk-Torok participating area.

The unit produced 3,023,150 barrels of oil (approximately 8,282 barrels per day) in 2019 and 1,476,908 barrels (approximately 8,114 barrels per day) in the first half of 2020.


Eni completed some of its work plan at Nikaitchuq early in the development year.

Before suspending operations, the company drilled the SP03-NE2 producer and the dual-lateral producers SP03-NE2 L1 and SP10-FN1 L1 from the Spy Island drilling site.

The original three-well program planned for the unit included a different slate of wells: the SP03-FN6 producer and the SI02-SE6 and SI06-FN8 water injection wells.

The SP03-NE2 project began with the SP03-NE2 PH pilot hole to the northwest to evaluate the prospect. Positive results led to an expansion of drilling plans for the area.

The workover campaign included projects at the SP12-SE3 producer, SP04-SE5 producer and SD37-DSP01 disposal well at the Spy Island drill site and the OP05-06 producer, OP17-02 producer and OP22-WW03 water well at the Oliktok Point drilling pad.

The company subsequently cold-stacked Doyon Rig 15 and Nordic Calista Rig 4 but is evaluating electrical submersible pump replacements projects in early 2021.

As with some other companies, the suspension of drilling activities allowed Eni to complete some maintenance activities that would have required a temporary shutdown.

Even so, the company is planning a summer 2021 turnaround at Nikaitchuq to coincide with a planned turnaround at the Kuparuk River Unit Central Processing Facility 2.

But the shutdown of regional infrastructure impacted Nikaitchuq production.

The unit produced 19,400 barrels per day between September 2019 and May 2020 but only 17,100 barrels per day during the month when throughput on the trans-Alaska oil pipeline was prorated. Production returned to 20,000 barrels per day in early June.

Eni also added six well slots to one of its drilling pads to accommodate the proposed NN02 exploratory well and as many as four additional Nikaitchuq wells. The company delayed the project after partner Shell declined to participate in the project. Eni subsequently received permission from federal authorities to suspend operations for two years, until April 2022.

In its plan for the current development year, running through September 2021, the company proposed no new drilling and said it would perform workovers as needed.

“Eni reports the global COVID-19 pandemic and subsequent global oil demand and price impact has temporarily curtailed planned drilling activity in the 2020 (Plan of Development),” Eni wrote. “Actual activities may change as conditions improve.”

Nikaitchuq produced 6,772,787 barrels of oil (approximately 18,555 bpd) in 2019, compared to 3,489,408 barrels (approximately 19,172 bpd) in the first half of 2020.

Eni acquired the Nikaitchuq leases through purchases in 2005 and 2007, sanctioned a $1.45 billion development program in January 2008, and brought the unit into production in early 2011. The company completed its initial onshore Oliktok Point pad drilling program in 2012 and shifted to continuous drilling at the offshore Spy Island drill site.

Editor’s note: See full story in The Producers magazine, being released in November by Petroleum News.

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