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Narwhal, Willow in Nanushuk;
investors unworried w. oil price
Kay Cashman Petroleum News
If you’re wondering whether ConocoPhillips has changed the name of the Nanushuk formation to Narwhal or Willow, the answer is no. Independent Armstrong and its partners first went after Nanushuk west of the central North Slope, although Conoco had drilled through the formation but never pursued it on their own acreage until they witnessed Armstrong’s amazing success in the Brookian topset sequence, which is the youngest and shallowest of the petroleum bearing rock sequences in Arctic Alaska.
When asked whether the Narwhal wells Putu and Stony Hill, were in the Nanushuk formation, U.S. Geological Survey geologist Dave Houseknecht told Petroleum News July 18 they were, along with Armstrong’s Pikka and Horseshoe discoveries. He had previously said Willow was also in the Nanushuk.
A Conoco geologist told Petroleum News the names Narwhal and Willow are internal, informal prospect names - not geologic terms.
He said the difference between Willow and Narwhal in the Nanushuk is their age - i.e. when the sediments were laid down - with the Willow prospect being older and Narwhal the youngest.
The Willow prospect (and West Willow) in NPR-A, or National Petroleum Reserve-Alaska, includes the Hunter well, Tinmiaq wells, Greater Mooses Tooth unit wells and possibly extends into the Bear Tooth unit. In 2017 Conoco also integrated its previous Cassin 3-D seismic program into its evaluation of Willow.
According to state of Alaska geologist Paul Decker, the API density of the oil in the Nanushuk may relate to the oil source rock. The Pikka/Horseshoe oil is thought to have originated from a source in the Shublik formation and has an API of 42 to 43. Willow oil has an API of around 30. Conoco has not said what the source rock for Willow is, nor has the USGS made a determination of the likely source rock, although there is speculation that it may have come from the HRZ or from a Jurassic source.
The Nanushuk runs through Armstrong’s Pikka unit, which will soon be developed by a new partner, Oil Search, and all the way west through NPR-A and south into the foothills of the Brooks Range, encompassing Umiat, a 1 billion barrel field on the eastern NPR-A border.
Although the Umiat field was discovered by the U.S. Navy in 1946, it has yet to be developed, primarily because of its remote location and technical challenges, although infrastructure has been drawing closer with Armstrong and ConocoPhillips’ discoveries to the north.
De-risking of Umiat to finish early 2019 Consultancy firm Ryder Scott conducted several Umiat field assessments, the latest in 2015, estimating a 50 percent probability of nearly 99 million barrels of oil being economically recoverable and a 10 percent chance of more than 154 million recoverable barrels from the billion barrels of oil in place.
Malamute Energy, new operator of the Umiat prospect, is working with researchers and technical experts to develop solutions to the challenges of producing light oil from the very shallow permafrost-hosted reservoir.
Company President Leonard Sojka told Petroleum News May 8 that in late 2017, “Malamute convened a multi-disciplinary technical workshop to evaluate the past work, technical assumptions, and open questions concerning production of the Umiat oil field. As a result … Malamute is now working with University of Alaska researchers and third party technical specialists to develop solutions” to Umiat’s “specific challenges.”
Among other things, the independent is “fully defining the controls on seal and compartmentalization, determining the best drive mechanism required to produce from the low-energy shallow reservoir, and optimal orientation and configuration of production and injection wells are all part of Malamute’s work to de-risk and advance the Umiat field toward production,” he said.
Petroleum News sources said in May that once the work to re-risk Umiat is completed, Malamute will look for investors or buyers for the prospect.
When asked July 23 in an email whether the company had completed the de-risk work and was ready to talk to potential investors, Sojka said, “Malamute is in the midst of working with several parties to study various characteristics of the Umiat Oil Field. While we are interested in speaking with potential investors/partners at any time, we have not completed the current phase in our hopefully valued-added de-risking process. We continue to gain insight into the oil field, but are targeting early 2019 as to accomplishing our current set of initiatives.”
Investors unconcerned about crude price drop According to a Bloomberg story released on July 17 and reprinted on the same day in the Alaska Department of Revenue’s daily oil price email, investors in oil companies don’t care about crude’s drop in the second week of July. Although the price of crude has begun to creep up since the 17th, Brent crude had fallen more than 9 percent.
European oil companies are “weathering the slump,” the article reported, “signaling a change in fortunes for last year’s laggards. … the Stoxx Europe 600 Oil & Gas index has retreated just 3.9 percent.”
Bloomberg credited oil companies’ “discipline during the 2014-2016 crash,” alleging it “proved to investors they can now easily withstand such crude-price corrections.”
Ahmed Ben Salem, an analyst at Oddo Bhf, was quoted in the story as saying, “Oil companies have done a good job adjusting their budgets to the lower oil price environment and their shareholders are now benefiting from that.
“The resilience is mainly linked to the fact that oil companies have an oil cash breakeven as low as $50 per barrel and their budget and share-buyback plans are based on $60.”
Investors have also been encouraged by a buoyant outlook for second-quarter earnings, Bloomberg reported: “Analysts expect the European oil sector to report the highest profit growth among 10 industries. The biggest companies are also set to deliver the highest free cash flow in almost a decade, according to Goldman Sachs Group.”
At the close of business July 20, Alaska’s Department of Revenue reported Alaska North Slope crude was at $74.20; Brent was at $70.46.
- KAY CASHMAN
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