Providing coverage of Alaska and northern Canada's oil and gas industry
November 2014

Vol. 19, No. 48 Week of November 30, 2014

Another rig for Kuparuk

Conoco contracts with Nabors for new coiled tubing rig; Doyon rig ordered earlier

Kristen Nelson

Petroleum News

ConocoPhillips Alaska has contracted with Nabors Alaska Drilling for a new coiled tubing drilling rig, the company’s president, Trond-Erik Johansen, told the Resource Development Council’s annual conference in Anchorage Nov. 19. The new Nabors rig will begin drilling in late 2016.

This is the second new rig the company has contracted for this year. In July Conoco announced a contract with Doyon Drilling for a new-build rotary rig to begin drilling at the ConocoPhillips-operated Kuparuk River field in early 2016. Doyon 142 will be the first new-build rotary rig added to Kuparuk’s fleet since 2000.

The new rig, Nabors CDR3, is a sister rig to Nabors CDR2 which has drilled 80 wells since it began operation in 2009, ConocoPhillips said in a Nov. 19 statement.

“Coiled tubing drilling has proven very successful at Kuparuk, helping to maximize oil recovery in a complex reservoir,” Johansen said in the statement. “Doubling our Kuparuk CTD capacity will allow us to access more challenged oil and help stem North Slope production decline.”

Johansen said at the RDC conference that ConocoPhillips began adding rigs at Kuparuk after passage of Senate Bill 21, the oil tax reform bill, in the spring of 2013. He said the company immediately contracted for Nabors 7ES, which began drilling in the summer of 2013, and then contracted for Nabors 9ES, which began drilling in 2014.

The rigs are drilling new wells and working over older wells, Johansen said, and additional drilling from just those two rigs, Nabors 7ES and Nabors 9ES, has already added 8,000 barrels of gross oil per day to Kuparuk production.

Flattening decline

Kuparuk production has been declining at about 7 percent a year in recent years, Johansen said, but with the addition of the new rigs that decline is now at 2 percent.

In addition to the new rigs, the Kuparuk Shark Tooth development, drill site 2S, has been approved for construction. Johansen said the site will develop thin sands on the periphery of the fields, sands the companies couldn’t see in previous years, until they were revealed by seismic shot in 2011-12. The drill site 2S development is estimated at $500 million, with production in late 2015, peaking at some 8,000 bpd gross.

Another Kuparuk development, the IH drill site at NEWS, Northeast West Sak, has not yet been approved, he said.

This project involves additional surface facilities and some 19 new wells, with an estimated cost of $450 million.

Johansen said the 1H project will involve five horizontal production wells and 14 vertical water injection wells. The production wells will have lateral well bores coming off the central bores reaching into different horizons. Funding approval is anticipated early next year, with production peaking at some 8,000 bpd gross.

Steep Alpine decline

Farther west, at Alpine, decline has been running 12 percent, steeper because Alpine is a smaller field, a smaller reservoir and with different reservoir properties, he said.

Development of the CD5 drill site is the first element in the fight against decline at Alpine, Johansen said, with Greater Mooses Tooth 1 the second building block in taking production at Alpine back up.

CD5, west of Alpine, was approved before passage of SB 21 and is on schedule to be in production in December 2015. A lot of work is done on the project, including completion of a 6-mile gravel access road and the drilling pad and three smaller bridges. Johansen the bridge across the Nigliq Channel is under completion with the 1,400-foot bridge being skidded out on rails to rest on seven piers. The bridge is halfway across, he said, and scheduled to be complete before Christmas. In spring installation will begin of production facilities and ConocoPhillips will begin ramping up to drill. CD5 production is projected to peak at 16,000 bpd.

Greater Mooses Tooth 1, GMT1, is the next building block for increasing Alpine production, and Johansen said the hope is to have that ready for sanctioning the last week of January or early February. But progress on that development depends on getting Bureau of Land Management and Corps of Engineers permits. If it takes longer for the permits that project would be delayed by at least a year because of the ice road season, he said. The project is estimated at almost a billion dollars, with first oil proposed in last 2017 - subject to work beginning this winter - and production expected to peak at some 30,000 bpd.

Beyond GMT1, ConocoPhillips drilled an exploration well last year at what would be GMT2; Johansen said the company is evaluating the results of that well.

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