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August 2016

Vol 21, No. 33 Week of August 14, 2016

Slope drilling down

First half development drilling at 6 largest units declined over 2015

ERIC LIDJI

For Petroleum News

With two notable exceptions running against the trend, the six most active North Slope units collectively reported a decline in development drilling in the first half of the year.

According to Alaska Oil and Gas Conservation Commission completion reports for the Prudhoe Bay, Kuparuk River, Colville River, Milne Point, Oooguruk and Nikaitchuq units, operators completed 74 wells during the first six months of this year, down from 86 wells during the first half of 2015 and down from 79 wells during the first half of 2014.

The trend was even stronger comparing the second quarter to the first quarter. Not only was the total amount of drilling greater last year but also the rate of drilling was steadier.

While development drilling was fairly level through the first half of 2015 - from 44 wells in the first quarter down to 42 wells in the second quarter - it fell sharply over the same period this year - from 45 wells in the first quarter to 29 wells in the second quarter.

The figures represent administrative filings published through July 2016. AOGCC completion reports occasionally lag behind actual drilling and are often revised. With future revisions, these figures could end up being higher but are unlikely to be lower.

Any discrepancies between these figures and those reported for the first quarter, in the May 15 issue of Petroleum News, are the result of AOGCC revisions, additional completion reports and adjustments to remove apparent duplicates from the database.

Except when mentioned, references to “wells” includes laterals and sidetracks but not workover activities to repair aging or damaged wells. The well totals include both production wells and injection (or “service”) wells required to maintain field pressure.

Prudhoe and Kuparuk

While the completion reports appear to reflect a noticeable downward trend in the aggregate, they become more complicated when considered on a unit-by-unit basis.

But both the Prudhoe Bay and Kuparuk River units follow the trend.

Reflecting the large cuts to employment and expected activity that operator BP Exploration (Alaska) Inc. announced earlier this year, development drilling declined at the Prudhoe Bay unit. The company drilled 27 wells at the unit in the first half of 2016, down from 33 wells in the first half of 2015 and up from 23 wells during the first six months of 2014.

And like the overall North Slope figures, the Prudhoe Bay numbers also show a decline between first quarter and second quarter activity. The rate of drilling remained fairly level in early 2015 - with 18 wells in the first quarter and 15 wells in the second quarter. But this year, drilling declined from 18 wells in the first quarter to nine wells in the second.

Similarly, at the Kuparuk River unit, ConocoPhillips Alaska Inc. reported a slowdown in activity. The company drilled 30 wells at the unit through the first half of 2016, down from 38 wells during the first half of 2015 and up from 26 wells in the first half of 2014.

And while the rate of drilling activity was steady last year - with 19 wells in both the first and the second quarter - the rate appeared to be slowing through the first half of this year - with 18 wells drilled in the first quarter and 12 wells drilled in the second quarter.

The Kuparuk River unit figures are more nuanced than they first appear because of ConocoPhillips’ ongoing strategy of multilateral drilling at the unit. The 30 penetrations drilled at the unit can be further broken down to six single wells, three sidetracks and 21 laterals, including what appears to be a septa-lateral well at Drill Site 3H, a penta-lateral well at Drill Site 3O and a tri-lateral well at Drill Site 3Q, all in the north of the unit.

Alpine and Milne Point

While the figures show an easing at the two largest fields on the North Slope, they show the complete opposite at the next two largest fields: Colville River and Milne Point.

With its ongoing development program at the new CD-5 pad underway, ConocoPhillips increased activities at the Colville River unit over last year. The company drilled eight wells at the unit in the first six months of 2016, up from five wells during the same period last year. And the rate of drilling remained steady between the first and second quarters.

One of the wells drilled this year was plugged and abandoned, and later sidetracked.

And at the Milne Point unit, operator Hilcorp Alaska LLC started its drilling campaign after a period of preliminary workover and administrative activities. The company drilled seven wells at the unit in the first half of this year, after drilling none during the same period last year. But previous operator BP drilled 17 wells during the first half of 2014.

Oooguruk and Nikaitchuq

The declines were sharpest at two of the newest producing units.

Caelus Natural Resources Alaska LLC drilled two wells at the Oooguruk unit in the first half of 2016, after drilling four wells at the unit during the same period of 2015.

And while the four 2015 wells were evenly split between the first and second quarters, Caelus drilled both of the two 2016 wells in the first three months of this year.

Earlier this year, the small independent announced plans to suspend drilling operations at the unit through at least August 2017, as a response to persistently low oil prices.

Similarly, the major Eni US Operating Co Inc. suspended drilling at the neighboring Nikaitchuq unit in late 2015 and expects the hiatus to remain in place for much of this year. While the company drilled eight wells at the unit in the first half of 2014 and six wells in the first half of 2015, it drilled no wells during the first six months of this year.






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