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Producers 2020: Despite pandemic setbacks, ConocoPhillips advances
The decades-long westward march continues for Alaska’s reliable producer Eric Lidgi for Petroleum News
ConocoPhillips Alaska Inc. has generally been a predictable operator.
Over the past generation, the local subsidiary of the large Houston-based independent has been gradually and diligently advancing westward across the central North Slope.
The company operates the Kuparuk River unit, the Colville River unit and the Greater Mooses Tooth unit. Each of these has built upon existing infrastructure to carry North Slope development farther west. (The plans for the undeveloped Bear Tooth and Willow projects continue the trend.)
And while long lead times for Alaska projects generally protect the state from the full impact of short-term crises, the uncertainties around the coronavirus pandemic made it hard to predict what work ConocoPhillips would undertake at those three units this year.
The company submitted its Colville River unit plan of development in March, just as the pandemic was upending American life. By the time the company submitted its Kuparuk River unit plan of development in early May, it had added pandemic-related disclaimers.
In between those two releases, the company made two major operational decisions.
In early April 2020, it demobilized its North Slope rig fleet. The move was a way to reduce on-site personnel in response to the fast spread of COVID-19 in North America.
And toward the end of the month, the company announced that it would be curtailing North Slope oil production by 100,000 barrels per day for the month of June, in response to low prices as economic shutdowns lead to a decline in the global demand for oil.
The company returned to normal operations in July 2020.
When it reported quarterly earnings figures in late July 2020, it said actual curtailments had been about 40,000 barrels per day from the Kuparuk River and Colville River units.
But the disruptions of this year (and perhaps next year, as well) will likely mean little to the ongoing trends at its North Slope properties. ConocoPhillips is working to extract additional production from the aging Kuparuk River unit, expand production on two fronts at the Colville River unit and study initial production results at Greater Mooses Tooth. A small but significant sign of optimism: in its Kuparuk River plan, the company mentioned infrastructure upgrades intended to support 25 additional years of operations.
The Kuparuk River unit With the Kuparuk River unit already deep into its mature phase, oil production mostly depends on the extensiveness of development drilling, the diligence of well maintenance and workover activities, and the sophistication of enhanced oil recovery efforts. Even so, ConocoPhillips has continued to find new opportunities by stepping out at the western edge of the unit and by developing viscous oil resources at the eastern edge of the unit.
The second-most productive unit in Alaska produced an average of 102,690 barrels per day in 2019, down 7% from an average of 110,500 bpd in 2018, according to the most recent plan of development for the unit, covering 2019. ConocoPhillips reported declining production at the main Kuparuk oil field and at three of its four satellite fields (Meltwater, Tarn and West Sak). Production increased at the Tabasco satellite field.
Unusually, the company provided few firm drilling or workover commitments for the current development year in the plan of development it submitted to state officials on May 1. The omission is a nod to the uncertainties caused by the COVID-19 pandemic.
KRU: Kuparuk field ConocoPhillips is developing the main Kuparuk oil field from 878 active wells - 506 producers and 372 injectors - at 46 drill sites (of which 14 also produce from satellites).
Oil and natural production are declining. The field produced 73,000 barrels of oil per day in 2019, down 7.5% from 79,000 bpd in 2018. It also produced 143 million cubic feet of natural gas per day in 2019, down 22% from 184 million cfpd in 2018.
Those declines came as drilling and enhanced oil recovery activities increased.
A 22-well coiled tubing drilling program in 2019 accounted for some 2,100 bpd of peak gross incremental oil production. By comparison, a 12-well coiled tubing drilling program in 2018 accounted for some 3,300 bpd of peak gross incremental oil production.
The program was spread across the field, but it included a five-well cluster at Drill Sites 1R and 1G targeting the West Sak field. The wells were also geologically diverse, with six targeting the A Sand, 10 targeting the C Sand and one targeting both the A and C sands.
The company also completed five rotary wells in 2019 - three producers and two injectors - but did not provide production estimates. The rotary program included three wells from Drill Site 2M and two wells from Drill Site 3G. Non-rig well work added some 8,000 bpd in 2019, compared to 11,500 bpd attributed to similar projects in 2018.
According to Alaska Oil and Gas Conservation Commission records, ConocoPhillips drilled 14 wells and laterals at the Kuparuk River unit through July 2020 - all before submitting its plan. The current development plan covers the year ending July 31, 2021.
ConocoPhillips began importing natural gas liquids from the neighboring Prudhoe Bay unit in September 2018 to blend with natural gas to create miscible injection.
The outside NGL supplies allowed the company to increase its enhanced oil recovery program at the Kuparuk field at Drill Sites 1B, 1C, 1D, 1E and 2C and to initiate EOR at other sites connected with Central Processing Facility 2. The company switched to field-wide miscible injection in October 2019, which allowed it to conduct EOR activities at drill sites connected with Central Processing Facility 1 and Central Processing Facility 3.
The Kuparuk field received an average of 83 million cfpd of miscible injection in 2019, accounting for some 7,700 bpd. By comparison, the company logged some 9,400 bpd of increased production from an average of 64 million cfpd of miscible injection in 2018.
“Alternative EOR opportunities for Kuparuk are being explored, with laboratory investigation and field testing of promising methods to recover additional resources that are currently considered residual oil,” the company wrote in its plan of development.
The biggest area of growth at the Kuparuk River unit is the Nuna Moraine interval, in the northwest corner of the unit. ConocoPhillips has been testing wells in the area for years, but it gained additional assets following the acquisition of the nearby Nuna prospect.
The company conducted a two-well pilot project in late 2018 with the 3S-611 and 3S-612 producer-injector pair and expects to drill two follow-up wells at some point in the future.
In August 2020, ConocoPhillips asked the state Division of Oil and Gas to expand the Kuparuk River Torok oil pool to include the leases in the recent Nuna acquisition.
KRU: West Sak ConocoPhillips is developing the West Sak satellite from 117 active wells - 55 producers and 62 injectors - at 10 drill sites: 1B, 1C, 1D, 1E, 1G, 1H, 1J, 1R, 3K and 3R.
Oil and natural production are declining at West Sak. The field produced 21,700 bpd in 2019, down slightly from 22,700 bpd in 2018. The field also produced 12.7 million cfpd of natural gas per day in 2019, down some 14% from 14.8 million cfpd in 2018.
The company completed a five-well coiled tubing drilling development program at West Sak in 2019. The program included two producers and one injector at Drill Site 1R and one producer and one injector at Drill Site 1G - all single laterals targeting the B Sand.
For the coming development year ending July 31, 2021, the company is planning a five-well program at Drill Site 3R. The program includes the 3R-105 dual lateral and the 3R-107 dual lateral. The program would eventually expand the drill site to include as many as nine new wells, requiring the formation of a new North West Sak participating area.
In its latest plan, ConocoPhillips had plans to extend viscosity reducing water alternative gas, or VRWAG, injections at certain 1H North East West Sak wells in mid-2020.
KRU: Meltwater ConocoPhillips is developing the Meltwater satellite from 17 active wells - 10 producers and seven injectors - at Drill Site 2P, which also produces from the main Kuparuk field.
Oil and natural production are declining at Meltwater. The field produced 450 bpd in 2019, down 35.7% from 700 bpd in 2018. The field also produced 7 million cfpd of natural gas per day in 2019, down nearly 34% from 10.6 million cfpd in 2018.
To address rising gas-to-oil ratios attributed to injection practices, ConocoPhillips switched the field to water flooding in mid-2019. Without the change, several wells would have become uneconomic, according to the company. The water-only injections followed six months of miscible injections and almost a decade of gas only injections.
“It is expected that it will be at least years before the producers start to observe the benefit of water injection,” the company wrote in its current plan of development.
KRU: Tabasco ConocoPhillips is developing the Tabasco satellite from eight active wells - five producers and three injectors - at Drill Site 2T, which also targets the Kuparuk field.
Oil production increased at Tabasco. The field produced 1,390 bpd in 2019, up 13.6% from 1,200 bpd in 2018. Natural gas production declined. The field produced 170,000 cfpd per day in 2019, down more than 43% from 300,000 cfpd in 2018.
The increase is likely the result of several maintenance projects completed in 2019.
ConocoPhillips converted the 2T-209 producer to injection about seven years after the well was suspended. The company returned the 2T-203 and 2T-218 producers to production in early 2019 following repairs to their electric submersible pump motors.
KRU: Tarn ConocoPhillips is developing the Tarn satellite from 56 active wells - 39 producers and 17 injectors - at Drill Sites 2L and 2N, which also both target the Kuparuk field.
Oil and natural production are both declining at Tarn. The field produced 6,150 bpd in 2019, down slightly from 6,900 bpd in 2018. The field also produced 6.1 million cfpd of natural gas per day in 2019, down more than 50% from 13.2 million cfpd in 2018.
The Colville River unit ConocoPhillips is planning a considerable increase in development drilling at the Colville River unit this year, as well as ongoing work toward two expansion opportunities.
The company currently develops the unit from four pads targeting seven participating areas. But forecasts have always envisioned additional pads, to accommodate expansion.
In its most recent plan of development, the company said it would drill as many as 21 development wells across the Colville River unit in 2020 and into the first quarter of 2021, although the company asked the state not to release the locations of those wells.
According to AOGCC records, the company had completed nine wells and laterals through the first six months of 2020 (as well as a well-and-lateral pair completed in the final weeks of 2019). The wells were completed largely in the first quarter of the year, before complications from the coronavirus emerged. The completed wells were located at the CD4 and CD5 pads. Several other permitted wells have not yet been completed.
The company drilled five wells at the unit in 2019. The program included three multilaterals and a horizontal well at CD5 targeting Alpine and a slant well at CD2 targeting Fiord West. The company postponed three planned CD5 wells over rig scheduling delays and cancelled a fourth by combining it with an existing well. The company also postponed two planned CD4 wells “due to rig optimization decisions.”
ConocoPhillips is progressing two important expansion projects at the unit.
Work on the CD2X expansion project last year added 21 well slots and converted six existing well slots at the CD2 pad, giving the company 27 well slots for extended reach drilling activities. The project would support the new Fiord West Kuparuk satellite.
The company received an AOGCC drilling permit for the CD2-310 well in mid-August 2020, the first drilling permit issued for the company at the unit since early May 2020.
The second project targets the Narwhal prospect in the south of the unit. Following many regulatory disputes, the state approved the expansion in August 2017, subject to certain conditions. The expansion incorporated the formerly named Putu prospect into the unit.
To meet the initial conditions required by the state, ConocoPhillips drilled the Putu No. 2 and Putu No. 2A wells and made a $3 million bonus bid replacement. The company also drilled four appraisal wells - CD4-595PH1, CD4-595, CD4-594PH1 and CD4-594 - beyond its work commitments “to better understand the reservoir and to test the technical feasibility of extended reach drilling at shallow depth,” according to the company.
The next round of commitments requires ConocoPhillips to either pay $4 million to the state and submit a plan detailing efforts to either bring the leases into sustained production or it must voluntarily contract the leases. The company chose the former.
While the company had initially intended to access the area from its existing CD4 pad using extended reach wells, the CD4-594 and CD4-595 wells “stretched the limits” of serviceable extended reach drilling at shallow depths, according to ConocoPhillips.
To reach Narwhal, the company is now designing a CD8 gravel pad connected by road to the CD4 pad. CD8 would support between 20 and 40 new development wells, depending on modeling. The company expects CD8 production no sooner than 2025.
A CD4-597 injector well in late 2020 or early 2021 would complete the intended pattern of pilot project drilling, allowing the company to better design well spacing and facility design for the pad. Other drilling might be conducted for other engineering purposes.
CRU: Alpine The Alpine pool is the largest producing field at the Colville River unit.
ConocoPhillips completed initial development drilling at the field in November 2005 from the CD1 and CD2 pads and switched to peripheral opportunities. The startup of the CD5 pad in late 2015 provided additional opportunities to produce from the pool.
The Alpine pool includes two participating areas: Alpine and Nanuq Kuparuk. The Alpine participating area is currently being developed from 156 wells - 82 producers, 72 injectors, and two disposal wells in the Ivishak. The Nanuq Kuparuk participating area is currently being developed from 13 wells - six producers and seven injectors.
In the coming year, the company is planning an undefined coiled tubing drilling program at the Alpine field using laterals to target areas between existing producers. The company is also planning a rotary program at Alpine including three producers and six injectors.
Within the Nanuq Kuparuk sand, the company is planning to use an extended reach drilling rig in early 2021 to access opportunities to the west of the CD5-316 well.
Oil production is declining at the pool. The Alpine participating area produced 34,900 barrels of oil per day in 2019, down from 37,100 bpd in 2018. The Nanuq Kuparuk participating area produced 10,000 bpd in 2019, down from 12,600 bpd in 2018. The combined pool has produced 504.4 million barrels of oil cumulative since start up.
CRU: Fiord ConocoPhillips is not planning any new development wells at the Fiord pool in the coming cycle, although it is considering as many as five sidetracks at the Fiord Nechelik participating area and one workover project in the Fiord Kuparuk participating area.
The company drilled the CD2-162 slant well in early 2019 targeting the Fiord West Kuparuk reservoir, near planned extended reach well locations. The pilot well was designed to provide information to support future extended reach drilling activity but was suspended before reaching its target after its bottom hole assembly became stuck.
The company is now planning as many as four additional slant pilot wells over the coming development cycle. The wells would also support future development activities.
The Fiord pool is currently developed from 23 wells at Fiord Nechelik - 13 producers and 10 injectors - and six wells at Fiord Kuparuk - three producers and three injectors.
The Fiord Nechelik participating area produced 4,800 bpd in 2019, down from 5,500 bpd in 2018. The Fiord Kuparuk participating area produced 400 bpd in 2019, equal to 2018. The Fiord pool has produced 73.3 million barrels of oil cumulatively since start up.
CRU: Nanuq and Qannik ConocoPhillips is planning no new development wells at the Nanuq pool, but it expects to finish two coiled tubing drilling sidetracks from CD4 in the coming development year.
The company is currently developing the Nanuq pool from 10 wells - six producers and four injectors - at the Nanuq participating area. The Nanuq pool produced 1,400 bpd in 2019, down from 1,200 bpd in 2018. Cumulative oil production is 5.2 million barrels.
The company completed the CD4-499 horizontal production well into the Qannik pool in late 2019 and early 2020. The well targeted an opportunity to the east of the existing CD2 development. The company may drill an offset injector in the coming development year.
The company is developing the Qannik pool from nine wells - six producers and three injectors - at the Qannik participating area. The Qannik pool produced 1,700 bpd in 2019, down from 1,600 bpd in 2018. Cumulative oil production is 7.7 million barrels.
The Greater Mooses Tooth unit The Greater Mooses Tooth unit is practically an extension of the Colville River unit, although administrated independently and overseen by a different land manager.
ConocoPhillips first announced the possibility of a development in the area in the early days of the Alpine project. But the GMT project was dependent on the CD5 pad, which crossed the Nigliq Channel of the Colville River, opening western leases to development.
The 11.8-acre GMT-1 drilling pad is the first commercial development in the National Petroleum Reserve-Alaska, overseen by the U.S. Bureau of Land Management. The pad is also the hub for future ConocoPhillips development projects in the region, including the GMT-2 pad and the Willow prospect at the unit, and the Bear Tooth unit to the north.
ConocoPhillips brought the 33-well pad online in mid-2018 with sustained oil production beginning in October 2018. The unit produced approximately 10,646 barrels per day in its first year. But production volumes began falling in late 2019. Over the year ending June 1, 2020, the most recent available information, production was down to 6,532 bpd.
ConocoPhillips is currently developing the unit from three production wells - GMTU MT6-03, GMTU MT6-05 and GMTU MT6-06. The wells have been producing unequally, although parity appears to be underway. Of the 95,452 barrels of oil produced at the unit in June 2020, 74% came from GMTU MT6-05, 22.6% came from GMTU MT6-03 and 3.2% came from GMTU MT6-06. By comparison, in July 2019, the wells accounted for 86.7%, 12.2% and 1.1%, respectively.
ConocoPhillips expected better results for its initial drilling campaign but said no remediation is planned at the moment. The company is using the result of the project to inform its ongoing work at the GMT-2 pad. GMT-2 is targeting a different reservoir.
Last year, ConocoPhillips finished processing an 810-square mile seismic program covering much of the unit. The results will guide future exploration and development.
The GMT-2 pad is currently under construction, with pipeline installation planned for earlier this year. The company expects major administrative work with the Alaska Oil and Gas Conservation Commission this fall, with start-up planned for late 2021.
At the Bear Tooth unit to the north of Greater Mooses Tooth, ConocoPhillips is planning a four-well exploration program this year but no development work as of yet. At the nearby Willow project, the BLM recently released a final EIS for the proposed project.
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