Phillips Alaska applies for McCovey unit

Both state, federal leases included in 28,500 acre unit proposal in Beaufort Sea north of Prudhoe Bay unit, west of Northstar

Kristen Nelson

PNA News Editor

First McCovey was a potential operating area in the 1999 charter of development between the state and BP Amoco, ARCO and Phillips Petroleum.

In March, ARCO Alaska Inc. permitted a shallow hazard survey for McCovey.

In May, Phillips Alaska Inc. applied to the state Department of Natural Resources Division of Oil and Gas and the U.S. Department of the Interior’s Minerals Management Service for approval of a McCovey unit agreement covering some 28,500 acres in the Beaufort Sea north of the Prudhoe Bay unit and west of Cross Island.

Phillips said it and Chevron each hold 50 percent working interest in the McCovey leases; Phillips would be the unit operator. There are four state oil and gas leases, all from state sale 65 in June 1991, a total of 20,371 acres with a 16.67 percent royalty and an expiration date of July 31, 2001. The three federal outer continental shelf leases were acquired in OCS sale 124 in June 1991, total 8,133 acres, have a royalty rate of 12.5 percent and expire July 31, 2001.

The four state tracts went for bonus bids of $31.09 an acre, $78.03 an acre, $101.01 an acre and $213.19 an acre. The federal tracts — the farthest offshore — all went for $25.74 an acre.

Sohio Alaska Petroleum drilled the Reindeer Island Stratigraphic Test well on one of the state tracts in 1979, reaching a measured depth of 14,352 feet and a true vertical depth of 13,645 feet from a surface location on Reindeer Island about 13 miles north of the ARCO dock at Prudhoe Bay. The well was spud Jan. 27 and plugged and abandoned April 11. That well hit the Sag River formation at 11,933 feet, the Shublik at 12,008 feet, the Sadlerochit at 12,081 feet, the Lisburne at 12,385 feet and basement at 14,315 feet.

Humble Oil and Refining had drilled a 509 foot hole in the same area in 1969. Both were plugged and abandoned.

Drilling prior to April 2002

Phillips said the companies plan winter operations from an ice island or a bottom-founded mobile offshore drilling unit. The targeted bottom hole is on a federal lease, Y-1578, which lies some 12 miles offshore. The companies plan to drill to the Basal Brookian interval or 13,000 feet subsea, whichever is lesser.

Terms of the agreement include a formal drilling contract by April 30, 2001, or the unit will terminate. If a contract has been signed but drilling has not begun, then the companies must have committed $3 million to the drilling project by July 31, 2001.