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Second wind Successful last year, Armstrong is back to drill more North Slope wells Kay Cashman Petroleum News Publisher & Managing Editor
The company that saved the day for North Slope exploration last winter is back again, planning to drill between one and three exploration wells off Alaska’s northern coast this coming winter.
Denver-based independent Armstrong Oil & Gas — doing business in Alaska as Armstrong Alaska — will drill the wells at its Northwest Milne prospect which is northwest of BP’s Milne Point field in state waters.
Some of the leases in the prospect were acquired by Armstrong from BP Exploration (Alaska) earlier this year. (See map on page 12.)
If state, federal and industry officials are correct in their assessment, the Armstrong wells will take the total of North Slope exploration wells next winter from three to as many as six, possibly saving the 2003-2004 season from being the slowest ever on the slope for wildcat drilling. (See related story on page 9 of this issue.)
Armstrong, which has a reputation in the continental United States for finding new oil in mature basins and attracting solid partners to operate its fields, hopes to bring another oil and gas company to Alaska. Last year it brought one of the country’s largest independents, Dallas-based Pioneer Natural Resources, to the North Slope to drill three wells at its Northwest Kuparuk prospect where a field development announcement is expected soon.
This year Armstrong is not saying if it will drill Northwest Milne or bring in a partner to do so, but the company’s founder and president, geologist William D. “Bill” Armstrong, told Petroleum News Aug. 12, “We usually bring new ideas and concepts to the business opportunities that we pursue. One of our stated goals is to bring additional companies that we have a good relationship with to Alaska and introduce them to a world-class hydrocarbon system with a favorable business climate. Very few wells have ever been drilled without multiple partners on the North Slope and we don’t anticipate changing that this year.”
In the Lower 48, major independents El Paso Production and Anadarko Petroleum have both operated for Armstrong.
“We have partnered with almost all the major North Slope players in the Lower 48 at one time or another,” Bill Armstrong told Petroleum News last fall. Industry support critical How many wells Armstrong will drill this winter will be “conditional upon adequate industry support,” Armstrong’s Vice President of Operations Stu Gustafson said Aug. 12, declining to elaborate.
The proposed wells — the Nikaitchuq No. 1, No. 2 and No. 3 — get their name from an Inupiat word which means “to persevere” and “will target multiple objectives. One of the primary objectives is an attempt to extend the favorable productive Jurassic sand fairway which tested 1,300 barrels of oil per day in the Ivik well last year,” Gustafson said. Ivik was one of three wells Pioneer drilled at Northwest Kuparuk last year.
“Other objectives are extensions to established production at the Milne field,” Gustafson said. Four miles of ice road Armstrong has not chosen a rig yet, but has had “preliminary discussions with multiple rig contractors that have scoped out several suitable options for the program,” Gustafson said.
The company’s current plan is to drill from one or two pad locations. The final position and design of the pads will be “dependent on cost and the permitting/regulatory process,” he said.
A pre-permitting meeting was held with agencies in Anchorage Aug. 14.
Armstrong estimates the project will include four to six miles of ice roads and “relatively shallow water” of eight feet or less, Gustafson said. Stacking the accumulations Alaska Division of Oil and Gas Director Mark Myers says the key to success in the area Armstrong is drilling is understanding the Jurassic, which he said Armstrong clearly did at the Northwest Kuparuk prospect it put together for its partner, Pioneer.
“The Jurassic … has significant volume potential to it, but typically produces at slower rates. … Other horizons —smaller accumulation — like the Brookian and Kuparuk could add significantly faster flow rates to the project,” he said.
The result, he said, is “long term productivity at reasonable flow rates if you can stack them up and that’s something Armstrong is looking to do in that area.”
Depending on what they find, Myers said, production could be handled at a standalone facility or other nearby existing facilities at Milne Point or Kuparuk.
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