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June 2017

Vol. 22, No. 26 Week of June 25, 2017

Oooguruk unit drilling still on hold

Caelus planning eight-well workover program this year and designing six future grassroots wells; expects limited Nuna activity

Eric Lidji

For Petroleum News

Caelus Energy Alaska LLC expects to continue its suspension of drilling activities at the Oooguruk unit this year but is also easing back into development work.

The local subsidiary of Texas-based Caelus Energy LLC is not planning any drilling activities at the North Slope unit over the coming year. But the company expects to conduct a workover campaign and has identified six wells to pursue in the future.

The company suspended drilling operations at Oooguruk in May 2016 and reduced its workforce by 25 percent in an effort to reduce costs in the face of market uncertainty.

In a plan of development submitted to state authorities in early June, the company proposed suspended drilling activities for another year, beginning this September.

But the company is planning for future development activity at the Oooguruk unit, particularly in the Oooguruk Nuiqsut participating area, the largest of the three oil pools at the unit. The company has finished planning for six of the remaining 13 well locations - eight new wells and five reclaimed well slots - at the participating area. The new wells are ODSN-05, ODSN-08, ODSN-09, ODSN-11, ODSN-12 and ODSN-20.

Caelus is planning eight workover projects at the unit, scheduled to begin starting this August. The workovers include recompletions to improve flow efficiency at seven existing wells (ODSN-02, ODSN-04, ODSN-16, ODSN-17, ODSN-28, ODSN-31 and ODSN-39) and a test of the Kuparuk formation in the Ivik fault block using a dual Nuiqsut and Kuparuk completion in the existing ODSN-29 well. The company is also planning integrity repairs on three existing wells, ODSN-02, ODSN-04 and ODSN-28.

Previous year

To date, Caelus and its predecessor Pioneer Natural Resources Alaska Inc. have drilled 43 wells at the Oooguruk unit - 28 at the Oooguruk Nuiqsut participating area, five at the Oooguruk Kuparuk participating area, four at the Oooguruk Torok participating area, five appraisal and exploration wells outside of those three participating areas and one disposal well. Through April, the unit produced some 30 million barrels of oil.

Without drilling activities, development work over the past year focused primarily on maintaining and upgrading facilities and on addressing development in other ways.

At the Oooguruk Nuiqsut participating area, Caelus spent the past year evaluating three existing injection wells in a proposed expansion area: the ODSN-06i well drilled in the northeast corner of the participating area near the Ivik exploration well, the ODSN-07i well drilled in the northern end of the participating to support the ODSN-02 and ODSN-28 producers and the ODSN-10i well drilled in the southwest of the expansion area.

The company briefly used ODSN-07i as a production well before converting it to injection in January. The company is also running extended pre-production tests from the ODSN-06i and ODSN-10i wells “to assess long term reservoir performance in these new development areas” before eventually converting the wells to injection.

The company is also monitoring the ODSN-03i after discovering early water injection breakthrough in its offset producing wells, ODSN-02 and ODSN-04. The company plugged a lateral in the well in July 2016 to isolate the relevant zone and removed the plug in April to resume injections and monitoring. “The surveillance data from the program will be used to assess reservoir management and remediation alternatives.”

The injection rate of the ODSN-27i and ODSN-34i wells was “significantly lower” following the shutdown of seawater deliveries from the Kuparuk River unit in September 2016. “Attempts were made to clear any debris possibly plugging the lateral by back-flowing and surging the wells. Injection performance is under review,” Caelus wrote.

At the Oooguruk Kuparuk participating area, production continued from horizontal producers ODSK-14 and ODSK-41, with ODSK-38i as the primary injector. The company returned the ODSK-35Ai well to injection this year. The company shut-in the ODSK-33 well “due to very high water-cut and significant hydraulic backout effects.”

At the Oooguruk Torok participating area, production continued from the ODST-39 and ODST-45A wells. The company recompleted the ODST-45A well in April 2016 to remove scale build up. The effectiveness of an April 2017 workover to address the problem is still being evaluated. The company also restored injection at the ODST-46i well after repairing a tubing leak to the inner annulus caused by a leaking gas lift valve.

The ODST-47 well is non-productive “due to mechanical failures.” Caelus is planning to contract the participating area to remove acreage associated with the well and instead use the well slot for future development of the larger Oooguruk Nuiqsut participating area.

Nuna

Caelus undertook similar activities at the proposed Nuna development over the past year.

The company sanctioned the Oooguruk unit satellite development in early 2015 and completed initial infrastructure associated with the project, including a drilling pad and access road. The company also began initial permitting for a potential second pad.

But the suspension of drilling activities in early 2016 led Caelus to postpone aspects of Nuna, moving the startup date to “2018 or later” from an earlier date of late 2017.

Over the past year, the company undertook a list of non-drilling tasks at Nuna, including a continued refining of cost estimates and an assessment of the commercial viability of the project based on drilling and engineering results and on permitting requirements.

This coming year, the company expects to continue design, engineering and procurement work and ongoing geologic studies with the goal of a “2018 or later” startup for Nuna. Those work plan includes an ongoing evaluation of “facility construction schedule and cost in light of oil price and tax structure environment,” according to the company.






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