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XTO Energy increases Alaska reserves by 42 percent Company sees 10-15 years of production left from its A and C platforms offshore Nikiski; if test well proves Jurassic productive, economic life could be longer Kristen Nelson PNA Editor-in-Chief
XTO Energy Inc. — formerly Cross Timbers Oil Co. — buys properties that are no longer profitable for larger companies and, because it is smaller and has lower overhead, makes money from those properties.
“We’ve done that throughout the San Juan, throughout East Texas and it worked well for us,” XTO’s Lindsey Dingmore said March 22: “… we have gone out and bought 2.3 billion cubic feet of gas and on those same properties with a little loving care and some development we’ve developed another 1.9 billion cubic feet out of those same properties, an 83 percent increase since Cross Timbers was formed in 1986,” Dingmore, XTO’s manager of governmental and regulatory affairs, told the House Special Committee on Oil and Gas.
XTO has also increased its reserves in Alaska.
The Fort Worth, Texas-based company bought two platforms, A and C, at the Middle Ground Shoal field in Cook Inlet from Shell Oil in 1998.
The company bought 12 million barrels of reserves, said Doug Schultze, XTO’s vice president of operations for the Permian Basin and Alaska. XTO development efforts increased those purchased reserves by 42 percent, “and we really believe there’s more potential out there,” Schultze said. West flank challenge Starting in the 1960s, Schultze said, Shell developed the east flank of the structure. Shell began work on the west flank in the late 1980s. The west flank “is really the big opportunity we’ve been working on for the last three or four years,” he said.
The west flank looks narrow on a surface view, Schultze said: “But if you look at the structure, it’s a very turned over structure. … And so you have the whole reservoir basically turned over on its side, which makes for challenging development.”
XTO has had one rig running steadily for more than two years. It has converted three wells to water injection to water flood the west flank, a project Schultze described as “critical to our success up here,” and is starting to see results from the water flood.
Schultze said the company has just completed its sixth horizontal sidetrack. The horizontal wells came on at more than 500 barrels a day and the company has been able to continue at that production rate, he said.
Two more wells are planned on the west flank — one is under way now — at a cost of $3 million to $5 million a well. XTO has been getting reserves of 500,000 to 1 million barrels of oil per well, Schultze said.
The company’s capital budget for Alaska is $15 million this year, he said, with $7 million budgeted for operations costs. Studies of both flanks Schultze said XTO’s west flank simulation study was a first for the area: “It’s a difficult technical problem to simulate an overturned reservoir. And we’ve got something that we believe is giving us a lot of assistance and helping us pick our candidates for drilling and also for the water injection.”
For the west flank — the reservoir that is turned on its side — XTO has developed a way of looking at the reservoir from the side, instead of from above. “That’s allowed us to go in and select these locations and find the holes in the reservoir that we think we can get undrained oil from and that’s worked very well for us,” he said.
The company also has an east flank study under way. Schultze said that although the east flank has been water flooded since the 1960s, “we really think there’s some bypassed oil out there and an opportunity to go in there and find some other production on the east flank. ” Jurassic possibilities The properties produce about 4,600 barrels a day. Without XTO’s development work, current production would probably be at about 3,000 bpd, Schultze said.
But there’s more potential, something XTO has been looking at for a while.
“There actually is a formation below the Hemlock called the Jurassic that has been drilled in the inlet once or twice before,” he said, although not commercially produced.
A well was drilled into the Jurassic in the McArthur River field, but while it came on with very high production it dropped off very quickly, Schultze said.
“And we believe that with some different techniques, different completion methods, that maybe you can get something that will produce long term,” he said.
“We’ve been studying that and I think there’s probably an 80 percent chance that we’ll be drilling a test well into the Jurassic later this year.” If the company can get a good test, it will then look at whether it could move to full development.
“And that could be a huge boost to us out there if we could find a way to get into the Jurassic and develop that. Because that structure underlies our entire acreage position out there,” Schultze said.
The company’s reserves have “easily 10 and probably 15 years of economic life left,” he said. “And if the Jurassic were to come into play that would change that significantly, probably.”
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