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Tapping North Slope heavy oil Phillips Alaska uses new drilling technology to boost heavy oil production Patricia Jones PNA Contributing Writer
North Slope oil fields contain a number of very large and virtually untapped resources — several billion barrels of heavy or viscous oil contained in shallow deposits, either within or just below permafrost layers.
How to economically produce oil from these technologically challenging reservoirs has plagued operators on the North Slope for years, according to Steve Bross, Phillips Alaska’s satellite field director at the Kuparuk field.
“Over the last 15 years, there’s been about $750 million spent on heavy oil on the North Slope,” he said, during a viscous oil presentation April 11 at an energy workshop held at the University of Alaska Fairbanks.
During his presentation, Bross outlined characteristics of heavy or viscous oil on the North Slope, explained technical and economic challenges for developing those resources and described some successful wells that Phillips has completed in recent months. New drilling techniques boost production Key to recent success has been implementation of a new drilling technique called multi-lateral well drilling, Bross said.
Using this technique imported to the North Slope, drillers use horizontal directional drilling techniques to drill multiple sidetracks out from one main vertical well bore.
That way, a larger area of the shallow layer of oil-rich sands can be tapped from one well bore, increasing the oil flow from conventional well drilling.
“We made a quantum leap from wells that produced 250 to 300 barrels a day, to wells making well over 1,000 barrels and even up to 2,000 barrels a day,” Bross said.
And the increased production has come with “not substantially a lot more money for the base well design,” he added.
As the first multi-lateral wells held and produced at elevated rates, with 1,500-foot lateral extensions, the company has “gotten more aggressive with it,” Bross said. “We’ve pushed the drilling envelope with every success we’ve had drilling.”
Currently, Phillips is operating six multi-lateral wells in the Kuparuk River unit. One well drilled was over four miles in length, but only 3,500 feet deep.
“We’re staying in the sands 100 percent of the time, so this is state of the art drilling technology here,” Bross said.
The breakthrough came in 2000, when viscous oil managers felt that a “technology step change” was necessary, Bross said. Heavy oil historically expensive, low producer During the 1990s, Alaska’s North Slope producers all took various shots at tapping the massive-sized heavy oil deposits. From Conoco’s initial efforts at Milne Point, to BP Exploration’s work at Schrader Bluff, the combined total spending on North Slope heavy oil was $750 million, Bross said.
Included in that effort was Phillips’ predecessor, ARCO Alaska, which spent $250 million on a pilot program that included drilling 20 test wells in West Sak in 1998.
The company applied technology used in Lower 48 heavy oil deposits, he said: “The result we were getting were these $5 million, 300-barrel per day wells that none of our management liked.”
Even though capital costs were reduced due to the use of existing infrastructure, the crude produced from West Sak typically is lower in value. That’s because it lacks the higher end products that are more valuable to refiners, Bross said.
“You’re starting out several dollars a barrel deficit in price and value of the crude when you put it in the pipeline,” he said.
Couple that with a slope-wide trend for expensive operations and an increase on top of that for the labor and equipment-intensive viscous oil wells — producers are looking at marginal returns in the best case scenario.
“If you drop a couple dollars in value from low oil quality, and pick up a couple dollars per barrel in operating costs, we’re four or five dollars a barrel in the hole when we start to do viscous oil development,” Bross said.
Therefore, low market prices directly affect progress on such programs.
“Because of higher operating costs and lower values, anytime the price takes a downturn, this is one of the first projects that comes up on the cutting blocks,” Bross said. “Too good to walk away from” Why tackle all of these technological and economic challenges? Because the size of the heavy oil resource is so large, it makes these hurdles look like mere mosquitoes to slap out of the way.
“There’s general agreement that it’s big, really big, and it all underlies existing infrastructure,” Bross said. “That’s what has driven this $750 million investment — we keep spending money on it because it’s too good to walk away from.”
Estimates vary on the actual size of heavy oil deposits, and how much of that resource is actually recoverable. During his presentation, Bross went through some of the known accumulations, reporting deposit size and then how much is believed to be recoverable.
All told, he described up to 8 billion barrels in core areas of Schrader Bluff, West Sak and Ugnu as recoverable, using conventional heavy oil technology, the new multi-lateral drilling and in the future, still different technology that Phillips is looking at in Canada.
That new technology would be used on the Ugnu deposit, located above the West Sak accumulation. Estimates put Ugnu’s total resource at 7 billion barrels, Bross said, all located in a shallow layer with many areas bound by permafrost.
Yet more heavy oil resources exist outside the core areas of Ugnu and West Sak. These are considered immobile oil, and will require new technology to tap, Bross said.
Using primary and secondary recovery with water flooding, Phillips expects to produce 20 percent of the West Sak resource, Bross said. “That’s a good number for West Sak.”
Additional enhanced oil recovery techniques should add another 8 to 10 percent to the amount of oil recovered, he said.
Keeping heavy oil development costs down One benefit that the North Slope heavy oil deposits can tout is an existing infrastructure network for processing and transportation.
“Part of the attractiveness of the resource is that it sits all underneath existing infrastructure, and we can develop from existing pads,” Bross said.
Hence, the recent efforts to tap heavy oil. That’s because heavy oil can be produced and processed economically only when offset with a mix of higher quality, lower cost crude also flowing through the same infrastructure.
“Time is not our friend, because we are captive of the economics of the field that anchor us,” Bross said. “It’s important to do these projects while the base field is healthy, and we have the infrastructure to support us.”
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