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State approves expansion of Prudhoe Bay Kuparuk River formation believed capable of production from 7,239 acres adjacent to Point McIntyre, Raven participating areas Kristen Nelson Petroleum News
The Prudhoe Bay owners have applied to add a small amount of acreage to the unit, hoping to expand production at the Point McIntyre and Raven participating areas on the eastern side of the field.
The 7,239-acre expansion was approved by the Alaska Department of Natural Resources Division of Oil and Gas June 30, increasing the size of the Prudhoe Bay unit from 247,477 acres to 254,717 acres.
In its original March application Prudhoe operator BP Exploration (Alaska) Inc. also requested contraction of the Northstar unit area to include a portion of a single lease in the Prudhoe Bay unit; that request was withdrawn in June, the division said.
The expansion includes portions of seven leases: 1,320 acres are portions of three leases partially within the Prudhoe Bay unit; 5,919 acres are portions of four leases not currently in either the Northstar or Prudhoe Bay units.
Expansion area 1 contains portions of two leases directly north of the Prudhoe Bay unit Point McIntyre participating area.
Expansion area 2 is portions of two leases directly east of the Point McIntyre PA and north of the West Beach PA.
Expansion area 3 contains portions of three leases directly east of the combined Niakuk PA and north of the Raven PA.
The state said ownership of all of the leases is aligned to Prudhoe Bay decimals: BP 26.3605670 percent; ExxonMobil Alaska 36.4026870 percent; ConocoPhillips Alaska 36.0767460 percent; and Chevron USA Inc. 1.16 percent.
Point McIntyre expansion Point McIntyre was one of the early participating areas at Prudhoe Bay.
The Prudhoe Bay unit was formed to produce Ivishak sandstone reservoirs, the state said; pool rules were expanded in 1977 to include the Put River sandstone and the Ivishak shale. Numerous smaller reservoirs overlying the Ivishak sandstone have been brought into production since then with separate participating areas.
The Point McIntyre PA produces from the Kuparuk River formation, with a portion of the Kalubik formation productive in the western portion of Point McIntyre.
Expansion areas 1 and 2 are requested to further develop the Point McIntyre oil pool. The Kuparuk formation at Point McIntyre has a different depositional history than the Kuparuk formation in the Kuparuk River unit, with thickened Kuparuk C reservoir sands.
“Depositional quality is complex and sandstone quality is the primary concern in the expansion areas,” the division said.
There is also uncertainty over the extent of the reservoir, although recent Alaska Oil and Gas Conservation Commission public well production data indicates oil is present in the northern tier of Point McIntyre wells and producible, “albeit at low rates,” in expansion area 1 to the north and in expansion area 2 to the east, the division said.
A well with a bottomhole immediately west of one of the leases in expansion area 1 has produced 248,000 barrels of oil through March, suggesting, the division said, that oil is likely being produced from the expansion lease and therefore it should be included in the Prudhoe Bay unit.
BP “has reasonably demonstrated” with confidential data and discussions with the state that expansion areas 1 and 2 include potential producible hydrocarbons in the Kuparuk reservoir and the unit expansion allows “for further evaluation of the Kuparuk River formation,” the division said.
Expansion area 3 Nonconfidential well data in the area of expansion 3 north of the Raven PA includes the Niakuk 41A and Sag Delta 8 wells.
In expansion area 3 the targets are the Kuparuk River formation and the Permo-Triassic reservoirs.
The Ivishak sandstone — the primary reservoir at Prudhoe — “continues to be a target in numerous, small accumulations north of the Prudhoe Bounding Fault,” the division said. The Shublik formation overlies portions of the Ivishak sandstone and is itself overlain by the Sag River formation.
Sag Delta 8 tested oil from the Kuparuk River and Sag River formations within the expansion area, while the Ivishak sandstone and Lisburne formation tested water.
Greater Point McIntyre area The division said all three proposed expansion areas will be included in the greater Point McIntyre area plans of development; the current plan expires Sept. 30.
Terms of the decision require commitment of specific leases in the expansion areas by specific deadlines. Acreage not committed within the timeframes given automatically contracts from the Prudhoe Bay unit, the division said.
Expansion area 1 requires a well within three years of the effective date of unit expansion — July1 — and requires that the leases in the expansion area be committed to a participating area within five years of that effective date.
The requirement for expansion area 2 is inclusion of the leases in a participating area within a year of the effective date of unit expansion.
Expansion area 3 requires both drilling and including the leases within a participating area within five years of the expansion.
Benefits to state The division noted that there are both short-term and long-term economic benefits to the state from the expansion approval.
“The assessment of the leases’ hydrocarbon potential will create jobs in the short term,” the division said, and if hydrocarbons are produced the state earns royalties and taxes.
The expansion allows Point McIntyre reservoir production to occur through facility sharing of existing Prudhoe Bay facilities as well as drilling unit wells through existing facilities, minimizing surface impacts, the division said.
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