Providing coverage of Alaska and northern Canada's oil and gas industry
June 2015

Vol. 20, No. 23 Week of June 07, 2015

Repsol feeling ‘positive’

Spanish supermajor releases first results from North Slope exploration program

Eric Lidji

For Petroleum News

Repsol E&P USA Inc. is touting “better-than-expected” results from its recent North Slope exploration campaign and has begun permitting a development program but continues to hold off on making a final development decision until it gathers more information.

The subsidiary of the Spanish supermajor reported “positive” results from the Qugruk No. 8 and Qugruk No. 301 wells drilled this past winter in the general vicinity of the Colville River Delta.

Repsol has already committed to a fifth exploration season on its North Slope acreage this coming winter and said it has begun permitting a development “in the Nanushuk and Alpine areas.” But the company has yet to sanction a development in Alaska and has previously said that it would likely make the decision sometime next year. “We are very satisfied with the latest results from Alaska,” Executive Vice President of Exploration and Production Luis Cabra said in a statement June 2. “The positive news from this year’s exploration campaign, combined with the recent changes in the state’s tax structure, make Alaska a compelling area to continue to invest and generate the potential for development.”

Through four previous seasons, Repsol has drilled 16 “positive” wells and sidetracks, according to the company. This year, Qugruk 8 flowed 30-degree API gravity crude at rates up to 2,160 barrels per day and a 2,000-foot horizontal lateral of the Qugruk 301 well yielded tubing constrained rates as high as 4,600 bpd, according to information from Repsol and from its partner Armstrong Oil & Gas. Those are the first production rates released from the program to date.

Those results, “added to the positive results from previous campaigns, confirm the significant development potential of the area,” Repsol said in its statement.

Repsol has been conducting the exploration program on behalf of a three-company joint venture. Repsol holds a 70 percent working interest. The Armstrong Oil and Gas subsidiary 70 & 48 LLC holds a 22.5 percent interest and the Colorado-based independent GMT Exploration Co. LLC holds the remaining 7.5 percent interest.

According to Armstrong, the joint venture has been exploring two distinct targets in the region over the past few years. The two wells completed this year, and two wells from previous seasons, targeted the Alpine formation at the “East Alpine” field. Those four wells “have encountered oil productive Alpine sand in excess of 95 feet thick at a depth of 6500 feet with porosities ranging from 15 percent to 25 percent. Well control and seismic data indicates the oil pool covers an area in excess of 15,000 acres.” Another seven wells in the “Nanushuk reservoir” have “proven an oil pool that covers more than 25,000 acres, at a depth of 4,100 feet, with an oil column of 650-plus feet, and up to 150 feet of net pay with an average porosity of 22 percent.”

Although the joint venture needs to drill more wells to “confirm the ultimate size of some discoveries, this season’s results justify moving forward with development,” according to Armstrong. The joint venture is permitting developments in the Nanushuk and in the Alpine.

Getting closer

The joint venture began in 2011, when Repsol acquired a stake in 494,211 acres in the White Hills region south of the Kuparuk River unit and near the Oooguruk unit.

The $768 million deal earmarked some $750 million for exploration, according to Petroleum News sources, suggesting that all three parties were eager to get to work.

Permitting and technical problems turned a five-well program into a two-well program in early 2012. A three-well program in early 2013 and a two-well program in early 2014 gave the company enough confidence to suggest the possibility of development. “We are working toward defining the most economical way to develop the area,” Chief Financial Officer Miguel Martinez said in May 2014, offering no further details for the time being.

The company permitted a three-well program this past winter. From the recent statement, it is unclear whether Repsol only drilled two wells or whether only two were successful.

According to Alaska Oil and Gas Conservation Commission filings, Repsol suspended the third well - Qugruk No. 9 - in April 2015, one day after getting a revised permit.

The company is currently awaiting a ruling on a proposed Pikka unit, which would cover the wells the company drilled this winter, in addition to some previously drilled wells.

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