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Division of O&G signs off on Premier exit
As 88 Energy looks to promising targets in NPR-A, Charlie 1 investor lease interests assigned back to Accumulate and Burgundy Kay Cashman Petroleum News
After the Charlie 1 exploration well was drilled last winter, investor Premier Oil withdrew from the joint venture because well results did not meet its expectations. In a Feb. 23 presentation to investors, 88 Energy, which put together the JV, had said Charlie 1 was targeting “multiple stacked drillable prospects identified on Icewine 3D interpretation” that totaled 480 million barrels of oil net to the company. Instead, drilling showed a gas condensate discovery.
According to the recently released Alaska Department of Natural Resources’ Division of Oil and Gas October lease report, an Oct. 5 decision made at Premier’s request changed the lessee name on 112 state leases in the area from Premier to 88 Energy subsidiary Accumulate Energy Alaska.
Also in the Oct. 5 decision, effective June 1, 2020, Premier’s working and royalty interests in the leases were assigned to Accumulate (45% WI, 36.9750% RI) and the other member of the joint venture, Burgundy Xploration (15% WI, 13.125% RI).
State lease ADL 393380 in which the Charlie 1 well was drilled was included in the Oct. 5 actions.
The exploration well was plugged and abandoned in April rather than suspended because further analysis was needed to determine whether such a high gas content discovery could be commercialized on the North Slope, 88 Energy said at the time, noting stimulation and testing was not possible because of “the different phase of hydrocarbons encountered along with the lack of time in the remaining winter drilling season.”
Other factors included uncertain access to some of the people required in the event of “unforeseen circumstances/emergency situations in light of the COVID-19 pandemic” and the potential of early break-up, which could strand the drilling rig, Nordic Rig 3, on the wrong side of the Kuparuk River at significant cost to the JV.
88 Energy was also reluctant to create a “potential future liability if analysis determines that the well should be P&A’d in a subsequent season, at substantially higher cost.”
The company via subsidiary Accumulate has also drilled three other exploration/appraisal wells on the North Slope in conjunction with partners - Icewine No. 1 in 2015, Icewine No. 2 in 2017 and the Winx 1 well in the winter of 2018-19. None of the wells proved commercially successful, although 88 Energy has said the jury was still out on the Icewine unconventional targets in Icewine No. 2 and the condensate discovery in Charlie 1.
Today, 88 Energy’s Alaska portfolio contains three key exploration project areas - Yukon Leases, Project Icewine and Project Peregrine. The company said in its July 21 second quarter 2020 quarterly activity report that it relinquished its Western Block leases where it drilled the Winx well.
Peregrine on schedule 88 Energy said Nov. 9 that planning and permitting for the first well at its North Slope Project Peregrine remains on schedule for a late February spud.
The company plans to drill two exploration wells at Project Peregrine in the National Petroleum Reserve-Alaska on acreage it acquired in an off‐market takeover of XCD Energy.
The wells will be drilled by Accumulate.
88 Energy’s Nov. 9 ASX announcement said a preferred bidder had been selected for the Peregrine farm-out, although until the final documents were executed more details about the deal and the selected bidder’s name would not be made public.
“Subject only to finalization of standard documentation,” execution of the final documents is already underway and will be finished “in the next few weeks,” 88 Energy said, noting the “multiple” bids received were “competitive.”
Targeting the Nanushuk The main target of the two wells was the prolific Nanushuk reservoir.
The prospects to be drilled in the 195,000-acre Peregrine block are Harrier and Merlin.
Merlin 1 was considered a direct analogy to ConocoPhillips’ Willow oil discovery, while ConocoPhillips’ Harpoon prospect was interpreted to lie on the same sequence boundaries as Harrier 1.
The prospects lie between the Umiat oil field to the south and Willow and Harpoon to the north.
A company official told Petroleum News that the Nanushuk can be reached at less than 5,000 feet in the area, while a third prospect in the Peregrine block, Harrier Deep, has a Torok objective at about 10,000 feet. It will not be drilled in the 2020-21 winter season.
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