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State approves SE Delta exploration unit for Phillips One well being drilled this winter, second well to be drilled next year; SE Delta adjoins southwest corner of Kuparuk unit Kristen Nelson PNA Editor-in-Chief
The Alaska Department of Natural Resources Division of Oil and Gas has approved a unit application from Phillips Alaska Inc. for the SE Delta unit adjacent to the southwest corner of the Kuparuk River unit.
Phillips has 100 percent of the working interest in the seven state of Alaska oil and gas leases covering approximately 31,802 acres and is drilling the first of two proposed exploration wells this season.
Five of the leases were acquired by Phillips predecessor ARCO Alaska Inc. in 1991 and had an expiration date of March 31. The unit extends the leases through an initial two-year term; the state said Phillips can apply for a third year if it agrees to drill a third exploration well.
Phillips filed a two-year initial unit plan which identifies two prospects within the unit area, Atlas and Cronus, to be drilled as winter operations from ice pads. Phillips committed to complete drilling operations on the Atlas well before June 1 and on the Cronus well by June 1, 2002.
The plan for the Atlas prospect included two ice pads within the proposed unit area and as many as five penetrations, two wells and three sidetracks. Permits were issued in January and February, and Phillips completed construction of the ice pads and began drilling the Atlas well Feb. 1.
Phillips has begun permitting for the Cronus prospect — up to three penetrations, one well and two sidetracks.
Adjacent discoveries The Kuparuk River field was discovered in 1969 and began production in 1981. Kuparuk River satellites Tarn and Meltwater were discovered in 1997 and 2000, respectively. Production began at the Tarn accumulation, approximately 4 miles northeast of Atlas, in 1998. Meltwater, approximately 3 miles east of Cronus, is under construction this winter.
The nearest wells to Atlas and Cronus are the ARCO Cirque 1, ARCO Tarn 1, ARCO Tarn 2 and ARCO Bermuda 1 to the east and the 1 BP Itkillik to the west.
Phillips’ target at the Atlas and Cronus wells is the Torok formation, with well depth estimated at 6,200 feet true vertical depth. The nearby wells found non-reservoir quality rock in the Torok. Third well possible The SE Delta initial plan of exploration expires June 1, 2003. If Phillips fails to drill the Atlas well to completion as scheduled, the plan of exploration will be in default and the unit will be terminated. If the Atlas well is completed, but the Cronus well is not, the Cronus acreage will contract out of the unit and Phillips will pay the state $300,000.
If Phillips drills both the Atlas and Cronus wells, the initial plan of exploration may be extended another year by drilling an additional well or sidetrack in the unit area by June 1, 2003. That would extend the initial plan until June 1, 2004.
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