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Recent ANS exploration activity will impact facility sharing landscape
Kay Cashman Petroleum News Publisher & Managing Editor
The first major wave of new explorationists to Alaska’s North Slope in recent years was led by Anadarko Petroleum in the early 1990s, followed by EnCana’s predecessor Alberta Energy in 2000. Both companies initially signed on as partners with the North Slope facility owners and experienced slope operators, BP Exploration (Alaska), ConocoPhillips Alaska and ExxonMobil.
According to the North Slope of Alaska Facility Sharing Study, released June 15 by the Alaska Division of Oil and Gas, seven exploration wells, including sidetracks, were drilled in 2001 on the North Slope (see map on page 23). Five of those wells were drilled by the predecessor to ConocoPhillips and two were dilled by BP — the last two wildcats BP would spud in the state.
In the winter of 2002, 12 exploration wells were drilled on the North Slope, one operated by BP on the edges of the Prudhoe Bay unit, 10 by ConocoPhillips, and one by independent Anadarko, its first stint as a slope operator. By this time Anadarko had become one of the largest leaseholders (including ASRC options) on the North Slope. Second wave of new explorationists In 2003 a second wave of new explorationists drilled wells on Alaska’s North Slope, including home-grown independent Winstar, headed by former ARCO Alaska executive Jim Weeks, and Irving, Texas-based independent Pioneer Natural Resources.
Pioneer had bought into a North Slope prospect put together by independent Armstrong Oil and Gas. Bill Armstrong, who heads up the Denver-based company, had the foresight to bring into his group experienced North Slope explorers, including Stu Gustafson, former head of Exxon’s exploration department in Alaska.
Nine exploration well were drilled on the North Slope in 2003, six by independents and three by a major. The wells included a hot ice well by Anadarko that tested its new Arctic drilling platform, EnCana’s first operated well in Alaska at the offshore McCovey prospect, three by Pioneer in partnership with Armstrong at the Northwest Kuparuk prospect (now called Oooguruk), a Winstar well drilled for the tiny independent by ConocoPhillips, and three wells drilled by ConocoPhillips.
This past winter seven exploration wells were drilled on the North Slope, including three in the National Petroleum Reserve-Alaska by ConocoPhillips in partnership with Anadarko, one by newcomer Total in partnership with independent Talisman Energy (Fortuna) in NPR-A, and two by new player Kerr-McGee, a Oklahoma-based independent which acquired majority interest in Armstrong’s Nikaitchuq prospect northwest of Milne Point.
In the winter of 2005, independents Armstrong, Pioneer and Kerr-McGee are expected to drill as many as five exploration wells on the North Slope. Anadarko is expected to drill its Jacobs Ladder prospect south of the Badami unit in either 2005 or 2006, depending on whether or not it can find a partner for the project.
According the North Slope facility sharing study, which was conducted for the state by Petrotechnical Resources of Alaska, recent North Slope exploration activities that “will potentially impact the facility sharing landscape” include Pioneer/Armstrong’s’ Oooguruk unit evaluation, Kerr-McGee/Armstrong’s Nikaitchuq 2004 exploration drilling, ConocoPhillips’ 2004 NPR-A drilling, and 2004 lease acquisition by Pioneer, Kansas-based independent AVCG, and UltraStar exploration, a sister company to Winstar.
Pioneer and Armstrong “have announced a discovery in the Nuiqsit Fm., and are evaluating options for development,” the study noted. Development “could impact the Kuparuk facilities and or its pipeline.”
Kerr-McGee and Armstrong “have announced a discovery in the Sag River Fm.” Development could impact the Milne Point facilities, the Milne pipeline and Kuparuk pipeline, the study said.
ConocoPhillips discoveries west of the Colville River unit will impact the Alpine facilities and pipeline, as well as the Kuparuk pipeline.
Pioneer acquired tracts in the 2003 North Slope and Beaufort Sea state areawide lease sales in the Hemi Springs area, as well as north of Prudhoe Bay, east of Northstar and west of Kuparuk. “Successful exploration programs associated with these lease acquisitions could impact numerous production facilities,” the study noted.
AVCG added to its lease position last year with acquisitions east and south of the Colville River unit, north of Prudhoe Bay and west of the Kuparuk River unit. “They are considering stand-alone processing options at this time, which would limit the facility impact to common carrier pipelines,” the study said.
In 2003 UltraStar, headed by Jim Weeks, added new leases to its portfolio around Badami and north of Prudhoe Bay. Successful drilling of its prospects could impact Badami, Point McIntyre/Lisburne and/or the Prudhoe Bay facilities. Armstrong, EnCana, ConocoPhillips In addition to this activity, continued prospect development and technological breakthroughs to lower North Slope environmental impacts and costs by Armstrong could also have an impact. (See Petroleum News archives at www.PetroleumNews.com)
Another potential player among the non-facility owners is EnCana. Although the Calgary independent is not drilling in Alaska this next winter, it views the state as one of its key international exploration provinces.
EnCana was the second highest bidder (ConocoPhillips was the first) at the U.S. Minerals Management Service’s Sept. 24 Beaufort Sea sale, taking all 24 tracts on which it bid, including a block of 19 tracts north of NPR-A in the Smith Bay area, adjacent to six existing ConocoPhillips-Anadarko leases.
EnCana was the only bidder for “B” leases, those farther offshore and farther from infrastructure in what MMS referred to as the wildcat area, bidding on 22 tracts, the three on the east side and the majority in the block north of NPR-A.
ConocoPhillips continues to be a major North Slope explorer. The company, which partners with several majors and independents in Alaska, has drilled or participated in 43 exploration wells and acquired more than a million acres of exploration acreage in Alaska in the last six years.
“A critical constraint will be available processing and pipeline capacity to the west and north of the Kuparuk River unit,” the study said. “Alpine satellites, NPR-A, and the Oooguruk and Nikaitchuq discoveries will all place significant pressure on the Kuparuk and Alpine pipelines. However, with enough new production potential realized, additional pipeline capacity may be justified,” the study said.
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