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Starting early?
Moving cautiously, Oil Search looks at beginning Pikka production in 2022
Kay Cashman Petroleum News
The new oil field that is expected to increase Alaska North Slope output by almost 25% at its peak might be going online early - in 2022 versus late 2023.
Keiran Wulff, Oil Search Alaska’s president, said June 26 that moving “cautiously, not expeditiously,” the schedule for its big Pikka oil field development might be moved forward by more than a year.
“If we can get the necessary approvals … drill some wells earlier … we’re looking at bringing it on early,” he told attendees of the Resource Development Council’s 44th annual luncheon in Anchorage.
In other news from the company, as of June 26, Oil Search expected to soon close on its June 30 option with Armstrong Energy to double its working interest in Pikka, Horseshoe and nearby exploration leases. For an additional $450 million, the company can buy Armstrong’s remaining working interest in the acreage, which varies from 25.5% to 37.5%, depending on the lease. (The initial buy-in was for a similar percentage and closed in 2018 for $400 million, after which Oil Search took over operatorship of the leases.)
Repsol holds the remaining working interest in the leases.
Elusive Nanushuk In Wulff’s speech and accompanying overheads at the RDC luncheon, he summarized the company’s activities in the Pikka unit to date, as well as talked about plans for the future.
The topic of his presentation was “Oil Search & Alaska, forging a path forward in the Nanushuk.”
The shallow Brookian Nanushuk formation was ignored in earlier drilling across the North Slope as explorers drilled deep to find another Prudhoe Bay. The play was discovered by Armstrong and Repsol.
Wulff, like Armstrong founder and President Bill Armstrong before him, said the Nanushuk was a very subtle play that doesn’t jump out at you on seismic, but takes high quality 3D seismic and advanced seismic processing to track for drilling.
Throughout his speech Wulff emphasized the importance of utilizing the best technology and employing people with North Slope experience as elements of his company’s success on the Slope to date.
Coming in under cost One slide titled, “Earliest spud on ice in 43 years,” touted the success of this past winter’s drilling season for Oil Search, with wells Pikka B and C, noting they were both drilled in record time and came in under cost. They were also sidetracked and flow-tested with Pikka B intersecting the thickest Nanushuk reservoir seen in the field to date - some 350 feet of pay as compared to average thickness farther north in the Pikka unit of some 200 feet and 40 to 70 feet farther west at Willow.
Per Oil Search, the well results also “materially upgraded prospectivity” in the southern part of the Pikka unit and in the adjacent Horseshoe block.
The Pikka B/Pikka B ST1 flowed at a stabilized rate of 2,410 barrels of light, sweet oil per day, its flow restricted by the capacity of the testing equipment, the company reported. Based on the productivity index calculated during the final flow test (one stage stimulation), the well flow rate potential was estimated at 3,800 bpd at a flowing well head pressure of 50 psi.
“It’s extremely rare that what you plan for is exactly what you get,” Wulff said, but that is what happened this past winter.
He credited much of Oil Search’s success to the 80-some contractors his staff worked with, noting most of them were from Alaska.
He made it clear he wanted to hear “noise” from the contractors - get input on a continual basis as to what was being done right, wrong, and how it could be improved.
Twenty-seven changes As previously reported, Oil Search received the U.S. Army Corps of Engineers Record of Decision, or ROD, and permit for the Pikka development, which was tentatively scheduled to enter the front-end engineering and design, or FEED, phase this summer, get final company approval and begin construction in early 2020, and start production in late 2023 - all of which, as Wulff indicated, might change.
A critical step to advancing the proposed project, the ROD used Oil Search’s preferred development option, which included, Wulff noted, the company’s 27 changes that reflected feedback from permitting agencies and key stakeholders, including residents of the nearby Native village of Nuiqsut.
Among the changes were smaller pads and moving pads farther from the river, he said.
The Corps approved a development scope that included 26 miles of gravel roads, 70 acres of gravel pads, 650,000 feet of pipelines, 36 miles of power and fiber optic cables, up to 12 sealift modules skids, a 200-man camp, two bridges, three to five infrastructure buildings, and involved a peak construction workforce of 1,300-1,600.
Along with a central processing facility there would be as many as three pads with 120 wells, Wulff said.
The oil is initially expected to come from the Nanushuk formation, but the company is also looking at tapping the deeper Alpine reservoir.
Bill Armstrong said from the start that there were at least six intervals in Pikka wells that would eventually be tapped.
Extended reach drilling Extended reach drilling is a key technology that will be employed at Pikka, Wulff said, which will help “minimize the footprint” of the project.
The measured depths of extended reach wells will be 12,000 to 31,000 feet, he said, noting a fit-for-purpose rig selection is planned.
Regarding long term government monetary benefits from the Pikka development, Wulff’s presentation included the following: $30 billion in state royalties and taxes, $8 billion in federal taxes, and $1.6 billion in North Slope Borough taxes.
Oil Search, which was founded in Papua New Guinea in 1929, is celebrating its 90th anniversary this year.
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