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Phillips could begin production at Starichkof in late 2003
Kristen Nelson
Phillips Alaska Inc. has told the state it could be producing from the Starichkof field offshore the lower Kenai Peninsula by late 2003. The Starichkof field is at the Cosmopolitan unit where Phillips has been drilling the Hansen No. 1 exploration well.
A timetable was part of the field plan Phillips submitted to the Alaska Oil and Gas Conservation Commission Feb. 25. A field plan, with a voluntary agreement by the lessee to use its best efforts to employ residents of Alaska and to contract for work with firms in Alaska, is required for the Cook Inlet royalty reduction. The Legislature created a royalty reduction for fields in the Cook Inlet sedimentary basin discovered before Jan. 1, 1988, and undeveloped or shut in from at least Jan. 1, 1988, through Dec. 31, 1997, including: Falls Creek; Nicolai Creek; North Fork; Point Starichkof; Redoubt Shoal; and West Foreland.
Subject to commission approval of a field plan, the royalty is 5 percent on the first 25 million barrels of oil and the first 35 billion cubic feet of gas produced in the 10 years following the beginning of production for sale.
The commission has scheduled a hearing on the plan April 16. Testing under way Two offshore wells were drilled on the Starichkof structure in the late 1960s, one of which discovered hydrocarbons in the Lower Tyonek reservoir sands and produced oil at relatively low rates during a drill stem test, Phillips told the commission.
Phillips said in its Feb. 25 plan submittal that it has drilled the Hansen No. 1 and is evaluating it. The well was spud in October and reached total depth in early January.
“Phillips anticipates finding production in the Lower Tyonek and Hemlock reservoir sands that will produce in commercial quantities,” the company told the commission. Production in 2003 The timetable included in Phillips’ plan indicates the company will evaluate information from the Hansen No. 1 well in the second quarter of this year and formulate a plan to development the field or to conduct additional seismic operations.
In the fourth quarter of this year, Phillips said it will plan a second well — or a sidetrack — or conduct seismic operations over no less than a 30-square mile area covering the field. If the company decides to do delineation drilling or shoot seismic, that would occur in 2002.
In 2003, Phillips would complete additional drilling or seismic operations, evaluate data and acquire permits for construction of production facilities and pipelines. A first plan of production or second plan of exploration would be submitted to the state in the third quarter of 2003. Production could begin in the fourth quarter of 2003.
Phillips said its timetable for Starichkof development is “subject to change based on results and information gathered during the exploration process and unpredictable delays in various regulatory and authorization processes.” Only Alaska contractors hired Phillips told the commission that 93 percent of its employees reside in Alaska and that it made “a concerted effort to employ as many Anchor Point, Homer and Kenai companies and individuals in the project as were qualified.” The company said only Alaska contractors were hired to support drilling the Hansen well.
Phillips is the operator at the Starichkof field (Cosmopolitan unit) and has a 70 percent working interest. Forest Oil Corp. has a 25 percent interest and Devon Energy Production Co. L.P. has the remaining 5 percent.
The Starichkof field covers approximately24,600 acres offshore the Kenai Peninsula, including seven state leases and two federal leases. Only production from the state leases is eligible for royalty reduction.
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