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Repurposing Nikaitchuq North 01 to development well in state unit
Kay Cashman Petroleum News
The Nikaitchuq North 01 exploration well was to be completed in an offshore federal lease in Harrison Bay (Block 6423), its purpose to find more oil to fill the spare capacity in the North Slope Nikaitchuq unit's processing facility.
After some stops and restarts due to restricted drilling periods and drilling problems, in mid-2018 NN-01 reached a vertical depth of 8,131 feet and a measured depth of 30,010 feet, shy of its 35,000-foot MD target.
The well was officially suspended by Eni US Operating because of drilling "complications."
Eni anticipated continuing the drilling of the NN-01 well in early February 2020, but instead announced it would not finish drilling NN-01 or sidetrack it; rather it would try again in second quarter 2020 with a new well, NN-02.
However, Eni's 50% working interest partner (Shell) elected to go non-consent, meaning it would not participate -- i.e. pay its share of the cost of drilling and testing the NN-02 well.
Eni applied for and received from the U.S. Bureau of Safety and Environmental Enforcement a suspension of operations, or SOO, for two years until April 2, 2022.
Issued as a 5-year lease by the feds in 2017, on Aug. 4, 2022, a one-year lease extension was granted with a new expiration date of Aug. 11, 2023.
On June 29 Eni filed a Nikaitchuq unit plan of operations amendment with the Alaska Division of Oil and Gas to repurpose NN-01 as a development well. The division approved the application on Aug. 4.
Because the well was being repurposed at the request of Eni to access targets within the Nikaitchuq unit and incorporated into the company's plan of operations, the division said in its approval that the federal lease "will not be further extended or renewed" and will be allowed to expire Aug. 11.
Earlier Eni had told the division that "due to Shell's decision to not participate in the drilling of the NN-02 well, management decided to allow the SOO to expire in April 2022. As a result of the SOO expiry the federal unit, Harrison Bay Block 6423 Unit, and corresponding leases have terminated."
NN-01 had been spud from Spy Island Drillsite, which is a manmade gravel island in shallow state of Alaska waters off Oliktok Point where the Nikaitchuq unit's onshore production and processing facilities are located. The distance to the federal lease from Spy Island was approximately six miles.
The end of the NN-01 well is sealed off in state acreage. It is currently in suspended status and has been plugged and cement sealed as per Alaska Oil and Gas Conservation Commission, or AOGCC, regulations.
Eni will drill a sidetrack off NN-01's existing wellbore to access and develop the Nikaitchuq Schrader Bluff Oil Pool.
Existing infrastructure will be used for the project.
Drilling was proposed to start no earlier than January 2024, the division said in its approval. Eni's application said the proposed start date was Jan. 1, 2024.
The division said If activities have not commenced, the approval expires on Aug 4, 2026
Spare capacity One of the reasons Eni gave for stepping out north of the Nikaitchuq unit to test the Nikaitchuq North prospect in the federal Outer Continental Shelf was it wanted new oil to take advantage of significant spare capacity in the standalone Nikaitchuq unit production facility, which can handle 40,000 barrels per day and could easily be expanded to 50,000 bpd.
Eni's Nikaitchuq unit averaged 15,962 bpd in June, down 9.9% from a June 2022 average of 17,708 bpd.
Prior to Eni allowing its federal leases in Block 6423 to terminate, the U.S. Bureau of Ocean Energy Management, or BOEM, said Eni's NN-02 well would be "targeting the same seismic anomaly" as the first well, NN-01.
Like the first ultra-extended reach well, NN-02 was to be an S-shape wellbore into the target reservoir.
In the public portion of the paperwork Eni filed with the state and feds, geological information about the Nikaitchuq North target reservoir was not released.
However, Eni left hints elsewhere, specifically in its oil discharge prevention and contingency plan application that appeared to be based on tapping the Jurassic Alpine sands, which would certainly qualify as an anomaly in the area.
Whatever the case, the 25,957 barrels per day in the contingency plan application could not be referring to the heavy Schrader Bluff oil produced from the Nikaitchuq unit that is known to extend north because that oil can't flow unassisted.
Also, the measured depth and angle of the well suggest one of the Jurassic sands.
Furthermore, a previous Nikaitchuq unit operator, Kerr-McGee and partner Armstrong, talked about the possibility of testing the Jurassic Nuiqsut sandstone and the Triassic Sag River sandstone to the north.
--KAY CASHMAN
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