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THE EXPLORERS 2005: Pioneer still adding to Alaska prospects Independent having new rig special built for North Slope to drill more wells, cut exploration costs Kay Cashman Petroleum News
Since Pioneer Natural Resources entered Alaska in 2002 to take the lead in Armstrong Alaska’s Oooguruk project, the Texas-based independent has stacked up 1.6 million acres on the North Slope. This includes 20-30 percent working interests in 1.4 million acres in the National Petroleum Reserve-Alaska, 50 percent working interest in the Storms area south of Prudhoe and Kuparuk, and a 70 percent working interest in 53,000 acres at Oooguruk.
Plus, in August 2005 Pioneer announced it had ventured into Southcentral Alaska’s Cook Inlet basin where it signed an agreement with ConocoPhillips to acquire up to 50 percent working interest and potentially become operator of the Cosmopolitan unit.
Pioneer’s subsidiary in Alaska — Pioneer Natural Resources Alaska — is headed up by Ken Sheffield and headquartered in the ConocoPhillips Alaska building in downtown Anchorage.
Oooguruk a first for independents The company’s most talked about North Slope prospect is Oooguruk, formerly known as Northwest Kuparuk, where it had the first independent-operated discovery on the North Slope. Company executives have said they hope to have the project sanctioned by the end of 2005. Approval hinges, in part, upon getting royalty relief from the State of Alaska.
If sanctioned, a gravel island would be built and offshore buried pipeline would be installed in 2007; development drilling would also begin that year, with first oil from Oooguruk in 2008.
At its peak Oooguruk is expected to produce 18,000 to 20,000 barrels per day.
According to Pioneer Natural Resources Chairman and CEO Scott Sheffield (no relation to Ken Sheffield), Pioneer will be “drilling about five to six exploration wells per year” in Alaska.
Sheffield made the comment at a July 7, 2005, Independent Petroleum Association of America Oil & Gas Investment Symposium in London.
“One of the reasons that we’re seeing much higher crude prices is people in general are not exploring,” Sheffield said. “We’re seeing less exploration in the last several years than any time in history … People are not exploring.” Pioneer, he said, has taken a long-term strategy, “trying to find the right basins and also we went out and raided the majors over the last six to seven years, hired some of their best people.” Pioneer has put in a lot of the processes that the majors use, he said, including “a very disciplined process” for peer review and post audit.
Cutting exploration costs with new rig Ken Sheffield told Petroleum News that the new Arctic Fox No. 1 truckable rig under construction for his company’s use will employ proven technology that will allow the company to drill more wells during the North Slope’s short winter drilling season, as well as cut exploration drilling costs on the Slope.
“This rig is very, very similar to rigs that are used in the Canadian Arctic for exploration,” Sheffield said. “The rig design is proven. It’s just a new application for the North Slope. What we’re trying to do is drill more wells per season and spend time drilling wells and less time moving and building ice.”
A joint venture between Doyon Drilling Inc. and Akita Drilling Ltd. is building the rig in Nisku, Alberta, for use in this coming winter’s exploration season (2005-06). A team of Pioneer, Doyon and Akita personnel specified the rig design.
The rig’s lightweight design involves a 400,000-pound rated double mast that reduces the derrick height to about two-thirds that of a typical triple-mast North Slope rig; the double mast derrick handles two joints of drill pipe rather than the three joints of a triple mast derrick. The double-mast configuration is suitable for exploration drilling where long lateral wells are not required, Sheffield said.
Using 4-inch or 4.5-inch drill pipe, the new rig will drill routinely to 10,000 feet and could drill to 12,000 feet, depending on the casing and well bore designs, he said.
“Five inch was for a long time the standard across the Slope,” Vance Hazzard, Pioneer’s Alaska drilling superintendent, said. “(Four-inch) works out great for the hole sizes that we’re looking at.”
Easy to move The rig can break down into many small modules for easy portability — an in-line layout design coupled with a telescoping mast helps allow the rig to split into 35 loads, each of which will fit onto a conventional truck. The rig could be moved to places in Alaska with road access during the summer, Sheffield said.
A reduction in the need for heavy-duty ice roads should also prove to be a big payoff in the use of the new rig, Sheffield said. “Considerably less ice is required to support 100,000 pounds than is required to support 1.5 million pounds (for a development rig).”
And, given the fixed costs inherent in mobilizing a rig for a drilling season, drilling multiple wells will translate directly into less cost per well, he said.
“We’re hopeful that we’ll be able to move this rig in three or four days from location to location,” Sheffield said, adding he was confident of being able to drill four, possibly five wells per season, once “we get our legs and our operations under way.”
—Alan Bailey contributed to this article
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