|
BP advertises for farm-in partners on slope prospects
Kay Cashman
BP Exploration (Alaska) Inc. is advertising for partners for its Badami satellites. The Badami unit, operated by BP, is the farthest east producing field on the North Slope.
The company published a brochure — “BP Exploration Alaska Farm-in Opportunities” — inviting companies to invest in three unnamed North Slope prospects for drilling in the winters of 2003 and 2004 and distributed it at a prospect fair in Houston this past fall. Farm-ins are generally handled by a unit’s operator.
BP said farm-in deals have been cut for the largest of the three prospects — Slugger, an exploration unit which lies a few miles to the south of Badami — but the company would not talk about the status of the other two prospects, which it said are Badami satellites.
BP spokesman Ronnie Chappell did tell PNA that “companies interested in knowing more (subject to a standard confidentiality agreement) should contact Pete Zseleczky at 907 564-5083.”
In the brochure the prospects’ well depths (see sidebar) were listed as 11,500-13,000 true vertical depth, deeper than the Badami unit wells which range from 10,500 to 10,700 TVD. Well depth at Red Dog, a prospect just east of the Badami unit on the western edge of the Exxon-operated Point Thomson unit, is 12,379 feet. Point Thomson wells vary in depth from 13,200 to 14,100 TVD.
In its brochure BP said, “Two of the three prospects can be accessed from existing gravel pads in close proximity to processing facilities and pipeline to Trans Alaska Pipeline System.”
It said the third prospect “is 12 miles from existing infrastructure,” which is approximately the distance from the Badami facilities to the planned exploration well at Slugger.
Slugger interest farmed out As reported by PNA in August, BP farmed out all — and Chevron and Phillips farmed out part — of its working interest in the Slugger unit to independents Forest Oil Corp. and Andex Resources LLC in exchange for a disproportionate share of the costs of the first Slugger well. Andex and Forest will each receive approximately a 20 percent working interest in the eastern North Slope unit.
The state’s well requirement at Slugger calls for drilling through the Kemik interval by May 15, 2003, subject to termination of the unit and payment of a $430,000 penalty, which will be paid by BP and Chevron should the well not be drilled by the state’s deadline.
On Aug. 21, a Chevron representative told PNA, “One of the reasons we like Slugger is it should ring the cash register faster than our other North Slope exploration prospects since, if successful, the production will likely be processed at the existing Badami facilities.”
Good news for state BP’s search for farm-in partners for Badami satellites is good news for the state, Bill Van Dyke, resource manager for the state of Alaska’s Division of Oil and Gas, told PNA: “If one or more of these satellites is successful there’s a good chance it will help Badami. …Even if the facilities are not used, it will for sure help reduce the cost of producing oil at the field. … At a minimum, it will put more oil in the Badami pipeline and lower the cost of shipping.”
In its brochure, BP listed the pipeline tariff from Badami to Pump Station 1 of the trans-Alaska crude pipeline as $1 per barrel. According to Van Dyke, the tariff has been $8 a barrel because only about 2,000 barrels are being shipped currently from Badami.
“This (the $1 tariff in BP’s brochure) assumes putting nine times more oil through the line. Operating costs don’t change much,” he said.
Farm-ins a normal practice “It’s pretty common for companies to want to share the risk on these exploration plays,” Van Dyke said. “In a farm-in, the company farming in earns a working interest in the leases and, in most cases, they do that by paying a disproportionately higher share of the well cost. For example, you might earn a 50 percent interest in the lease but pay 75 percent of the well cost.
“I suspect BP has real good geological and geophysical data on these prospects and that — along with their record on the North Slope — is a plus,” he said. “Different companies view them and risk a little differently but as far as data goes, BP will have a good data set.”
In its annual progress report to the state on the Badami unit (see Dec. 16 issue of PNA for full story), BP said it has no plans for further development drilling at Badami but said satellite evaluation was continuing: “Further evaluation of satellite potential within the unit was undertaken and discussions with third parties interested in participating in exploration of this potential have taken place.”
| 