Technology prompts BP to spend $100 million at Schrader Bluff

Kristen Nelson

Plans aren’t fully finalized for 2002, BP Exploration (Alaska) Inc.’s new president, Steve Marshall, told the Resource Development Council’s annual conference Nov. 29, “but we expect to have about a $700 million capital budget, on pace to fulfill the commitment that we made to invest in excess of $3.5 billion in Alaska over five years.”

The company’s goal for Alaska, he said, hasn’t changed much in the five years since BP upstream chief executive Dick Olver told an Anchorage audience that the company planned to build “a bridge from the prevailing climate of declining production, to a long-term sustainable oil business and to future opportunities like gas sales.”

Olver “spoke of building that bridge with new production from sources in and around existing infrastructure on the North Slope. And he spoke of a huge multi-billion barrel prize if we worked together to build that bridge,” Marshall said.

“Now, many things have changed in the state and in our industry in the last five years. But some things have remained constant,” Marshall said: “The need to compete for investments. The need to bring on new sources of production to offset declining base. The ongoing challenge of controlling high costs in Alaska. And BP’s determination to build a sustainable base on the North Slope that will not only last years, but decades.”

Over the next year and the next several years, he said, BP will be looking for opportunities to provide new near-term and medium-term production, “opportunities that leverage existing infrastructure, our huge resource base and our collective North Slope experience.”

Marshall said the company’s investment focus will be “on projects in and around existing fields and our existing infrastructure, areas where we have the most experience and where we’ve had the greatest success. Those areas which are close to existing pipelines and allow reserves to be brought on as quickly as possible and development costs to be that much lower. Areas around Prudhoe Bay, Milne, Kuparuk — all of which are world-class reservoirs.”

In and around Prudhoe Bay, Marshall said, satellites are currently producing 40,000 barrels a day — compared to less than 10,000 bpd at the start of the year.

And, he said, in-fill drilling and enhanced oil recovery will continue at Prudhoe Bay.

More than $100 million at Schrader Bluff

But to this point, he said, we’ve not been able to make it work. In 2002, however, BP will devote more than $100 million to Schrader Bluff development.

Marshall said it’s only some recent breakthroughs in technology — multi-lateral wells and the new light drilling systems — “that have started to give us a glimmer of hope that this is actually possible.”

The S pad project is under way, with $50 million spent this year and in excess of $100 million in 2002 and will start up in the fourth quarter of 2002, he said.

BP is looking, he said, for “what we call some disruptive technology — disruptive in a way that can actually cause a breakthrough, perhaps like we’ve seen with coiled tubing.”

That technology could then be applied across the North Slope and provide access to “potential resources that to this point seem to be economically sub-marginal.”