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Providing coverage of Alaska and northern Canada's oil and gas industry
April 2019

Vol. 24, No.17 Week of April 28, 2019

Explorers magazine preview: BlueCrest advances exploration, development

Cosmopolitan oil output continues to climb with successful application of new fishbone well design; gas campaign appears on hold

Kay Cashman

Petroleum News

BlueCrest Alaska Operating LLC is methodically advancing both exploration and development at its four-lease Cosmopolitan offshore unit in Cook Inlet.

The local subsidiary of the Texas-based independent brought the offshore Cook Inlet unit into production in early 2016, after becoming operator in 2014 and after 49 years of failed attempts by previous operators.

But BlueCrest’s development efforts hit technical snags, which it has since resolved with a custom-built drilling rig and an innovative new well design dubbed the fishbone.

A highly complex and compartmentalized reservoir, Cosmopolitan’s Hansen field requires fracturing operations after drilling activities have been completed to open up impervious barriers in the reservoir rocks. The fractures are larger than previous Cook Inlet fracturing efforts and closer to developed areas than most Alaska operations.

Added to those complexities are operational challenges. Cosmopolitan is an offshore reservoir being developed from onshore drilling facilities, requiring long directional wells. For example, its H-16 well was the longest extended reach well ever drilled in Cook Inlet - a 22,810-foot well that reached a vertical depth of just 7,089 feet.

The unit’s oil wells are being drilled approximately 3 miles out and 1.5 miles down to reach the edge of the reservoir. Then the wells traverse an additional 1.5 miles horizontally through the productive sands.

The powerful drilling rig, specially ordered and owned by BlueCrest, was built for this work.

BlueCrest Rig No. 1 began working in the unit in November 2016, allowing the company to tap offshore targets from an onshore drilling pad near the city of Anchor Point, and keeping its owners from having to build an offshore platform or contract a jack-up rig.

The rig has a 750-ton top drive and a 7,500-pounds-per-square-inch drilling mud system, making it capable of drilling 24,000-foot wells at a vertical depth of some 7,000 feet.

BlueCrest has Cosmopolitan oil production up from 275 barrels of oil per day in July 2017, to 801 bpd in June 2018, and to 1,425 bpd in January 2019.

The Cosmopolitan story

In September 2016, BlueCrest Director J. Benjamin Johnson gave a presentation in which he talked about Cosmopolitan’s history.

When Pennzoil drilled the field discovery well in 1967, the well just clipped some oil at the side of the field. And the company, not having good well logs, abandoned the prospect, having concluded that the oil column was very thin, Johnson said. Then 25 years later ARCO, thinking that Pennzoil may have missed a large discovery, shot some seismic over the prospect. The seismic revealed a large 15,000-acre dome-shaped structure in the subsurface. But, with no equipment available for offshore drilling, the company was faced with the need to drill a fairly risky directional well from onshore.

In 2001, ARCO successor ConocoPhillips did drill a well from onshore, confirming the presence of oil in the prospect and showing the potential for more oil than previously thought. A further well drilled in 2003 included a somewhat horizontal section through the Hemlock formation - a relatively short horizontal section of the well produced 1,000 barrels per day of oil, Johnson said.

Pioneer Natural Resources then acquired the prospect, shooting a 3-D seismic survey to better define the Cosmopolitan structure. Although this survey provided a clear delineation of the scale of the structure, gas at the top of the structure disrupted the seismic signals, thus blotting out any image of the structure inside the dome. In fact, the seismic image suggested that the dome had caved in at the top.

Pioneer drilled a well into the structure in 2007 but this long, undulating horizontal well missed many of the reservoir sands, Johnson said.

BlueCrest’s geophysicists had attributed the collapsed appearance of the structure to the distortions to the seismic imaging caused by a gas cloud in the subsurface, he said. A recalculation of the seismic results on the assumption of the presence of a gas cloud indicated the existence of a large geologic dome. The drilling of a well in 2013 from an offshore rig after BlueCrest had acquired 75% ownership of the Cosmopolitan prospect (Buccaneer was the operator) not only confirmed that this dome structure was present but also found a 5,000-foot thickness of gas-bearing sands.

Apart from a couple of water sands, everything else was filled with gas. Below the gas lay about 1,200 feet of oil sands, separated by some shales, Johnson said.

Johnson showed cross sections of the subsurface geology and the various well trajectories, showing that the earlier wells had hit the edges of the hydrocarbon pools, thus failing to reveal the full extent of the subsurface hydrocarbon resources. However, the well that Pioneer drilled in 2007 has turned out to have continuing value: BlueCrest converted this well into an oil production well, enabling the Cosmopolitan field to come online before the main development drilling program got underway.

BlueCrest bought out Buccaneer and today owns 100% of the unit.

Natural gas exploration?

Although Cosmopolitan has primarily been developed as an oil field and its exploration targets have been oil formations north and south of the primary producing wells in the center, it also has a substantial natural gas deposit overlying the oil reservoirs.

But exploration for gas would require a jack-up rig because the gas is too shallow to be accessed from onshore drilling and gas production would involve offshore production platforms.

BlueCrest has said nothing since 2016 about the possibility of going after the natural gas in the Cosmopolitan unit.

Fishbone pattern

An examination of Alaska Oil and Gas Conservation Commission drilling data for Cook Inlet in recent years shows some interesting patterns, Petroleum News reported in its March 24, 2019, issue. The drilling of oil wells, in particular, has seen a steady climb since dropping to just one well in 2015, presumably partly in response to the low oil price at the time. Four development wells were drilled in 2016, 11 in 2017 and 17 in 2018.

BlueCrest’s drilling of new development wells in its Cosmopolitan unit offshore the southern Kenai Peninsula represented a major component of the drilling increase. The company completed two wells in the unit in 2017 and 15 in 2018. Most of those 2018 wells were sidetracks, part of BlueCrest’s development strategy of drilling a “fishbone” well pattern, with a single “spine” well running from the surface. That spine well is deviated to run through the lower part of the oil reservoir, with sidetrack “rib” wells drilled upwards every 800 feet into reservoir rock above the spine.

Seven years of oil drilling targets

BlueCrest said it has identified enough potential targets to justify seven years of expansion drilling at Cosmopolitan.

Its original development plan involved drilling five wells starting in early 2017: the H-16 well, the H-14 well and H-14L lateral, and the H-12 well and H-12L lateral. The company intended the five-well program to be the first stage in a full development program that would potentially require 20 wells over a seven-year timeline.

The facilities at the Cosmopolitan unit are capable of handling as much as 10,000 barrels per day.

The 38-acre onshore parcel for the Cosmopolitan development project is much larger than the existing pad and facility require and could easily accommodate expansion.

Drilling briefly suspended

BlueCrest briefly suspended drilling operations in early 2017, after the state of Alaska withheld between $75 million and $100 million in tax credits owed for previous work. The state policy decision under former Gov. Bill Walker’s administration forced the privately owned company to raise significant additional funds.

The company drilled the first fishbone, the H-12 well, in 2018, under its fourth plan of development covering the 2018 calendar year. The H-12 consists of a wellbore with a long horizontal tail with seven vertical laterals rising up into the producing formation.

The H-12 fishbone well was put into production. Based on evaluation of that well, BlueCrest decided to re-drill the H-16 well in a similar fashion, with eight laterals.

Fifth plan of development

The fifth plan of development, or POD, covers the 2019 calendar year.

Another fishbone well was drilled, the H-4, some 3,200 feet south of existing Cosmopolitan wells and tested the southern extent of the reservoir BlueCrest told the state. It has eight laterals.

After evaluating results of the H-16a (the re-drill) and H-4 fishbone wells BlueCrest said in the POD it “will decide the best possible location for a possible second well in the 2019 drilling program.”

Expected to be the H-11 Fishbone well that would step out to the north to evaluate the northern portion of the reservoir, the company instead filed permits for and got spacing exceptions for the H-13 (eight laterals) on Feb. 22, 2019, stepping out to the northwest.

Based on its success to date, it can be assumed BlueCrest will continue moving forward to make full use of its 10,000-barrel-a-day facility.

Fort Worth, Texas-based BlueCrest Energy Inc. is a privately held exploration and production company founded in 2011 and focused on the development of oil and gas resources in Alaska.






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