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Alaska OKs Tuvaaq unit on North Slope Unit is one of three north of Kuparuk and Milne Point in shallow waters of Beaufort Sea Kristen Nelson Petroleum News Editor-in-Chief
On Aug. 20 the state of Alaska issued a decision approving Armstrong Alaska Inc.’s application to form the Tuvaaq unit in the near-shore waters of the Beaufort Sea on the North Slope between the Oooguruk and Nikaitchuq units. An exploration well is planned this winter for Tuvaaq, which lies north of the Milne Point and Kuparuk River units.
The new unit is the centerpiece of the 46,000 acre exploration play assembled by Denver-based Armstrong Oil and Gas. Armstrong brought in Pioneer Natural Resources as 70 percent partner and operator at Oooguruk and Kerr-McGee as 70 percent partner and operator at Nikaitchuq.
State records at the beginning of September show Armstrong as 100 percent working interest owner in the Tuvaaq leases, although Kerr-McGee spokesman John Christiansen told Petroleum News Sept. 1 that Kerr-McGee now holds the largest chunk of the unit.
“We expect to operate the exploratory well that is currently planned. We will have the largest interest in the unit but the exact interests (of the owners) has not been determined at this point.”
Kerr-McGee said in an earlier interview that one of its planned 2004-05 wells will test Tuvaaq.
Last month both Pioneer and Kerr-McGee executives told analysts that they are discussing partnering for development of the exploration prospect, where both have made oil discoveries at their respective units. Three wells planned, one this year The 14,561-acre Tuvaaq unit includes seven state oil and gas leases from state oil and gas lease sale 86, held in 1997. The leases have an effective date of Jan. 1, 1998, and a seven-year primary term, expiring on Dec. 31, 2004, with a 16.66667 percent royalty. Formation of the unit extends the term of the leases, and is conditional upon a work plan approved by the Division of Oil and Gas, part of the Alaska Department of Natural Resources.
Armstrong submitted a five-year initial plan of exploration and told the division it plans to drill three wells.
The first well, this winter, would test the Triassic/Jurassic; the second in the 2006-07 winter drilling season, would test the Cretaceous Kuparuk sand interval, Jurassic Nuiqsut sand continuity and limits of the Triassic Sag/Eileen/Ivishak accumulation within the Tuvaaq unit. The third well, planned for 2008-09, would test the Triassic Sag/Eileen/Ivishak intervals on the eastern side of the unit.
Armstrong is planning to drill on its own this winter at its Two Bit prospect onshore west of and adjacent to the Kuparuk River unit.
In addition to the wells, 2005-06 work includes building a seismic dataset and studies.
Armstrong also told the division that the end of 2005 is a funding milestone “on any possible fast-track scenarios” for development.
The division is requiring the wells as a condition of the unit and the drill-or-terminate dates are June 2005, June 2007 and June 2009. ‘Strong technical application’ The division said in its decision approving the unit that “Armstrong submitted a strong technical application that justified the size and shape of the unit.” Armstrong integrated and interpreted 3-D seismic surveys and tied that data to surrounding well control, using the data to identify targets including the Jurassic Nuiqsut and Sag River, Eileen and Ivishak sandstones.
Well data is available from the Milne Point field several miles southeast of Tuvaaq, where oil is produced from the Schrader Bluff, Kuparuk and Sag River formations, and from the Kuparuk River field south of Tuvaaq, which produces out of the Kuparuk River formation. The division said there are also a dozen or so exploration wells south and west of Tuvaaq which have tested hydrocarbons in the Kuparuk formation and in Jurassic sands.
Armstrong tied 3-D seismic from Tuvaaq with the offshore Thetis Island No. 1 and the Kalubik No. 1 wells, and with recent wells in the adjacent units: the Ivik, Natchiq and Oooguruk wells in the Oooguruk unit and the Nikaitchuq No. 1 and No. 2 in the Nikaitchuq unit.
“Armstrong believes that the quality and thickness of the Sag River sandstone should increase to the north/northwest from the Milne Point area into the Tuvaaq unit area,” the division said, also noting that oil-stained Brookian sandstones were encountered in the Thetis Island No. 1 and Kalubik No. 1 wells southwest of Tuvaaq. A Brookian sandstone in the Kalubik No. 1 well tested oil at a rate of 10 barrels per day, and Brookian sands were also tested in the Thetis Island No. 1 well, producing mud filtrate with a trace of oil.
In the northern Milne Point unit and northeastern part of the Kuparuk River unit the primary oil production comes from lower A Kuparuk sandstone, and in the northwestern Kuparuk River unit Kuparuk C sandstone is preserved locally, with a significant portion of production from Kuparuk C, along with A sandstones. Some Kuparuk C sandstone is preserved southwest of Tuvaaq in the Kalubik wells and in the Colville Delta wells.
“It is quite possible,” the division said, “that the Tuvaaq area could contain pods of Kuparuk C sandstone that have been preserved on the down-side of the northwest trending, down to the northeast faults in the area.” Jurassic sandstone potential There is also Jurassic sandstone potential in the area, with three oil-bearing Jurassic sandstones in the Colville Delta area southwest of Tuvaaq: the Nechelik, Nuiqsut and Alpine. While the Alpine interval is not present in the northern Colville Delta, the underlying Nuiqsut sandstone appears to extend into and thicken in the Colville Delta area: “The overall Jurassic section appears to thicken to the east-northeast of the Colville Delta area based on the East Harrison Bay 1 and Oliktok Point 1 wells,” the division said.
Jurassic Nuiqsut sandstone oil prospects at Tuvaaq “are dependent on the interplay of faulting,” the division said, and the faulting probably separates the potential Jurassic reservoir in the Tuvaaq area from the Thetis Island accumulation.
“The key to unlocking the reserves within the Jurassic sands is producing the low API gravity oil without damaging the formation with drilling fluids,” the division said, in contrast to Sag River oil, expected to be higher API.
Armstrong has also identified Sag River and Sadlerochit potential by integrating 3-D surveys over the Colville Delta, Prudhoe, northern Milne Point, northern Kuparuk, Oooguruk, Tuvaaq and Nikaitchuq.
There are two Sag River structural prospects at Tuvaaq, and the division said that geochemical analyses of oils from the Nikaitchuq and Milne Point wells predict that Sag River oil at Tuvaaq would be in the range of 36-38 degrees API; reservoir modeling predicts production rate of up to 2,500 barrels per day with horizontal wells.
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