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Explorers magazine preview: Wildcats in Eni’s North Slope future?
While CEO talks about stepping up worldwide exploration, including in Alaska, fate of first NS wildcat in 11 years remains hush-hush
Kay Cashman Petroleum News
After an 11-year hiatus Eni US Operating Co. returned to Alaska exploration in late December 2017 with the spudding of the first of two ultra-extended reach wells from a manmade Beaufort Sea island in the Nikaitchuq unit. The prospect is adjacent to, and directly north of, the Nikaitchuq unit.
The exploration program was expected to take two years. Due to a series of delays, as of early April 2019, the modified Doyon 15 drilling rig was still on the Nikaitchuq North No. 1 exploration well, or NN-01, with no more than hints from Eni on well results, starting with a May 2018 strategy meeting where Eni CEO Claudio Descalzi said the company was doing well in Alaska and planned to increase investment in the state.
No permit for a second well was filed with the Alaska Oil and Gas Conservation Commission, per its website, and no AOGCC update was available for the NN-01 well, which is listed as confidential.
The current plan approved by the state of Alaska and the federal Bureau of Ocean Energy Management said the drilling of the second exploration well, NN-02, “targeting the same seismic anomaly of the first well” was contingent upon NN-01 results.
The nearshore Nikaitchuq unit, which began producing oil in early 2011, lies north of the Kuparuk River unit, west of Prudhoe Bay, and northeast of the adjacent Oooguruk unit.
The Alaska subsidiary of the Milan, Italy-based major is looking for new oil reserves at Nikaitchuq North to take advantage of significant spare capacity in the standalone Nikaitchuq production facilities, which in late 2017 handled some 20,000 barrels of oil per day but had a capacity of 40,000 bpd and could be expanded to 50,000 bpd, according to Eni Alaska Vice President Whitney Grande.
Geological target speculation The “seismic anomaly” from 3-D over Nikaitchuq North that was noted in the approved plan did not identify the target of the exploration program, but the Schrader Bluff formation that is produced from the Nikaitchuq unit is known to extend a long way north under the Beaufort Sea.
The previous unit operator, Kerr-McGee, also talked about the possibility of testing the Jurassic Nuiqsut sandstone and the Triassic Sag River sandstone to the north.
They said exploration and development drilling in the area of the Nikaitchuq unit “establishes an overall prospective trend for improved Sag River sand quality and thickness to the north/northwest over the northwest Milne structure and within our proposed Nikaitchuq exploration unit.”
Federal block 50 percent owned by Shell Although Eni spud the NN-01 well in late 2017, drilling did not get underway until February 2018 because of what the company said were “unforeseen impacts to the drilling schedule.”
According to the published plan, the well was to have a vertical depth of 8,131 feet and a measured depth of 34,150 feet, although more recently company officials talked in terms of 35,000 feet for the measured depth: “It will be the longest extended reach well in the state,” stretching into federal Beaufort Sea waters, specifically Harrison Bay Block 6423, which is 50 percent owned by Shell, Grande said in November 2017.
Eni’s initial plan was to complete the Nikaitchuq North prospect well in mid-February 2018, potentially conducting flow testing between mid-February and mid-March, but completion of the well was deferred to mid-summer. But later that year an Eni official told Petroleum News, “the NN-01 exploration well was not completed in 2018 and as such no flow test was performed. Drilling was suspended on Aug. 23 due to impending seasonal drilling restrictions. Eni intends to restart drilling in early 2019.”
No exploration reservoir targets are allowed to be drilled during broken ice seasons, per Alaska’s Division of Oil and Gas. Drilling can only take place during frozen ice conditions and during the summer open water season.
Adds production by Oooguruk acquisition Eni, which was the fourth largest oil producer in Alaska in 2018, behind ConocoPhillips, BP and Hilcorp, at the end of that year held a working interest in two producing North Slope fields. It had a 100 percent interest in, and was operator of, the Nikaitchuq unit and was a 30 percent partner in Caelus Natural Resources Alaska’s nearby Oooguruk unit, which is adjacent to the Pikka unit where the huge Brookian Nanushuk oil discoveries were made in the last few years by Armstrong and Repsol. The first Pikka development is slated to go online in 2023 under the operatorship of their partner Oil Search.
In January 2019, Eni said it had entered into an agreement with Caelus to acquire 70 percent and operatorship of Oooguruk.
The deal gave Eni approximately 7,000 barrels of oil per day and allowed it to “implement important operational synergies and optimizations” with nearby Nikaitchuq, which at the time produced 18,000 bpd.
In January 2019, the Oooguruk field averaged 9,336 bpd, down 5.8 percent from a December average of 9,909 and down 29.2 percent from a January 2018 average of 13,191 bpd.
Eni said it planned to drill more production wells in both units: Caelus drilled one production well and one injection well in the Oooguruk field in 2016, but thereafter suspended drilling. In response to the downturn in oil prices in 2014, Eni conducted minimal drilling in its Nikaitchuq field from 2015 to fourth quarter 2018.
In January 2019, the largest month-over-month Alaska production increase came from Nikaitchuq, which averaged 18,375 bpd, up 99.6 percent from a December average of 9,205, and down only 3.9 percent from a January 2018 average of 19,117 bpd. This increase was a return to a more normal level of production at Nikaitchuq, where production hit a low of 6,553 bpd in November 2018 when there were only 10 wells operating. By December, the number of wells producing crude was back up to 26 (25 in January), compared to 27 in January 2018.
Buys 350,000 undeveloped acres to east Going back to 2018, in late August Eni announced it had acquired 350,000 undeveloped exploration acres from Caelus. The 124 state leases are on the eastern North Slope between Prudhoe Bay and Point Thomson.
The company said at the time that it planned to “apply its business model and experience,” involving “fast-track exploration” and “a short time to market” for the “potential new discoveries.”
The relatively unexplored acreage is close to existing infrastructure and to the trans-Alaska oil pipeline and approximately 20 miles southeast of Deadhorse, which is an unincorporated community consisting mainly of facilities for oilfield workers and firms that have contracts with the nearby oil fields, including Prudhoe. Deadhorse is accessible via the Dalton Highway and the Deadhorse Airport.
Multiple play types revealed on seismic Shortly after acquiring the eastern North Slope leases in 2015, which are in two blocks, Caelus acquired 175 square miles of new 3-D seismic data and reprocessed another 275 square miles of existing 3-D to image prospects in the acreage.
“Adjacent infrastructure with available capacity reduces threshold volumes required for developing discoveries in the sub-100 MMBO recoverable range,” Caelus said. “Multiple play types within proven stratigraphic horizons provide significant upside potential in previously poorly-imaged structural trends and/or subtle stratigraphic traps.”
Surrounding legacy wells “confirm deeper petroleum system elements and de-risked shallower Brookian reservoirs and hydrocarbon charge and phase within the area,” Caelus said, much of which was mostly ignored in drilling until Armstrong and Repsol discovered big oil finds in the shallow Brookian Nanushuk at Pikka and Horseshoe west of the central North Slope.
Stepping up exploration Towards the end of first quarter 2019, Eni said it planned to spend $4 billion on drilling at least 140 wildcats globally over the next four years, targeting 2.5 billion barrels of potential resources, many in frontier basins.
In Alaska Descalzi said the company was looking to increase oil production.
He said Eni would drill about 40 wells per year worldwide, with an annual outlay of more than $1 billion.
In North America wells are planned in both Mexico and Alaska.
Eni currently has access to approximately 177,607 square miles of net exploration acreage worlwide, up 37 percent from 2014, which Descalzi said could hold more than 12 billion barrels of estimated resource potential.
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