Providing coverage of Alaska and northern Canada's oil and gas industry
April 2020

Vol. 25, No.14 Week of April 05, 2020

Prudhoe drilling ends

BP worker tests positive for COVID-19; company ends development drilling for 2020

Kristen Nelson

Petroleum News

A Prudhoe Bay worker has tested positive for COVID-19 and field operator BP Exploration (Alaska) is pulling back to essential workers only at the field and ending development drilling for 2020.

In its annual progress report and 2020 plan of development update, which the Department of Natural Resources’ Division of Oil and Gas posted March 26, BP said it expected to drill four to seven wells with a rotary rig and 15 to 20 wells with a coil tubing rig.

The positive COVID-19 test at Prudhoe was announced March 31.

BP Exploration (Alaska) spokeswoman Megan Baldino said the company confirms that a worker at Prudhoe Bay tested positive, and said BP is “following procedures and protocols to minimize” risk from the virus “and ensure the safety of our people.”

All non-essential activity on the Slope is being eliminated, she said in an April 1 email.

“The safety and wellbeing of staff and contractors and respect for the communities in which we operate is our highest priority.”

With workforce safety the priority, “Activity is limited to safety critical and regulatory compliant activity so we can focus on safe compliant operations,” with this year’s two-rig drilling program being ended.

Divestment program

An April 1 release from BP discussed the company’s worldwide COVID-19 response. It did not mention any instances of workers testing positive for the virus. The only mention of Alaska was in a discussion of the company’s divestment program, which said the company was on track to deliver $15 billion of announced transactions by mid-2021, but noted that: “The phasing of receipt of $10 billion of divestment proceeds by the end of 2020 may be revised as transactions complete, particularly while volatile market conditions persist. This includes the sale of our Alaskan business to Hilcorp which we continue to expect will complete during 2020, subject to regulatory approvals.”

That $5.6 billion sale was announced in August.

BP is the current operator at Prudhoe, with a 26.36% interest; other working interest owners in the field are ExxonMobil Alaska Production with 36.4%, ConocoPhillips Alaska with 26.36% and Chevron USA with 1.16%.

Hilcorp is buying BP’s Alaska assets, including its share of Prudhoe, and taking over as Prudhoe Bay operator. That deal is going through regulatory approvals, with the Regulatory Commission of Alaska, reviewing the turnover of pipeline assets, recently projecting a September 2020 date to finalize its work on the ownership transfers. Other state agencies have not published completion dates. BP and Hilcorp had said they hoped to finalize the deal in the second quarter of the year.

2019 drilling

The annual progress report and 2020 update covers the initial participating areas at Prudhoe, the oil rim and gas cap participating areas. The greater Point McIntyre area and Prudhoe western satellites are covered in separate plans of development, due in July and October respectively.

The report notes that Prudhoe Bay is in its 43rd year of operation - 32 years beyond the end of its production plateau - and that unit owners are focused on efficient operation of existing wells and facilities.

The field is well developed, with more than 1,400 wells.

“Minimizing natural decline is the constant goal,” the report said.

In 2019, a rotary rig and a coil rig worked at Prudhoe in what the report described as “a total of two PBU rig years drilling 27 IPA wells.”

Projected 2020 well activity, now ended, was four to seven rotary penetrations, which BP said was about the same as in 2019, but a decrease in coil penetrations from 22 in 2019 to “15-20 in 2020 if more non-IPA wells are drilled and RWOs are done with the rig.” IPA rig workovers were expected to increase from five in 2019 to six to nine in 2020.

“Technical work to identify and evaluate drilling locations that are economically viable in the current oil price environment is ongoing,” the report said.

New high density broadband seismic was acquired in 2019, BP said, and was processed at an accelerated rate, allowing “more efficient drilling and the progression of additional resources.”

A merger of 2015 and 2019 survey data was planned for completion in 2020.

2019 production

Crude and condensate from the IPA averaged 165.03 thousand barrels per day in 2019, down from 174.2 thousand bpd in 2018. BP said the production rate, combined with volumes from the PBU satellite fields and a portion of Point McIntyre, “fully utilized available PBU processing capacity within reservoir management constraints.”

The volume delivered to the trans-Alaska oil pipeline in 2019 was 60.2 million barrels, down from 63.6 million barrels in 2018.

IPA gas production was 7,031 million cubic feet per day in 2019, down from 2018 when it averaged 7,051 million, but re-injection of gas was 6,300 million cubic feet per day, up 1% from 2018 when it averaged 6,296 million.

The report said gas production taken in kind and removed from the PBU included 5.5 billion cubic feet, 0.2% of produced gas, and about 12 million barrels of natural gas liquids, about 19 billion cubic feet, 0.7% of produced gas.

IPA NGL production averaged 43,600 bpd for the reporting period, a total of 15.9 million barrels, with 12.1 million barrels delivered to the trans-Alaska oil pipeline and 3.8 million barrels taken to the Kuparuk River unit.

Produced water averaged 985,000 bpd, down from 893,000 in 2018.

ConocoPhillips cuts

Other major North Slope fields - Kuparuk and Alpine at the Colville River unit - are operated by ConocoPhillips Alaska. The Colville River POD update, submitted to the division in March, said the company was planning as many as 21 wells. The most recent Kuparuk plan, covering Aug. 1, 2019, through July 31, 2020, called for drilling of five grassroots rotary wells and some 20 coil tubing wells.

In a March 18 update, ConocoPhillips said it was cutting some $200 million from its Alaska spend. Matt Fox, ConocoPhillips executive vice president and chief operating officer, said there would be “reduced drilling in Kuparuk in the western North Slope. Just laying down a couple of rigs for some time in the Kuparuk and Alpine area,” with an estimated 2,000 barrel per day impact on production.

The company said details would be presented in its first quarter earnings conference call on April 30.

In a March 25 update on COVID-19, published on ConocoPhillips’ website, the company said there were no cases of COVID-19 at its North Slope operations. ConocoPhillips Alaska spokeswoman Natalie Lowman told Petroleum News in an April 1 email that this was still current, with no confirmed or suspected cases at the company’s Slope operations.

In its online update the company said northbound flights - which had been suspended March 18 - had been resumed on a limited basis, with employees and contractors who normally use the Anchorage International Airport now using the ConocoPhillips Aviation Hangar for boarding and deplaning.

ConocoPhillips implemented a policy on March 18 of requiring workers who live or have traveled out of state and are scheduled to travel to the North Slope to self-quarantine for two weeks before the start of their next scheduled shift. “By self-quarantine, we mean that people should not travel outside of Alaska and comply with all measures issued by the CDC and the State of Alaska,” the company COVID-19 update said.

The company said it was encouraging Anchorage-based employees to work for home.

“Our response to the COVID virus has not impacted production,” ConocoPhillips said.

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