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State approves Oooguruk unit expansion Four leases added to south of Pioneer-operated unit; if sanctioned by company, 2 drill sites would develop Torok formation crude Kristen Nelson Petroleum News
The Alaska Division of Oil and Gas has approved an application from operator Pioneer Natural Resources Alaska to expand the Oooguruk unit on the North Slope. The unit is at the northwest corner of the Kuparuk River unit, in the shallow waters of Harrison Bay offshore the North Slope.
This is the second unit expansion for Oooguruk, formed in 2003. Pioneer holds a 70 percent working interest in three of the four leases being added to the unit; Eni Petroleum US LLC holds the remaining 30 percent. Pioneer has 100 percent of the working interest in one of the four leases. Three of the four leases would have expired April 30 if not extended by the pending application; the fourth lease expires June 30, 2012.
The first Oooguruk unit expansion, in 2007, added a block of leases on the southwest corner of the original unit and one lease on the eastern edge, between leases already in the unit.
The division said Pioneer originally proposed adding five leases to the unit, but later requested that one lease be withdrawn from the expansion application.
Torok prospectivity Pioneer applied for expansion “based primarily on the prospectivity of the Torok formation,” the division said in its decision. Oooguruk produces from the Kuparuk, Nuiqsut and Torok participating areas within the existing unit. It proposes to produce from the Torok formation in the expansion area, and the division said “Pioneer provided sufficient geological, geophysical, and engineering data to justify the unit expansion to the south, but not to the southwest.” The four leases added to the unit are to the south; the withdrawn lease was to the southwest.
The division said the Torok interval in the expansion area ranges from 200 to 250 feet thick. The Alaska Oil and Gas Conservation Commission defined the Oooguruk-Torok pool boundary in a 2011 conservation order, with the Torok pool extending south from the existing unit into the proposed expansion area, the division said.
POE changes Pioneer proposed an exploration plan which, if development of two proposed Nuna drill sites in the expansion area were to be sanctioned, would run through 2016.
The division only approved the plan of exploration through June 2014, including the following:
• Drilling of three Torok pilot wells from the Oooguruk drill site — T-45A (previously drilled; currently on production); T-46i, an injection well to be completed by Sept. 30; and T-39 or a substitute to be completed by March 31, 2012.
• Submission of an application for an area injection order to AOGCC.
• Preliminary results and injection status reported to the division by June 30, 2013.
• Drilling, completion, fracturing and testing of a well from proposed Nuna drill site by June 30, 2013.
• Notice to the division by June 30, 2014, of Pioneer’s sanction decision for Nuna.
• If Nuna development is sanctioned, Pioneer will submit a plan of development for that activity.
Original POE The required plan of development would include items in the original plan occurring after June 2014.
The original plan of exploration included, in addition to the POE activities accepted by the division, a timetable for Torok development at two Nuna drill sites.
Pioneer said if the project is sanctioned, it would construct Nuna-related gravel roads and the Nuna DS-1 drill site pad by June 30, 2015, and begin Nuna development drilling in the expansion area in 2016.
Expansion leases would need to be committed to a participating area or under an approved POE or plan of development by Dec. 31, 2016, or they would automatically contract out of the unit.
Pioneer also proposes a second Nuna drill site.
Rent increase Rent on the expansion leases which would have expired April 30 if not extended will be increased because the state is foregoing revenue it could have gotten from bonus bids if the leases were not included in the expanded unit. If not included in the unit, the leases would have been available at the next state oil and gas lease sale.
The lease rentals will be increased from $3 an acre to $4.50 an acre effective April 30, 2011, the effective date of the unit.
In addition, the western sections of two of the expansion leases will be treated as separate leases and assigned new lease numbers, allowing the state, absent sanction or drilling, to contract them out of the unit.
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