Redoubt flame dwindles

Reserve estimates cut at field once seen as spark of new activity in Cook Inlet

Kristen Nelson

Petroleum News Editor-in-Chief

The dream that was Redoubt Shoal — solid new oil production from Alaska’s mature Cook Inlet basin — started to fade in August when Forest Oil said it had unsatisfactory results from two wells and was reevaluating the reservoir.

The final wake-up call came Jan. 27: Forest said it has completed an integrated field study of the Redoubt Shoal field and is reducing estimated proved reserves by 49 million barrels, to 8 million barrels.

Forest also said it replaced the Nabors Alaska Drilling rig with a workover rig.

The new reserves estimate reflects both lower-than-expected production rates and new data evaluations showing “significantly lower oil in place … lower overall recovery efficiencies and economic cutoffs,” the company said in a statement.

Thirty-six million of the 49 million barrels had been categorized as proved undeveloped.

Craig Clark, Forest Oil’s president and CEO, told analysts on a Jan. 27 conference call that the company is “very disappointed” in the reduction in proved reserves at Redoubt. He said Forest finished its detailed technical review and also has results back from the independent third-party review. The technical review combined geological and geophysical data gathered in 2003 with previous data, he said, and the reservoir was remapped using new seismic and new well data.

Clark said the new data, production to date of more than a million barrels and the drilling of the No. 7 well close to the earliest producers, the No. 1 and No. 2 wells, “was helpful in providing additional oil-in-place calculations to compare to the 2002 data.”

Lower productivity, which had become apparent earlier in 2003, combined with lower reserves and high drilling costs made it “apparent that there was some oil that could not be recovered on the fringe or lower productive areas due to economic cost,” Clark said.

All of those factors contributed to lowering the company’s estimate of economically recoverable oil by some 50 million barrels, Clark said. Forest “also reduced the total recovery factor to 18 percent.” Cook Inlet fields have been averaging in the range of 25 percent to 42 percent oil recovery rates, he said: “We will now be below this range.”

A legacy project for Forest

Forcenergy acquired leases at the prospect and ordered a drilling platform, the Osprey, to drill an exploration well and, if reserves were proved up, to drill production wells. The company chose to build a platform to avoid the cost of mobilizing a jackup rig to Cook Inlet. The platform, designed to be moved to another prospect if drilling results at Redoubt were not commercial, was set in place in Cook Inlet in July 2000.

In February 2001 Forest announced success at the Redoubt Unit No. 1 well, which tested at 1,010 barrels per day from the Hemlock formation. In June 2001 Forest announced a second successful well and said it “estimates that recoverable oil in Redoubt Shoal will exceed 50 million barrels.” Production was expected to be 2,500 bpd from the No. 1 well and 3,000 bpd from the No. 2. The No. 3 well was completed in October but was not production tested. Forest said “logs indicated reservoir quality similar to the No. 2 well” and expected similar rates. The company said that as of Dec. 31, 2000, it had “reported 9.8 million barrels of estimated proved reserves at Redoubt Shoal.”

In May 2002, with early results promising, the company said it had increased its “estimate of recoverable oil for the Redoubt Shoal field” to “at least” 100 million barrels.

Drilling continued, but by August 2003, Forest was reporting that results from a sidetrack of the No. 4 well and the No. 6 well “are below our original expectations and will result in a change in our existing geologic model of the Redoubt Shoal field.” The company said it would “undertake an integrated study on the field and develop geologic and reservoir models that appropriately reflect the apparent reservoir complexity and heterogeneity.”

Redoubt production began in December 2002 and state records show it peaked in May 2003, averaging almost 3,500 barrels per day. It then dropped, to 2,500 bpd by August, and for October through December production averaged only some 1,900 bpd.

Clark said Jan. 27 that the No. 1 well, the field’s best producer, was offline due to problems with the electrical submersible pump, used to bring oil to the surface. Production is coming from three wells, he said, and the company plans to repair the No. 1 and get it back on production and perforate the No. 7, a horizontal well completed in December in the same area as the No. 1 and No. 2.

Drilling rig off platform

“Our current contract on our drilling rig expired and we moved the drilling rig off the platform and moved in a less expensive hydraulic rig from the Gulf Coast,” he said.

“Basically we had a three-year term contract and that expired,” Clark said, “so we don’t want any term contracts.

“We have a rig that’s basically allowing for remedial work and testing,” he said of the rig the company brought in. The smaller rig, he said, represents a 15 to 20 percent cost savings.

“By eliminating the rig it gave us room and it also stops the meter running with a $100,000 a day spread,” he said.

The first thing the smaller rig will be used for is to repair the electric submersible pump in the No. 1 well, which went down late last year. It will then be used to complete the No. 7 well.

Moving the drilling rig off the platform allows Forest “more room for repair, diagnostics and stimulation work.”

Most of the equipment has already been installed for waterflood, Clark said, and “we will certainly start the waterflood in the future.”

As for the future of Cook Inlet, where Forest is a major leaseholder?

The company believes activity in Cook Inlet “should now focus on smaller oil targets,” Clark said, “with much lower start-up costs, and also shallow gas.”