88 Energy said Jan. 11 that on Jan. 8 its wholly owned subsidiary Emerald House acquired the Umiat oil field in the National Petroleum Reserve-Alaska from Malamute Energy and Renaissance Umiat. The purchase price was a 4% overriding royalty interest on the two federal leases in the Umiat unit, as well as the “assumption of liability of abandonment” (estimated cost US$1 million) of two Umiat wells - 18 and 23H - drilled by Linc Energy in 2013/2014.
An independent reserve estimate released by Ryder Scott on Dec. 1, 2015, put the gross 2P reserves at 123.7 million barrels of oil. (In 2014 the Umiat-23H well was flow tested at a sustained flow rate of 200 barrels of oil per day with no water and a max daily flow rate of 800 bbl.)
Per 88 Energy there were no 1P reserves estimated because there was no plan of development in place that included all the necessary approvals required to enter the Umiat unit into production. 3P reserves were 57.16 million barrels.
Discovered in 1945 in “shallow Brookian (Nanushuk) sandstones,” Umiat is south of, and adjacent to, the southern boundary of Project Peregrine, where this winter 88 Energy operating subsidiary Accumulate Energy Alaska will be drilling two wells, Merlin 1 and Harrier 1. The wells will be about 6,000 feet deep and target the Nanushuk formation, 88 Energy said in its Jan. 11 announcement.
Merlin is considered a direct analogy to ConocoPhillips’ Willow oil discovery, while ConocoPhillips’ Harpoon prospect is interpreted to lie on the same sequence boundaries as Harrier.
The 17,633-acre Umiat unit was formed in September 2019 with an initial 10-year term and requirements that call for an exploration or appraisal well to be drilled by Aug. 31, 2022.
Umiat full field review
88 Energy said it will “now undertake a full field review to determine at what oil price Umiat may be commercial as a stand-alone development and whether optimization of the previous development plan is possible.” If a discovery is made at Project Peregrine this winter, where the company said drilling is “imminent,” it is expected that “Umiat would contribute significant value to any development.”
Per 88 Energy, oil price assumptions used in Ryder Scott’s independent report were “estimated to average $67.49 a barrel for 2015, $66.03 for 2016, $86.66 for 2017, $89.06 for 2018, $97.51 for 2019, $109.54 for 2020, $112.61 for 2021, $114.92 for 2022, $119.61 for 2023, $124.34 for 2024 and held constant thereafter.”
In 88 Energy’s ASX reporting notes operating costs were assumed to be $15 per barrel, development costs $10.34 per barrel with peak production of 30,000 barrels per day with the “average price received during production” being $109.
Subject to standard regulatory approvals, 88 Energy said it was 100% working interest owner and operator via its fully owned subsidiary Emerald House, and that the two leases in the Umiat unit were AKAA-081726 and AKAA-084141.
The company also noted that the “classification of reserves” was based on data from “14 historical well penetrations in the field and subsequent engineering work. The total plan calls for 35 wells, 24 producers and 11 injectors.”
Finally, the ASX reporting notes made by 88 Energy said numerous environmental and engineering studies have been undertaken to confirm various paths to market with oil sales via the Trans Alaska Pipeline System where crude is predominantly sold based on the Alaska North Slope West Coast oil price.
