ERD wells deferred
On March 27 the Alaska Department of Natural Resources’ Division of Oil received an application from ConocoPhillips Alaska to delay by one year the contraction of Fiord West from the Colville River unit, as well as postpone drilling and sustained production by a year.
The filing was also addressed to the other area landowner, Arctic Slope Regional Corp.
The division approved the request, which was in the form of a unit amendment, on April 1.
Under the unit agreement, which has been amended several times, ConocoPhillips was required to spud a well in the Fiord West Kuparuk participating area by June 30, 2021, and drill two additional wells by Nov. 30, 2022, as well begin sustained production from one well by Nov. 30, 2022, in order to retain all the Fiord West leases from contracting out of the Colville River on unit Nov. 30, 2024.
What the company asked for in its March 27 filing was to extend all those deadlines by one year.
The big new extended reach drilling rig, Doyon 26, was part of the company’s deal with the state.
At the time ConocoPhillips’ request for a one-year extension appeared to be unnecessary since the seven modules that make up the new ERD rig were either on their way to, or already at, CD2 pad for assembly.
The company told Petroleum News April 1 that “the Doyon 26 rig will target Fiord West for its initial wells,” having a few days earlier said: “We still anticipate a first spud near the end of April.”
But that all changed with the company’s April 8 statement to Petroleum News saying it was demobilizing its North Slope rig fleet.
Looking for additional flexibilityIn its March 27 filing ConocoPhillips told the division: “As operational concerns change daily due to the coronavirus pandemic” the assembly and acceptance testing of Doyon 26 “may be delayed out of concern for the health and safety of CPAI (ConocoPhillips Alaska Inc.) employees and contractors on the North Slope. Given the recent oil price downturn and ongoing coronavirus pandemic, there is significant uncertainty around the volatility and duration of current oil market conditions. This amendment is requested to allow CPAI some additional flexibility within the terms of the Fiord West lease extension and deferral of unit contraction, while still progressing Fiord West Kuparuk participating area development to and through the November 2025 date.”
Fiord West ‘highly important’The Fiord West development is still “highly important” to the company’s ongoing North Slope development, ConocoPhillips Alaska’s manager of land and business development, John F. Schell Jr., said in the company’s March 27 filing, which he signed.
To date, he wrote, the company “has undertaken significant efforts to progress” the Fiord West leases toward sustained production, including paying $750 million in lease bonus bid replacement payments, contracting for a new ERD rig, posting a $10 million performance bond, and drilling two pilot wells in the Fiord West Kuparuk PA, including the 2020 Rhea pilot well to collect information in support of future Fiord West Kuparuk development.
In addition, ConocoPhillips has “completed multiple infrastructure projects in support of ERD rig mobilization, including a gravel pad expansion at CD2, construction of a new mud plant, construction of a new grind and truck dump facility, expansion of the existing cement plant on CD1, as well as construction and upgrades to the water supply and distribution system supporting these facilities,” Schell said.
But, as Schell wrote, “as operational concerns change daily due to the coronavirus pandemic” the ERD rig “assembly and acceptance testing may be delayed.”
In its approval, the division said: “Any of the subject lands that do not qualify for inclusion in a participating area in whole or in part, or which do not otherwise qualify for lease extension (i.e., continuous drilling, certified well, shut in production, or held by production) will terminate on November 30, 2025.”