ConocoPhillips Alaska expects to begin construction of infrastructure this winter for its Willow project, which will be the westernmost producing oil field on Alaska’s North Slope, located in the northeast corner of the National Petroleum Reserve Alaska.
The company is waiting for the final supplemental environmental impact statement, and it expects a new record of decision “sometime late this year or maybe early next year,” ConocoPhillips Alaska President Erec S. Isaacson said in remarks to the Alaska Support Industry Alliance at its annual meeting Oct. 20 in Anchorage.
“That will kick off the winter construction season this winter,” he said, adding that the company will start laying gravel west from the Greater Mooses Tooth 2 satellite drill site into the Bear Tooth Unit where Willow is located.
Willow is truly a huge project with an estimated peak production of 180,000 barrels per day, Isaacson said.
The Willow project is expected to produce approximately 600 million barrels of oil equivalent over the life of the project, according to ConocoPhillips Alaska project information.
Willow will generate 2,000 jobs in the construction phase, with 9 million construction manhours going into the project over the period, Isaacson said. It will create 300 permanent jobs.
According to the federal Bureau of Land Management, Willow could generate between $8 billion and $17 billion in new revenue for the federal government, the state of Alaska, the North Slope Borough, and communities in and around NPR-A, CPAI said.
Willow is the largest project of size and scale to be developed on the North Slope in more than 20 years, with a cost to develop of $8 billion, the company said.
Willow will also create a significant impact for Alaska, Isaacson said.
“That’s why it’s so important that we continue to fight and push for the continued access to the NPR-A for development out there,” he said.
In the second quarter of this year, CPAI had an Alaska net production of approximately 200,000 bpd, and it invested approximately $220 million in capital, Isaacson said. It is on track to spend over $1 billion in capital this year, like last year.
“That’s what we see going forward when we take a look at sustaining development that we have with our additional pads and drilling,” he said. “Willow is on top of that.”
In a separate new operating area, Isaacson also announced a new well to be drilled, the Bear No. 1.
“Down to the south of Alpine on state land you will see Bear, an exploration well that we are preparing to drill this coming winter season, into another Brookian topset play that extends south of Alpine,” he said.
New work in existing unitsCPAI is actively developing the Kuparuk River unit, North America’s second largest oil field, 40 miles west of Prudhoe Bay.
Kuparuk recently celebrated a major milestone, its 40th anniversary, Isaacson said. Kuparuk produced 2.5 billion barrels of oil and is still going strong at 90,000 bpd.
CPAI is developing new Kuparuk drill pads, in the Eastern NEWS, or North East West Sak, project; on the west side Nuna development; and Coyote, which is the Brookian topset soon be developing two to four wells in the short term, he said.
“We will still be investing billions into the Kuparuk field,” he said.
“Nuna is Brookian Torok horizon, up on the northwest side of the Kuparuk unit,” Isaacson said. “At Nuna we have ongoing Torok development, literally to establish a new pad and facilities.”
The company will move forward next year with module construction and placement, and well drilling.
“At Coyote, developmentally we have the well pad put in this year; we will be drilling a producer injector pair in Coyote shortly,” he said. “We will use that information to inform upon the whole development from our 3S pad.”
“Eastern NEWS … on the eastern side of Kuparuk, there will be a follow up on the successful 1H pad, a whole new pad chasing West Sak on the east side of Kuparuk,” he said. “West Sak is proving very successful, currently being drilled very successfully by Hilcorp at Milne Point over in Prudhoe Bay.”
CPAI is finding new oil in the Kuparuk formation in its Colville River Unit with extended reach drilling. “Using Doyon 26, the largest drilling rig in North America, we drilled a record setting well - the longest reach well in North America - at 35,526 feet we reached out and tapped the Kuparuk reservoir, we found the reservoir condition was better than expected and now we’re going through the necessary work to prepare for drilling of the second well,” Isaacson said.
“The first well was an injector. We went in and pre-produced that injector, we got a lot of information out of the reservoir and we’ll soon be turning that injector over to injection going into normalizing reservoir pressures, and preparing to drill that next extended reach well,” he said.
The learning curve went down, with the first well taking half a year, to drilling in less than 2 months, he said.
“That’s the type of learning that we have to chase, the type of technology we need to employ, to continue to be able to establish ERD technology across other areas of the North Slope here in Alaska,” he said.
In the western North Slope, on the narwal trend - basically the continuation of Pikka - the company has drilled three wells, Isaacson said.
“We have a producer, with an injector, and continue to drill more wells and have the potential for an additional pad,” he said.
On the west side of the Slope, over the Colville River to Greater Mooses Tooth, then farther west, lies Greater Mooses Tooth 2, where CPAI continues development, Isaacson said.
“We had first production at the end of 2021; right now, we’re about a third of the way through drilling on that development, and we’re constantly incorporating information from the wells drilled into the next well drilled to optimize that development,” he said. “We’re getting about 20,000 bpd, driving towards production of about 30,000 bpd for that pad.”
The power of peopleA land package is nothing without the people to work it.
“As we go forward, one of our key assets in Alaska is manpower,” Isaacson said. “We have 960 direct employees in Alaska, 50% in Anchorage, 50% on the Slope. Eighty percent of our workforce are Alaska residents,”
The support industry supporting those operations is larger.
“We touch another 8,900 contract employees over the course of the year,” Isaacson said.
Necessity has prodded CPAI into the people transportation business.
ConocoPhillips Aviation, the company’s in-house airline, manages the transportation of employees and contract employees to the North Slope, Isaacson said. Direct to Kuparuk, and direct to Alpine there are 700 north-south flights a year and 1,000 east-west flights each year to Alpine.
The logistics of North Slope operations require healthy capital budgets.
The cost to operate in Alaska - lifting cost, maintenance and operations and transportation cost - in Alaska is two times that of any other region in the world on average, Isaacson said.
“It’s an expensive place to operate,” he said.
In the second quarter 2022, CPAI paid an estimated $981 million in taxes and royalties, he said, adding that $771 million in the quarter went to the state of Alaska and $210 million went to the federal government.
All the company’s activities in Alaska were touched by high impact inflation in 2022, Isaacson said.
“Lower middle fiscal take, that’s where we have to be in order to be successful because of the high operating costs it takes to operate in a remote arctic environment,” he said.