NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.
HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PAY HERE

SEARCH our ARCHIVE of over 14,000 articles
Vol. 26, No.48 Week of November 28, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

GMT2 being tested

ConocoPhillips says early results from first well are very encouraging

Alan Bailey

for Petroleum News

ConocoPhillips has initiated a production test on its first production well in its Greater Mooses Tooth 2 development in the National Petroleum Reserve-Alaska, Vincent Lelarge, North Slope development manager, ConocoPhillips Alaska, told the Resource Development Council’s annual resources conference on Nov. 17. The company is confident that first oil will be produced from the development later this year, he said.

“We have initiated a production test on our first producer three days ago and early results are really, really encouraging,” Lelarge said. “The subsurface, the geology, the reservoir properties are at or better than expectations.”

The GMT2 development is ConocoPhillips’ second major development within the Greater Mooses Tooth unit and has involved three seasons of construction to build gravel roads, a 14-acre pad and nearly 15-miles of pipeline, together with the installation of production facilities. The development was completed ahead of schedule and involved more than 600,000 construction manhours with an excellent safety performance, Lelarge said.

“We’re really, really proud of the teams, the service companies, the employees that have contributed to this success,” he said.

ConocoPhillips is currently completing the fourth well for the development - that will become the second production well out of a 36-well program.

“So clearly we’ll continue to be drilling for many years to come at GMT2,” Lelarge said.

GMT2 comes at an investment of more than $1 billion that will provide a significant component of ConocoPhillips’ North Slope oil production in 2022 and beyond, he said.

A broad portfolio

The GMT2 development forms part of a broad portfolio of oil fields, together with exploration and development opportunities, that ConocoPhillips is engaged with on Alaska’s North Slope. In addition to the company’s core assets such as the Kuparuk River and Alpine fields, the company is actively seeking and pursuing new opportunities. Some opportunities are in a drilling execution phase, others are being appraised and others are being matured before final investment decisions, Lelarge said.

“The portfolio of development opportunities is really deep … and … probably deeper than it’s ever been on the North Slope,” Lelarge said.

At the same time, with crude oil prices rebounding after the doldrums of the onset of the COVID pandemic, ConocoPhillips oil production in Alaska is on track for meeting production targets, with year-to-date production of nearly 200,000 barrels per day. That has resulted in the payment of nearly $1 billion in taxes and royalties to the state and federal governments. And the company is also on track for capital investments amounting to about $1 billion in Alaska this year, Lelarge said.

The company’s safety incident rate remains very low, although it did increase a little relative to 2020, given the uptick in activity on the Slope in 2021

“Safety is the number one priority for ConocoPhillips,” Lelarge said.

The Alpine hub

The GMT2 production will be fed into processing facilities at ConocoPhillips’ Alpine field in the Colville River delta area. Alpine, which went into production in 2000, was originally built as a standalone development with just two drill sites and an expected recovery of about 400 million barrels of oil. Since then the field has become a hub for further development, with the addition of more drill sites and the expansion of development into NPR-A. ConocoPhillips has now produced 600 million barrels of oil through the Alpine facilities and estimates another 600 million barrels of additional production in the future, Lelarge said.

For example, the company has brought in a massive extended reach drilling rig, to drill from the Alpine CD2 pad, targeting the Fiord West oil field, northwest of Alpine. The rig is currently drilling a well with a maximum length of 36,000 feet and the expectation is to have wells in this development program over 40,000 feet in length.

“We’re making good progress and we’re expecting to reach first oil … some time in 2022,” Lelarge said.

Another project connecting to Alpine is the Narwhal development in the Nanushuk formation - ConocoPhillips anticipates first Narwhal production this year at drill site CD4, with a new drill site, CD8, to be added later this decade.

And drilling from CD5 over the years has been a particular success at Alpine, demonstrating excellent collaboration between ConocoPhillips and vendors to implement new technology: This drill site holds most of the records in Alaska and a couple of North American records for the longest lateral wells or the longest total drill length, Lelarge said.

The history of Alpine demonstrates the power of large oil fields on the North Slope: big fields tend to become bigger over time, Lelarge said.

“Through continuous investments in exploration, continuous investments in technologies and investments in our base facilities we are able to maintain production and significantly extend the initial expectation for those large fields,” he said.

Willow

ConocoPhillips hopes that the Willow field in northeastern NPR-A will become its next major hub field. Currently the Willow project is being impacted by an Alaska District Court order, upholding a legal challenge to the environmental impact statement for the project.

The company remains committed to the project and is continuing with engineering work, to refine the project cost and schedule, with a view to making a final investment decision sometime next year. With an estimated 600 million barrels of oil resources, peak production could exceed 160,000 barrels per day, Lelarge said. Field development could involve around 9 million construction manhours, he said.

At the same time the company is working through the issues identified in the District Court decision and is engaged with the Bureau of Land Management in this process. The gravel work in the NPR-A that had been planned for 2021 has been deferred into 2022 as a consequence of a court decision, but the overall timeline for the project has not been impacted, Lelarge said. Lelarge expressed his company’s gratitude for the support from many entities, including trade associations, Native organizations and the North Slope Borough, for the company’s NPR-A investments, including Willow.

Core assets

In its core assets ConocoPhillips is putting much effort into maturing, planning and optimizing wells, while also pushing the boundaries of its drilling operations, Lelarge said. These efforts help unlock increasingly challenging resources. As a part owner of the Prudhoe Bay field, ConocoPhillips is also benefiting from the results of Hilcorp Alaska’s development and maintenance work in that field.

However, it is critically important to continue improvements to drilling performance, to ensure that the North Slope remains competitive with oil development and production in the Lower 48, Lelarge said. As an example, Lelarge cited the use of coiled tubing drilling (coiled tubing enables the drilling of long lateral wells from existing well bores). ConocoPhillips has been drilling coiled tubing wells since 1998 at Kuparuk, Lelarge said. The company has drilled more than 200 of these wells, while continuously improving the technology, with improvements to the well designs and the well performance. A coiled tubing well at West Sak now holds a length record of more than 8,000 feet, exceeding the previous record by 3,000 feet, Lelarge said.

The extended reach drilling at CD5 and for the Fiord West development also provide excellent examples of drilling innovation.

Lelarge said that, in addition to new investments such as Willow, ConocoPhillips is planning total investments in excess of $10 billion in core North Slope assets during the coming decade, in the Colville River unit, the Greater Mooses Tooth unit, Kuparuk River unit and the Hilcorp operated Prudhoe Bay unit. This should enable total gross oil production from these units to reach a peak of 450,000 barrels per day, compared with current levels of around 400,000 barrels per day, Lelarge said.

In the Kuparuk River field development projects include the Nuna, Coyote and Northeast West Sak projects. Hilcorp is conducting projects in the Prudhoe Bay unit. At Alpine, projects slated for investment include work associated with the Narwhal project, and the CD2 extended reach drilling project. There is also the continuing coiled tubing drilling program.

Costs and risks

But there are costs and risk premiums associated with projects on the North Slope, Lelarge cautioned. Lifting and transportation costs on the Slope are roughly double the costs anywhere else in the world, he said.

“It really takes great rock and great projects in Alaska to be able to offset these kinds of costs and to remain competitive in the global portfolio,” Lelarge said. And then the added risk of regulatory and fiscal instability creates another obstacle to Alaska projects competing globally, he added.

ConocoPhillips focuses on lowering the costs for its base North Slope assets.

“This is key for the assets remaining competitive in the company’s global portfolio, but also to remain competitive through the ups and downs of the price cycles,” Lelarge said. A competitive and stable cost structure is needed for the company’s Alaska assets, he added. We will continue to engage with all stakeholders in Alaska to ensure a business environment and climate that allows Alaska to compete for investments in the company’s overall portfolio.

In fact, in recent years ConocoPhillips’ annual North Slope investments have been fairly constant, hovering around $1 billion per year, despite high levels of market volatility.

But while development opportunities are typically contingent on various factors such as exploration success or technology progression, all are impacted by fiscal instability.

“All of them are contingent on fiscal stability and predictability. It’s really critical to be able to progress these projects,” Lelarge said.

And so the formula for success on the North Slope involves lowering the cost of the base assets; continuing to invest through the exploration and development cycle; continuing to make the case for the importance of oil and gas in Alaska; advocating for a stable fiscal regime; and pushing the boundaries of innovation, he said.

Much has changed during ConocoPhillips’ long history in Alaska, Lelarge said. But some things have remained constant: the company’s focus on safety, its care for the environment, its desire to be constantly innovating, its focus on maintaining good relationships across all stakeholders, and its continued investment in the North Slope. This all supports keeping Alaskans working, he said.



Did you find this article interesting?
Tweet it
TwitThis
Digg it
Digg
|

Click here to subscribe to Petroleum News for as low as $89 per year.


Petroleum News - Phone: 1-907 522-9469
[email protected] --- https://www.petroleumnews.com ---
S U B S C R I B E