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Vol. 22, No. 13 Week of March 26, 2017
Providing coverage of Alaska and northern Canada's oil and gas industry

Beaufort drilling

BOEM reviewing Eni’s plan for directional drilling into Nikaitchuq North


Petroleum News

The Bureau of Ocean Energy Management has confirmed that it is reviewing a plan filed by Eni U.S. Operating Co., proposing drilling for oil prospects in federal waters of the Beaufort Sea, immediately north of the Nikaitchuq oil field. The agency received an exploration plan for the drilling on March 3, at which point it had 15 working days to determine whether the plan is complete, BOEM spokesman John Callahan told Petroleum News in a March 17 email. Eni would use extended reach drilling from an existing gravel drilling pad at Spy Island, Callahan said.

On Feb. 27 the Bureau of Safety and Environmental Enforcement sent a letter to Eni confirming approval of a new unit, the Harrison Bay Block 6423 unit, in the Beaufort Sea. Apparently Eni had applied for the unit formation on Dec. 20. The unit includes 13 federal leases. Those leases lie directly north, northeast and northwest of the state Nikaitchuq unit.

For some time Eni has been considering the possibility of further oil development to the immediate north of its existing Nikaitchuq field, which lies under state waters of the Beaufort Sea. Eni is part-owner of federal outer continental shelf leases to the north of the field. Two of these leases are scheduled to expire in July of this year and the remainder, including all of the leases in the new unit, are scheduled to expire in December. The leases lie within the region of the relatively nearshore Beaufort Sea that President Obama did not withdraw from oil and gas activities late last year.

In May 2016 Mark Fesmire, Alaska director of the Bureau of Safety and Environmental Enforcement, told a meeting of the Society of Petroleum Engineers that Eni had been discussing with his agency the possible drilling of some wells into federal leases to the north of Nikaitchuq. Those wells would be some of the longest extended-reach wells drilled to date, Fesmire said.

Schrader Bluff formation

The producing oil reservoir for the Nikaitchuq field lies in the upper Cretaceous OA sands of the Schrader Bluff formation. However, Eni has also been considering oil development in the Schrader Bluff N sands. The Schrader Bluff is known to extend a long way out into the Beaufort Sea continental shelf, where it presumably presents oil and gas development opportunities. The formation sits within the Brookian sequence, the youngest and shallowest of the major North Slope oil and gas bearing rock sequences.

On the outer continental shelf the Brookian typically lies on top of major faulted blocks composed of older rocks. Brookian sands are thought to thicken in more downthrown rock sections between the faults.

However, development at Nikaitchuq has been challenging because of the compartmentalized nature of the sands and the relatively viscous 16 to 19 API oil. Eni has been using a combination of horizontal injection and production wells, employing both electric submersible pumps and water injection to boost oil production. The company has also been drilling horizontal, multilateral sidetrack wells that undulate their way through the sand bodies.

Dates back to 2000s

The discovery and development of the Nikaitchuq field date back to the mid-2000s, when Bill Armstrong, president of Armstrong Oil and Gas, pushed exploration of what was then called the Northwest Milne Point prospect. Armstrong is currently spearheading a major planned Nanushuk development to the east of the Colville River unit.

In 2004 Armstrong partnered with Kerr-McGee for exploration drilling at Northwest Milne Point: The resulting discovery was named Nikaitchuq. Eni ultimately bought out both Armstrong’s and Kerr McGee’s interests in the Nikaitchuq field, to become operator and 100 percent owner of the field.

In early 2008 Eni sanctioned the Nikaitchuq development. The development plan involved drilling from an onshore pad at Oliktok Point and from an artificial offshore island, situated in shallow water at Spy Island in the Beaufort Sea. An onshore processing facility at Oliktok Point would deliver crude oil to the trans-Alaska pipeline through a 14-mile pipeline, connected to ConocoPhillips’ Kuparuk pipeline system.

Production in 2011

Initial production from Nikaitchuq started in 2011 from wells at Oliktok Point, with Spy Island production starting in November of that year. Since then Eni has conducted an active development program in the field. By the end of 2014 the production rate had reached more that 25,000 barrels per day. Developments have included the addition of lateral wells to existing wells, to improve the drainage of oil from the OA sands, and the drilling of multilateral wells.

In 2015 Eni completed a West Expansion Project, targeting an area to the west of the Spy Island drill site. In the third quarter of that year the company began an East Expansion Project with the drilling of a dual lateral production well. However, later that year, in response to the depressed oil price, the company suspended all Nikaitchuq drilling.

That drilling suspension continued through 2016. However, the company has recently filed a state plan of development indicating that “with hopes of a more favorable oil prices environment” drilling may restart in 2017 with the drilling of six wells from the Spy Island pad. At this point, it is not clear when the Spy Island extended reach drilling to the north into the new federal unit might begin.

According to data published by the Alaska Oil and Gas Conservation Commission, by the end of January this year the Nikaitchuq field had produced a cumulative total of 36.3 million barrels of oil.

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