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Vol. 24, No.46 Week of November 17, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

Producers 2019: BP: Still drilling at Prudhoe Bay after 42 years

Despite sale of Alaska business, major is setting the stage for another 40 years of Prudhoe production

Steve Sutherlin

Petroleum News

In 2019, the giant Prudhoe Bay oil field entered its 42nd year online, but operator BP Exploration Alaska said there is still an important role for development drilling, despite the reality that the field is 31 years beyond its production plateau.

In its annual progress report for the initial participating area, or IPA, of the core Prudhoe Bay field, which covered the 2018 calendar year and in BP’s plan of development for work from July 1, 2019, through June 30, 2020, in the IPA, BP said that for the Prudhoe Bay owners the “key priority is on efficient production of the existing wells and facilities.”

Prudhoe Bay is well developed, with more than 1,400 wells at the field, yet development drilling “will continue at a pace consistent with the business environment and the ability to identify viable targets informed by ongoing surveillance, supplemented by new seismic data being acquired in the first half of 2019.”

The Prudhoe Bay unit, formed in 1977 is operated by BP.

As of September 2019, the Prudhoe Bay unit contained 12 participating areas, 254,235 acres and has an average lease ownership of 26.36% BP, 36.4% ExxonMobil Alaska Production, 36.08% ConocoPhillips Alaska and 1.16% Chevron U.S.A.

Thirteen billion-plus

When Prudhoe Bay went into production in 1977, the initial estimated ultimate recovery was 9.6 billion barrels of oil. To date, however, it has generated 13.599 billion barrels through August 2019.

That number, per BP spokeswoman Megan Baldino, came from the following sources: Prudhoe Bay’s IPA 12.596 billion; Prudhoe satellites 0.221 billion (Aurora, Borealis, Midnight Sun, Orion, Polaris); and the Greater Point McIntyre area 0.782 billion (Lisburne, Point McIntyre, Niakuk, Raven, North Prudhoe Bay State and West Beach).

The Prudhoe Bay unit produced an average of 270,000 barrels of oil per day in 2018, accounting for more than half Alaska’s total oil production. This number includes natural gas liquids from the central gas facility shipped to the trans-Alaska oil pipeline.

During the 12 months of operations under the 2019 plan of development, or POD, for the IPA, BP is doing more of the kind of work that has sustained production in the Prudhoe Bay area long past its originally anticipated lifespan.

Apart from that, the year is anything but routine for the company and its 1, 600 employees.

Sale to Hilcorp

After 60 years in the state, on Aug. 27, 2019, BP announced it had signed an agreement to sell its entire business in Alaska for $5.6 billion to Hilcorp Alaska, an affiliate of Houston-based Hilcorp Energy, the largest private oil and gas producer in the U.S.

The transaction includes BP’s interest in the Prudhoe Bay unit and its related infrastructure and pipelines, its 49% interest in the Trans Alaska Pipeline System, 50% interest in Milne Point, 32% interest in the Point Thomson unit, 50% interest in the Liberty project, 40% interest in Alyeska Pipeline Service Co., 32% interest in the Point Thomson export pipeline, 50% interest in the Milne Point pipeline, 25% interest in the Prince William Sound Oil Spill Response Corp. and its interest in exploration leases in the 1002 area of the Arctic National Wildlife Refuge.

The sale does not include the $7.1 million BP Energy Center in Anchorage, a 13,500 square foot building that nonprofits and education groups can use free of charge. BP funded its construction and operation and will be donating it as a legacy to (as of Sept. 27, 2019) an unnamed entity.

The sale also did not include BP Exploration Alaska’s headquarters in Anchorage. The 15-floor, 324,000 square foot, Class A office building belongs to Oak Street Real Estate Capital based in Chicago.

The sale to Hilcorp is scheduled to close in 2020.

Well work planned for 2019

Production in 2019 from the core Prudhoe IPA “will largely be driven through continuing improvements in operating efficiency, optimizing base production and wellwork,” BP said.

Rotary penetrations are expected to be about equal to 2018, between five and seven.

Coil penetrations will see an increase, from 10 in 2018 to 15-23 in 2019, and rig workovers are expected to increase from two in 2018 to from two to eight in 2019.

BP said wellwork activity “remained at a high level in 2018 with 360 rate adding jobs done and about 900 total jobs performed.”

“The coil and rotary rigs were brought back in service in December (2018),” BP said, with future drilling opportunities to “be identified by ongoing surveillance and utilizing the new seismic being acquired and processed in 2019-2020.”

Flow station 2 was a focus, with eight wells drilled.

Obsolescence management

BP’s 2019 controls management program addresses aging control systems “by installing vendor supported systems,” improving life cycle cost and minimizing the impact on production during implementation.

BP said FS3 EMC was replaced by Control Logix in 2018, while Emerson Technologies was identified as a strategic supplier.

“The 2019 plan includes developing technology solutions and an implementation plan for remaining facilities,” BP said.

Pilot testing will continue in 2019 on the operator workbench, a mobile device for field workers to collect and input data without returning to a computer station.

BP is also expanding use of unmanned aircraft for monitoring.

Major gas sales

As the Prudhoe Bay unit operator, BP has executed a confidentiality agreement with the Alaska Gasline Development Corp. to allow disclosure of information for the Alaska LNG project.

“To date, the PBU operator has not received formal requests for information from AGDC, FERC, or any other agency, any other unit operator, or any third party regarding the AGDC-led AKLNG project,” BP said in its annual progress report for the initial participating area of the field covering the 2018 calendar year and its plan of development for work from July 1, 2019, through June 30, 2020. The company also said it anticipates responding to requests as they arise.

On Aug. 28, one day after the sale of BP’s Alaska business to Hilcorp was announced, BP spokeswoman Megan Baldino told Petroleum News in an email that, “the FERC process continues, and BP is honoring its commitment to AGDC and XOM pursuant to the MOU signed in 2019, including payment of up to $10 million.”

Broadband seismic program

BP is setting the stage to comb the Greater Prudhoe Bay area for smaller oil pools to target with advanced drilling techniques over the next decade or so.

The key to the effort is a massive 3D seismic survey the company describes as “high density broadband seismic,” acquired in the first half of 2019. The 455-square-mile seismic shoot covers most of the Greater Prudhoe Bay area.

“That’s the largest that we’ve ever done at Prudhoe Bay and we’re using state-of-the-art technology, so we’ll have the best image that we’ve ever had,” Janet Weiss, president of BP Exploration Alaska said on Jan. 18, 2019.

The new data - when combined with North Prudhoe seismic BP acquired in 2015 - will “provide a single continuous seismic image” across the unit, allowing for more efficient drilling. The company said this technology “enables denser and larger datasets to be acquired when compared to legacy methods.”

As the Prudhoe Bay field matures, the use of modern technology has become critical to extending field life and to maintaining the field’s economic viability, Fabian Wirnkar, BP vice president for reservoir development, said Oct. 5, 2018.

Locating and exploiting the remaining small pockets of oil in the field requires state-of-the-art technology in the form of data acquisition, storage and analysis, and in the form of sophisticated drilling techniques.

Modern seismic surveying, produces crisp images of faults and other subsurface features, enabling the location of features where additional oil may be found. Multilateral wells, drilled out from single wells connecting to the surface, can thread though those remaining pockets of oil. At the same time, the seismic imaging can enable, for example, the precise injection of water into areas where it can be most effectively used.

Put River formation recovery

In addition to infield exploration for untapped pockets of oil using 3D seismic, BP has been looking to tap known but difficult to produce reserves in Prudhoe’s IPA, by creating production techniques based on data analysis and advanced technology.

In 2018, the Alaska Oil and Gas Conservation Commission approved commingled downhole production for wells completed in both the Prudhoe oil pool and the Put River oil pool which overlies the main reservoir. The ruling allowed production of some 6.9 million barrels of oil in place in the IPA’s Put River formation, which would otherwise be stranded.

Put River consists of three lobes - Central, Southern and Western - with a fourth lobe, the Northern, in hydraulic communication with the Prudhoe oil pool. The Southern lobe of Put River has had production since 1999 with an active waterflood.

The Central lobe contains an estimated 1.1 million to 2.7 million barrels of oil in place and the Western lobe about 69.6 billion to 104.4 billion cubic feet in place with a condensate yield of approximately 40 barrels per million cubic feet, and a condensate in place value of between 2.8 million and 4.2 million barrels of oil.

AOGCC said several wells penetrating the Prudhoe and Put River oil pools are candidates for downhole commingling, which “should allow for increased flowrates and flow velocity in the tubing and reduce the potential for the hydrate deposition that is problematic in production from wells completed solely in the (Put River pool). Since standalone production of the Central and Western lobes is not viable due to hydrate deposition those reserves are essentially trapped. Commingling … will allow these resources to be recovered.”

Another 40 years

Keeping the Prudhoe Bay unit operating for another 40 years will be critical to future generations of Alaskans, Janet Weiss, president of BP Alaska, told the Resource Development Council’s annual conference on Nov. 14, 2018. New technologies will improve operational efficiency and produce more oil out of the field’s reservoir rocks, Weiss said.

Sustaining Prudhoe Bay through the next four decades will take the type of grit and innovation that has enabled the stemming of production decline over the past three years, she said.

In 2018, BP reduced operational costs at Prudhoe Bay by 6%, thus adding years to the expected life of the field, she said.

Weiss introduced BP specialists to elaborate on the company’s activities.

Unmanned aircraft

Randy Sulte, BP program execution manager, said unmanned aircraft can carry out inspection operations more efficiently and safely. For example, following flooding and subsequent road damage on the North Slope last spring, it was possible to use a drone to obtain high quality images for appraising the situation. Previously it would have been necessary to do an overflight in an aircraft, an operation that would not have been immediately possible because of low clouds.

Unmanned aircraft can eliminate personnel safety risks in operations such as inspecting flares. BP is also testing the use of unmanned aircraft to monitor for methane leaks.

Virtual reality remote access

Holly Willman, BP Prudhoe Bay East Area operations support team leader, demonstrated technology in which a 3D virtual reality headset is used to remotely move around in facilities on the North Slope. This technology enables a facilities engineer to make measurement of pipework in a facility without having to leave BP’s Anchorage office.

New computer applications

Dakota Chastain and Bridger Vance, commercial analysts in BP’s finance department, said new computer applications allow people to interact with financial data in new ways, providing rapid insights into what is happening from a commercial perspective. The commercial team is developing mobile apps that can simplify and speed up people’s access to the data. The idea is to save money, and to be able to work faster and smarter to extend the life of the Prudhoe Bay assets, they said.

BP is deploying a new computer system, the Apex system, to improve operational efficiencies in global oil field operations. In Alaska the system helps the company streamline fluids routing around the Prudhoe Bay field infrastructure, Amy Adkinson, BP systems optimization engineer told Petroleum News.

Maximizing field production requires planning and use of production and injection wells, to best access oil remaining in the field reservoir, and the optimum use of water injection, gas injection and enhanced oil recovery techniques to maintain reservoir pressures.

The routing of fluids

There is an additional aspect of operational efficiency involving the routing of fluids from the wells through the complex of pipework and production facilities that enable oil to be separated and transported to the trans-Alaska pipeline for export from the North Slope, while also recycling produced water and gas back through the field.

The pipelines and facilities have operating limitations but work at optimum efficiency if fully used. At the same time, if some component of the infrastructure is maxed out, that may delay bringing wells online, which impacts the potential to maximize field production.

Prudhoe Bay is particularly complex, with hundreds of wells, multiple gathering centers and flow stations, and a field pipeline network that can enable choices over how to route fluids through various facilities for maximum efficiency. In addition, as the field matures, it produces much more gas and water than oil, making management of fluids particularly important. The idea is to route fluids in a manner that supports the appropriate mix of well and facility usage, keeping the best wells in operation, Adkinson explained.

Faster processing

Although BP has modeling systems for managing the fluid flow, these systems are slow to use. The new Apex system, which is being tuned to the complexities of the Prudhoe Bay field, is much faster. Essentially, engineers can simulate different operational scenarios, evaluate the results and decide on an optimum course of action.

“Apex can unlock that efficiency, so that we can ask a question of our system, model it and have an answer in a matter of a day, versus a week,” Adkinson said.

Field operators can move from static modeling of the fluid flows, to more dynamic modeling, assessing how the fluid flows will evolve over time.

The system models fluid flows from the interfaces between wells and the reservoir through to first stage fluid separation. The system is hooked into the production models for individual wells, enabling well production to be simulated, feeding fluid production data into the surface infrastructure simulation. Currently the focus is on gas flows to the central gas processing facility, and how to deal with produced water.

“We’ve got a team of engineers that are working on (the system) … trying to find all of the useful ways we can use it … to leverage what we already have,” Adkinson said.

For example, if there is a plan to bring on new production in one part of the field, it is possible to use the system to simulate the impact of this on field operations as a whole. Due to facility and pipeline constraints the new production might force production to be backed out somewhere else in the field.

Rapid evaluations

Once Apex is fully operational, a reservoir engineer will be able to quickly evaluate the impact of planned well work on surface systems, more accurately assessing the impact on overall production at the field.

The system can also evaluate the impact on production of reconfiguring surface infrastructure.

Apex represents the next step in optimizing Prudhoe Bay operations, using technology to find things that are not intuitively evident, and to test the impact of changes before putting them into effect, Adkinson said.



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S U B S C R I B E




BP leaving loss to community

BP’s plan to pull out of Alaska could leave a big hole for nonprofits and other programs that benefited from the oil giant’s donations and its employee volunteers.

Its footprint has extended beyond the North Slope, its philanthropy including support for student scholarship and teacher honors, summer engineering programs, community cleanups and other initiatives. Employees were encouraged to volunteer and serve on boards.

The BP Energy Center offered free day-time meeting space to nonprofits and community groups, said Tamera Lienhart, director of community affairs for BP Alaska.

Cassandra Stalzer, a vice president with United Way of Anchorage, said Alaska — with its small population — has a “pretty thin philanthropic layer,” with few foundations of size that broadly support “the general good” or social service projects, and not a lot of wealthy people who have taken leading philanthropic roles.

“So, BP has been, for many years, one of the most significant players in philanthropy as a whole for the state,” she said.

Since 1998, Stalzer said BP and its employees have provided $22 million to her organization for community programs.

Often nonprofits are seen as “nice-to-have extras,” but they provide important services, such as housing and mental health programs, she said.

“This could be a quality of life moment for us where we need to figure out what it is that we really value and stand for,” she said. United Way continues to press ahead and hopes people take this as an opportunity to get involved, she said.

Laurie Wolf, president and CEO of The Foraker Group, which helps build up nonprofits, said BP’s long history and breadth of giving has been notable.

BP reported donating more than $3 million to Alaska community organizations in 2017, with its employees supporting hundreds of education and community groups and youth teams. Baldino said the 2018 figure was $4 million.

Lisa Parady, executive director of the Alaska Association of Secondary School Principals, said BP for years has been generous in providing student scholarships through a partnership with her organization.

BP has supported programs “that have a significant impact on the lives of our students,” she said.

—The Associated Press contributed to this article.