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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: Oil Search’s Pikka project evolving, improving

First oil in mid-2022 via Kuparuk, working to bump early output to 50,000 bpd; Horseshoe next project?

Kay Cashman

Petroleum News

Oil Search announced its entry into Alaska on Nov. 1, 2017, when it cut a deal with Armstrong Energy and a minority partner to buy a working interest in leases in and near the Pikka unit and Horseshoe block west of the central North Slope. Taking over as operator from Armstrong, the Australia company’s Alaska arm, headed by Keiran Wulff, was at the front of the North Slope exploration and development renaissance, which stemmed from Armstrong and Repsol’s discovery of a huge Nanushuk oil reservoir.

Since that time Oil Search has increased its working interest in the leases, bought out Armstrong and continued to pick up other North Slope acreage, including a block with Armstrong as a 50-50 partner on the eastern North Slope.

A flurry of new stakeholder documents and a filing with the state of Alaska toward the end of September 2019 paint a picture of continuous evolution in Oil Search’s first North Slope development in the Pikka unit.

Pikka will consist of three drill sites, a processing facility, an operations pad, a tie-in pad, infield pipelines, export and import pipelines, an access road, infield roads, a boat ramp and a potable water system.

Pikka changes

The most recent major project change in late September is that Pikka will start production early, in mid-2022, with 30,000 barrels of oil per day processed at ConocoPhillips’s nearby Kuparuk River unit.

Once Oil Search’s processing facility “is operational in 2023 or 2024,” the early production phase will end and the Nanushuk export pipeline will transition from carrying sales quality oil to Kuparuk central processing facility 2 and instead begin transporting it to the Nanushuk facility, which will have a capacity of handling 120,000 barrels of oil per day.

Note, the Pikka unit development is referred to as the Nanushuk development or project in state and federal paperwork, even though it will initially target oil deposits in both the Nanushuk and Alpine C reservoirs - two of six stacked plays in the unit that might eventually be tapped. This explains the pad names, which begin with ND, as well as the names of other project components, such as the Nanushuk processing facility, or NPF.

Data released during in late September 2019 during an Oil Search investor tour of its Anchorage office and the North Slope reveal that the company’s Alaska team through a value engineering process is looking to increase early production to 50,000 bpd, as well as increase the nameplate size of the Pikka project to 135,000 bpd. (The process of value engineering involves brainstorming ways to reduce initial or lifecycle costs while still maximizing function and maintaining safety and environmental standards. When the information was released the team had evaluated 86 different ideas.)

Primary modifications

Sept. 26, 2019, modifications to the Pikka plan of development filed with the Alaska Department of Natural Resources’ Division of Oil and Gas say early production will come from the ND-B pad.

“Multi-phase fluids from ND-B will be transported for processing at Kuparuk CPF2 via the 24-inch multiphase pipeline to the NPF, and the 18-inch Nanushuk export pipeline from the NPF to Kuparuk CPF2.”

The changes requested in the filing are “based on local community input” and “enhance engineering operational efficiency,” Oil Search says.

Other project alterations proposed by the company involve the following:

1. Modify the ND-B pad layout.

2. Relocate the tie-in pad and modify its layout.

3. Modify the water source access road and pump house pad.

4. Update road and pad footprint and fill volumes by about 0.2 acre and a net increase in total fill volume of approximately 5,000 cubic yards.

5. Relocate the boat ramp and associated boat ramp access road.

6. Implement early production.

ND-B pad alterations

Regarding the ND-B pad modifications, Oil Search wants to change its size and layout to accommodate the newly designed grind and inject facility, which will reduce the gravel footprint on the west and south sides of the pad and increase it on the east side.

The modified pad will be 20.8 acres, an increase of 1.3 acres from the previously proposed 19.5-acre pad.

Oil Search originally planned to construct underground injection control, or UIC, wells at each drill site within the well row. These wells were only capable of handling waste generated from the respective well pad. In October 2018 Oil Search reduced the overall number and location of UIC wells and relocated them to ND-B. In order to maintain disposal well sustainability with the reduced number of UIC wells, the company designed the grind and inject facility at ND-B to handle all drilling and operational wastes, including waste deliveries from ND-A and ND-C; hence the changes to ND-B.

The increased gravel footprint on the east side of ND-B will allow the grind and inject facility to be moved away from drilling and production operations to separate traffic having to do with processing and fracturing equipment, pipelines, and drill rigs “as recommended by detailed facility siting reviews and advanced engineering,” all of which will reduce overall drill site congestion and enhance safety, Oil Search says.

Tie-in pad, boat ramp changes

The tie-in pad relocation from near the Kuparuk River unit 2C pad to northeast of the Kuparuk central processing facility 2, or CPF2, is based on a request from ConocoPhillips, Oil Search says.

The new location will reduce the project pipeline length by 1 mile, including re-routing the pipeline “north of Lake K213/M8103 and eliminating two pipeline-road crossings.”

The tie-in pad size will increase from 0.8 to 0.9 acre to accommodate access to existing powerlines, a telecom tower, and space for additional equipment during project development and production.

Oil Search’s proposal to move the boat ramp and its access road from the permitted location on the Kachemach River, west of ND-B, to north of ND-B on the Colville River was requested by the Nuiqsut community, who will be using both to launch and retrieve boats. The new location will give subsistence users direct access to the east channel of the Colville.

Water source, pump house

Oil Search also proposes to change the permitted pump house pad location and realign the water source access road.

The modification will result in an overall increase in footprint from 2.2 acres (1.1- acre pad and 1.1-acre road) to 2.5 acres (1.1-acre pad and 1.4-acre road), an increase of approximately 0.3 acre, the company says.

The new pad location, approximately 500 feet west of the original site, will “improve access to a deeper portion of Lake MC7903 and provide more consistent access to unfrozen water during the winter,” Oil Search says.

The location and configuration of the water source access road intersection with the access road will also change, the first increasing from 24 to 32 feet surface width, which will allow the company “to maintain consistency with all roads and pipeline/road crossings on the project.”

Oil Search says it will also “allow for construction and maintenance equipment to gain access to the north side of the pipeline; and allow straight-line removal and replacement of pumps year-round.”

Finally, the pipelines near the pump house pad will be realigned to cross the water source access road south of the pump house pad, which will change the pipeline length but won’t alter the overall estimate of total vertical support members, the company says.

Horseshoe next?

With more oil potential in the Nanushuk formation to the north and south of the Pikka development, Oil Search sees Pikka as the first of a series of potential developments in a fairway between the Colville River and Kuparuk River units, Richard D’Ardenne, Oil Search senior vice president of development, said Jan. 18, 2019.

The Nanushuk reservoir for Pikka actually extends more than 60 miles north to south. And, while the company has not explored the more northerly end of that trend, there is promising acreage to the south, in the area of the successful Horseshoe exploration wells, he said.

The idea was to repeat that success many times in the fairway over the next 10 years, with more projects coming down behind Pikka, D’Ardenne said.

The investor tour slides from late September 2019 identified two exploration prospects Oil Search will be drilling this winter, Mitquq and Stirrup, to test Nanushuk analogues (see story with map in the Sept. 29, 2019, edition of Petroleum News).

The Stirrup prospect is adjacent to the Horseshoe Block and “could de-risk additional fairways to underpin a possible standalone” Horseshoe development, the company says, noting Stirrup is a direct analogue to the Horseshoe 1 Nanushuk discovery drilled by Armstrong in 2015.



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S U B S C R I B E




Wulff promoted, leaving Alaska

After serving as Oil Search’s managing director for 25 years, Peter Botten is retiring and Keiran Wulff, president of Oil Search Alaska, is taking his place.

In an interview with Petroleum News in late September 2019, Wulff said Bruce Dingeman, currently chief operating officer of the Alaska business unit, will take over his role as president, and Matt Elmer, senior vice president of production and operations, will assume the role of acting COO.

Wulff estimates that after the transition to his new position is complete, he will be spending about 20% of his time in Alaska.

What do the changes mean for the state?

“Alaska has a champion at the very top of the company,” was Wulff’s response, noting the leadership change has been internally progressing for about two years.

To ensure a smooth transition of responsibilities Wulff was appointed chief executive officer designate on Sept. 30, 2019. He will retain his Alaska responsibilities until mid-December to help oversee the company’s entry into front-end engineering and design for the North Slope Pikka development, while also engaging with stakeholders and being involved in budget and planning for 2020 and beyond.

“The transition is a very measured … well thought out … process. Nothing has been rushed,” he said.

“We have three fantastic projects we have to develop, including Alaska, and the beauty of it is we have the time to do so in an economically sound and environmentally sensitive manner,” Wulff said.

He will move from Anchorage to Sydney in mid-December, assuming his role as managing director and joining the Oil Search board on Feb. 25, 2000.

Alaska team, ConocoPhillips rapport

Wulff, a geologist with a Ph.D., spoke highly of the Alaska leadership team, mentioning individuals by name and offering background on most of them.

For example, when talking about Oil Search Alaska’s vice president of exploration and new ventures and former geoscientist with the state, Wulff said “there is no doubt Joe Chmielowski is very knowledgeable and has a deep understanding of the geology of the North Slope, but Joe is also genuinely a good person … a great leader … someone who empowers his staff.”

Currently the Oil Search Alaska group numbers 151 — 36 contractors and 115 employees.

The Alaska leadership team, which has several people with extensive North Slope experience, Wulff said, includes Dingeman, Elmer, Senior Vice President External Affairs Joe Balash, Executive Advisor Cindy Bailey, Vice President Commercial and Strategy Patrick Flood, Vice President Exploration and New Ventures Josef (Joe) Chmielowski, Vice President People and Culture Wanda Lewis, Vice President Finance and Project Services Jonathan Boyce, Senior Vice President Projects Bill Writt, Vice President Supply Chain and Ops Support Lea Souliotis, Senior Vice President Drilling and Completions Steve Robinson, Senior Vice President HSES James Robinson, Senior Vice President Subsurface Mark Ireland and IT and Data Management Manager Stephanie Kreibich.

When asked whether his experience as a Phillips Petroleum employee in the early years of his career had anything to do with his success in building a good relationship with North Slope neighbor ConocoPhillips, Wulff said no.

“Our playmates elsewhere are the majors, so I think it’s more a matter of we were taken seriously” by the bigger company, he said, making the relationship easier to establish.

—KAY CASHMAN