If ConocoPhillips does not finish its 2019-20 exploration drilling this coming winter, then the North Slope will have one lone explorer - 88 Energy subsidiary Accumulate Energy Alaska.
Accumulate is planning to drill two Nanushuk prospects that 88 Energy just acquired in an off‐market takeover of XCD Energy, as reported in Petroleum News’ July 13 news bulletin. The Harrier and Merlin prospects are in the 195,000-acre Peregrine block in the National Petroleum Reserve-Alaska.
On Jan. 21, XCD managing director Dougal Ferguson told PN that ConocoPhillips’ Willow oil discovery is considered a direct analogy to Merlin while ConocoPhillips’ Harpoon prospect “is interpreted to lie on the same sequence boundaries as the Harrier prospect,” between the Umiat oil field to the south and Willow and Harpoon to the north.” (See January 2020 XCD map in pdf and print versions of this story.)
No ice roads
In a July 13 interview, Erik Opstad, general manager operations for Accumulate, said the Harrier 1 and Merlin 1 exploration wells will be drilled into the shallow Nanushuk reservoir using a lightweight workover rig that can be transported off-road in pieces by tundra-safe track vehicles, versus a heavier rotary rig which would require an ice road.
The company will use existing gravel roads and snow trails to conduct the entire exploration program.
The Nanushuk formation requires drilling to only about 5,000 feet to fully test, whereas a third prospect in the Peregrine block, Harrier Deep, has a Torok objective at about 10,000 feet. It will not be drilled this coming winter.
XCD has said the three onshore prospects hold a mean unrisked recoverable prospective resource of 1.6 billion barrels of oil, per an independent report generated by ERC Equipoise. (Harrier Deep estimated at 572 million barrels.)
“We’re starting the process for an oil spill plan for the federal acreage,” Opstad said. Although the state has primacy with that type of permitting, the feds have some involvement.
“The only hurdle,” he said is that the federal process can be daunting, and “timing is very important to this project.”
Just a bit of paperwork left
The takeover bid by 88 Energy for all the fully paid ordinary shares and listed options in XCD “is basically closed now,” David Wall, managing director of 88 Energy, told PN July 13. There is “just a bit of paperwork” left to finish now that more than 90% of the shareholders and option holders have agreed to the deal.
88 Energy’s offer values the equity of XCD at approximately $8.9 million and delivers a premium to XCD shareholders and option holders, who will retain approximately a 20% ownership and participation in the future performance of the combined Perth-based companies, who are both focused on Alaska North Slope exploration.
ConocoPhillips an unknown
ConocoPhillips’ decision to resume drilling on the North Slope is dependent on how soon oil prices recover and on Alaska’s investment climate, company executive Scott Jepsen said May 8. And by investment climate, “I mean on whether or not the oil tax initiative passes,” he said, noting the initiative calls for “a significant tax increase” which “will put a brake on future investment.”
According to the Alaska Oil and Gas Association, if the tax initiative on the Nov. 3 ballot passes into law it will increase the state’s oil tax by 150-300%, depending on the price of oil.
