As a response to low oil prices, Caelus Natural Resources Alaska LLC wants to suspend development drilling and workover activities at the Oooguruk unit for the coming year.
The local subsidiary of Texas-based Caelus Energy LLC is planning no wells, sidetracks or workover operations at the North Slope unit through August 2017, according to a recent plan of development filed with the state Division of Oil and Gas in early June.
Although Caelus is being cautious at the moment, the company seemed to maintain longer-term confidence in the Oooguruk development, saying it would resume its previous drilling program “when oil prices recover and investor confidence resumes.”
In addition to the suspension of drilling, Caelus also reduced its workforce in Alaska by 25 percent this year, in an attempt to reduce costs during the current economic climate.
Caelus also postponed the first phase of its proposed Nuna development, although the company plans to continue facility design, geologic and geophysical analyses and long lead procurement over the coming year, in preparation for construction in early 2018 and start up “in 2018 or later.” The company had initially forecast starting up Nuna by late 2017.
Recent activityOver each of the three previous plan-of-development cycles, Caelus and its predecessor Pioneer Natural Resources drilled five new development wells at the Oooguruk unit.
While never as large a development as the Prudhoe Bay, Kuparuk River or Colville River units, the Oooguruk unit has been a consistent site of development drilling activities since production began eight summers ago. Between September 2015 and this summer, Caelus drilled three new horizontal wells and sidetracked an existing well at the unit, fracture stimulated five existing wells and performed workover operations on another three wells.
All three wells and the sidetrack were drilled into the Oooguruk Nuiqsut participating area. The wells were injectors (ODSN-06i, ODSN-07i and ODSN-10i) to support existing producers, although an extended pre-production period was planned for ODSN-06i and ODSN-10i to assess reservoir performance in specific corners of the participating area. The sidetrack (ODSN-01A) was drilled after a workover failed to repair casing at the original well. All four wells were hydraulically fracture stimulated in the past year.
Toward the end of 2015, Caelus requested a third expansion of the Oooguruk Nuiqsut participating area, which also proposed additional development drilling. The company initially met with state officials from the Division of Oil and Gas in February 2016 to discuss the plan and met with officials again in April to review the plan again after announcing plans to suspend drilling operations at Oooguruk until oil prices increase.
The proposed expansion has yet to be released for public comment.