Petroleum

Petroleum

West Sak costs now cut 45%

Alaska producers are cracking the code in tapping a huge resource of thick “viscous” oil on the North Slope. The latest project, North East West Sak, or NEWS, is now producing above projections and was brought in 45 percent below estimated costs, said officials with ConocoPhillips, which is operating NEWS. The company has three wells producing about 10,000 barrels per day. A fourth well will be operating in mid-September. NEWS was originally estimated to produce 8,000 barrels per day at peak. ConocoPhillips is now planning a new phase of West Sak called Eastern NEWS that will have a new drillsite. It is expected to be producing in 2023.

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Higher GMT-2 production estimate

ConocoPhillips has also upped its production estimate for GMT-2, a National Petroleum Reserve-Alaska project expected to be producing in 2021. The new estimate, in the company’s plan submitted to the U.S. Bureau of Land Management, is 38,000 barrels per day. That’s up from 30,000 barrels per day. The revision is due to the expected application of new horizontal drilling technology that will allow producing wells to exploit larger areas of underground reservoir.

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Eni Oil and Gas acquired 124 state oil and gas North Slope leases on 350,000 acres southeast of Prudhoe Bay from Caelus Energy. Reports are that Caelus will use the funds to do further tests at the company’s promising Smith Bay discovery off the northern shore of the NPR-A.

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Oil Search ups resource estimate

Oil Search, the Australian company planning development of the new Pikka discovery on the North Slope, has upped its estimate of potential resources as well as resources in adjacent acreage the company holds. Company officials told financial analysts Aug. 21 that the Pikka deposit, estimated previously to hold 500 million barrels, could contain an additional 200 million barrels. In addition, an acreage block called “Horseshoe” 20 miles to the south could contain an added 250 million barrels, the company said. The new estimates are based on new seismic work. Oil Search and Repsol, based in Madrid, are partners in Pikka and Horseshoe.

The company’s assessment generally matches the estimates announced by Repsol last year that Pikka and Horseshoe contain about 1.2 billion barrels of recoverable oil. Oil Search will meanwhile drill two appraisal wells this winter to confirm data on the Pikka project and will drill in 2020 at Horseshoe.

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 New report touts slope potential

A new report from a major energy consulting firm, IHS Markit, is touting the North Slope as a potential re-emerging “super basin,” based on new onshore discoveries and pending lease sales in the Arctic National Wildlife Refuge. The report is confidential to clients. The report is sure to stir more interest in the slope, which should be reflected in bidding in the upcoming state and federal North Slope areawide lease sales planned for November, 2018.

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 BOEM: Final EIS for Liberty oil

The U.S. Bureau of Ocean Energy Management approved the Final Environmental Impact Statement for the Liberty project in the Beaufort Sea. If the project is built it would add 60,000 to 80,000 barrels per day of new oil moving through the Trans Alaska Pipeline System. Oil royalties and taxes, however, would go to the federal government, which owns the subsurface mineral rights. Hilcorp Energy and BP are the major owners of Liberty, with 50 percent and 40 percent ownership respectively, which is in shallow water five miles north of the coast. The remaining 10 percent is owned by Arctic Slope Regional Corp. If the project proceeds it will expand ASRC’s stake in North Slope oil development, which is already substantial.

Liberty is an offshore oil deposit that has been known for years and previously planned for development with a gravel artificial island, then by drilling long “extended-reach” production wells from shore, both plans ultimately dropped. Now the artificial island idea is back. The companies would build a nine-acre gravel island to support a production facility. An undersea pipeline would be built to shore, to connect with existing oil field pipelines. The final approval for the Environmental Impact Statement by the U.S. Bureau of Offshore Energy Management sets the stage for a Record of Decision by the U.S. Department of the Interior and the granting of federal permits for the project. After that Hilcorp, BP and ASRC must make the final decision to build the field.

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