Petroleum

Petroleum

Work on GMT-2 starts this winter

ConocoPhillips approved construction of the GMT-2 project in the National Petroleum Reserve-Alaska after the U.S. Bureau of Land Management approved its Record of Decision for the project. Construction will start this winter. The plan is for a 14-acre drill pad supporting up to 48 wells, an 8.2 mile road and an 8.6 mile pipeline. The road and pipeline connect with GMT-1 and the CD-5 production site further east, and ultimately the Alpine field on state lands near the Colville River.

GMT-2 is scheduled to be in operation in 2021, and will see peak production of 35,000 barrels per day to 40,000 barrels per day.

GMT-1 starts up ahead of schedule

ConocoPhillips started up its new GMT-1 project in the National Petroleum Reserve-Alaska Oct. 5, several days ahead of schedule. Several wells are now drilled but two that are on-line are now producing over 3,000 barrels per day each, according to state Department of Revenue data.

Winter exploration shapes up

Great Bear Petroleum filed an operations plan with the state Division of Oil and Gas for its Winx No. 1 well near the Colville River. The well must be drilled by May, 2019, under an agreement with the state. Three Australian companies, 88 Energy; Otto Energy and Red Emperor, are partners with Great Bear. The prospects being tested are near where Armstrong Oil and Gas drilled and found oil in the Nanushuk formation. Great Bear and its partners will test the Nanushuk on its leases. Oil Search, the new owner of Armstrong’s interests and operator of the Pikka project, plans two wells this winter, one in the southern part of its leaseholds and the second the central part. These are delineation wells aimed at obtaining more reservoir information for development.

BP is planning a $40 million 3-D seismic survey across the Prudhoe Bay field this winter, using advanced techniques to better define faults and remaining oil pockets. The company also plans to resume drilling with two new drill rigs in January after temporarily pausing drilling last summer. Prior to the oil price crash in 2015 BP had five rigs at work in Prudhoe. BP also said it plans to drill two new wells in west Prudhoe “satellites” that produce viscous oil. The drilling is part of a broader effort to gradually expand viscous development.

State submits offer to buy own gas

Alaska Gas Development Corp., or AGDC, submitted the only expression of interest in North Slope state royalty gas in a recent solicitation of interest published by the Department of Natural Resources. The response is just the start of a procedure for the state to take its royalty “in kind,” or in the form of gas, rather than in value, or cash. Since AGDC is a state corporation this is essentially state selling royalty gas to itself but the transaction must still be arms’ length, as if AGDC were a private buyer. Presuming the royalty-in-kind decision is made and AGDC gets control of the gas, the corporation now would have most of the gas needed for the Alaska LNG Project. This follows a recent gas agreement with ExxonMobil and and an earlier agreement with BP. Negotiations continue with ConocoPhillips, the one remaining major gas owner on the slope.

Hilcorp completes Inlet pipe project

Hilcorp Energy completed its $75 million project to convert a cross-Cook Inlet gas pipeline to ship crude oil. This will eliminate the need to move oil by shuttle tanker from west Inlet oil platforms via the Drift River oil terminal to the Marathon Oil refinery at Nikiski, on the east side. It will reduce transport costs from $3 per barrel to $2 per barrel, the company said, extending the economic life of the aging oil platforms.

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