View of stacked drill pipe and rigging on the Nabors
drill rig 16E, working at the Hunter prospect this winter.
Photo by Patricia Jones
North Slope Exploration on Decline for 2002
The oil industry is
investing more than a billion dollars on capital expenditures this year, but
only a fraction of that is for North Slope exploration.
By Patricia Jones
Although
exploration spending by oil companies working on Alaska’s North Slope makes up
only a fraction of this year’s billion dollar capital expenditures, such
prospecting work is closely monitored by the industry.
Positive news about exploratory drilling, such as work conducted this spring by
Phillips Alaska Inc. and Anadarko Petroleum on the western portion of the North
Slope, gives hope to contractors and the various oilfield support businesses
that new developments may be coming in the near future.
And
right now, any good news would be welcome. Several contractors say the level of
development work on the Slope has dramatically slowed this year, compared to
past work seasons. Without a headliner oil field project to start next year, the
future work season on the Slope looks to be just as slow, if not even more so.
“If
you look at revenue, we’re at 30 percent to 35 percent of the volume of work we
had last year,” said Pat Egger, North Slope division manager for Houston
Contracting Co. “All indications in my crystal ball tell me that there will be
further reductions in activity.”
His
company landed four pipeline construction jobs for the winter work season,
employing a peak of about 370 workers, Egger said. That’s down from last year’s
employment peak of about 600.
Other North Slope contractors are also reporting reductions in development work.
With Northstar complete and a possible expansion at Alpine still in the planning
stages, Alaska’s two major oil field operators are focused more on satellite
field development, infrastructure upgrades and viscous or heavy oil processing.
Those projects make up the bulk of spending on the North Slope this year, more
than $550 million by Phillips, $100 million by Anadarko Petroleum and about $500
million by BP Exploration (Alaska) Inc.
Exploration Work
Included in that billion-dollar spending in 2002 is $50 million Phillips is
spending for North Slope exploration this season. That will cover eight to 10
drill wells and the cost of crews gathering seismic data, said spokeswoman Dawn
Patience.
“Generally speaking, we’re targeting oil on the North Slope,” she said, adding
that some of the exploratory wells drilled last year hit both oil and natural
gas accumulations.
Phillips’ work in the National Petroleum Reserve-Alaska, located west of the
Colville River, has been carefully scrutinized by those in the oilfield support
industry. The area seems to hold the most promise for future development.
“NPR-A will
probably have some future development out there, depending on the economic and
permitting climate,” said Egger.
So
far, the limited amount of publicly released information about exploration work
in NPR-A has been positive. About a year ago, Phillips and Anadarko announced
that five of six exploratory wells drilled in the reserve in early 2001 hit oil
or gas and condensates.
In
a stimulated test, in which the underground formation is fractured using
pressurized liquids, the Spark 1A produced a flow of 1,550 barrels per day of
liquid hydrocarbons and 25.5 million cubic feet of gas per day.
Patience said crews ran out of time last season to stimulate the second well,
Rendevous A. Even so, that well flowed at 360 barrels per day of liquid
hydrocarbons and 6.6 million cubic feet of gas per day.
Back then, Kevin Meyers, president of Phillips Alaska, said that the company was
“confident the discoveries will prove to be of commercial quantities. We believe
that the five successful wells have encountered three separate hydrocarbon
accumulations.”
Encouraged by last year’s results, Phillips and Anadarko have returned to NPR-A
in 2002, punching additional drill holes to further test the size of an
accumulation located last year, and to look for more underground deposits.
Drilling this winter at two more sites located in the same general area as last
year’s successful probes, wells called Lookout 2 and Mitre 1, helped Phillips
and Anadarko determine more about those accumulations.
In
addition, Anadarko is drilling its own well this season, on NPR-A leases in
which the company owns a 100 percent stake. In the past, as well as during this
exploratory season, the Houston-based company worked as a partner with Phillips.
“Our goal is to be an explorer in Alaska,” said Mark Hanley, Anadarko’s public
affairs manager in Alaska. “When we partnered with Arco Alaska and then
Phillips, we get experience, so we did not just come up and try drilling a
well.”
Anadarko’s well, called Altamura, is south of Moose’s Tooth, one of the five
successful wells drilled last year.
“Obviously our geologists saw some potential in that region, as we bid on that
acreage,” Hanley said.
Oil
and gas prospectors looking for information about NPR-A have been aided by
increasing knowledge about the nearby Alpine oil field, he added.
“Alpine was the first major discovery in that area, and folks began to see
things differently,” he said. “And with new technology of interpretative
seismic, we’re learning more about the structures of the area, and at Alpine.”
The
successful wells drilled in NPR-A are Jurassic in age, according to Phillips’
geologist on site, Greg Wilson.
“Phillips and Anadarko have used their knowledge from the Alpine field, coupled
with 3-D seismic (technology), to discover several new accumulations in
Alpine-like rocks,” he said.
The
underground accumulation is believed to be older than Kuparuk, but a little
younger in formation than Prudhoe Bay, he added.
Unlike Phillips and Anadarko, BP Exploration chose not to return to NPR-A this
year. Publicly, the company has said that more evaluation of the two Trailblazer
wells drilled last year is necessary before additional exploration wells are
drilled in NPR-A.
Stepping Out at
Hunter
In
addition to drilling the cluster of wells located in the eastern portion of
NPR-A, Phillips and Anadarko decided to step out further west in the Petroleum
Reserve.
Hunter, located about a dozen miles further west than last year’s exploratory
drilling sites, is one of those wildcat drill holes. Although Phillips allowed
media to tour the site and the Nabors rig 16E working at Hunter this spring, no
information was released about what drillers are finding downhole.
Rather, the focus at that remote drill site was on the logistics of operating
within a roughly three-month timeframe that such exploratory work is allowed on
the frozen tundra.
The
Nabors rig was broken down from its 120-foot tall, 24,000-square-foot footprint
into pieces small enough to fit onto a C-130 Hercules aircraft. That’s called
the Herc mode, explained Clyde Treybig, quality and marketing manager for Nabors
Alaska Drilling.
Each of those pieces, 8 ½ feet wide, 8 ½ feet tall and up to 50 feet long, must
weigh under 50,000 pounds, he said. “With those weight regulations and in those
dimensional pieces, we had 100 loads for the drill rig,” he said. “And with all
the associated equipment that goes with the rig, we had another 50 loads.”
But
rather than airlift the equipment to Hunter, Phillips opted for using a new
transportation device, a rubber-tired vehicle called a rolligon. With fat,
low-pressure tires, the vehicles have minimal impact on the tundra and do not
require transportation along seasonally constructed ice roads.
State regulators authorized tundra travel using the rolligons in late January,
and it was Feb. 23 before all the pieces were delivered and crews began
reassembling the drill rig, according to Bobby Morrison, Phillips’ company man
on site. “We spud 11 to 12 days later,” he added.
Anadarko also used rolligons to transport another Nabors drill rig, 14E, out to
Altamura. Because the specialized vehicles eliminate the construction of ice
roads, the transportation process is speeded up, allowing drillers more time at
the remote sites before equipment must be torn down and moved off the tundra in
the spring.
“It’s a pretty tight window to get those rigs out and back,” Treybig said.
“Planning and preparation is everything. And you always have to work with the
weather.”
The
rolligon transportation method could become the norm for exploration projects
located far from existing North Slope infrastructure, Wilson said. Alpine is the
closest gathering point for oil and gas transportation, located about 40 miles
to the east. And there are no all-season roads linking Alpine to existing
infrastructure at Kuparuk, still further east.
North Slope Development Projects
A little more than
a year into production, Alpine is the “good news” story of the North Slope.
Estimated to contain about 430 million barrels of oil, the field has been
producing well above early estimates of 80,000 barrels per day.
Late last year, the field topped out just over 100,000 barrels per day, and in
recent months, it has been running about 97,000 barrels, said Brian Richards, a
manager for Phillips at the field.
“We’re limited by how much water we can inject,” he said. “For each barrel we
take out, we reinject back in water.”
The
water source is seawater piped in from Kuparuk. Part of a planned plant
expansion would increase that water capacity by 30 percent to 40 percent, which
would increase production, Richards said. “We would have to do a lot of work in
the facility for us to get that 30 percent to 40 percent,” he said. “That would
not be done before mid-2004.”
Phillips and partner Anadarko have already allocated $47 million this year for
the initial phase of the capacity expansion project, including preliminary
engineering work. Final board approval is necessary for the full expansion
project, according to Patience.
Phillips also is spending $29 million this year on the Meltwater deposit,
considered a satellite of the Kuparuk field. Meltwater is believed to contain 50
million barrels of recoverable oil.
Another satellite field of Kuparuk is Palm, which has an estimated 35 million
barrels of recoverable oil. Phillips authorized $31 million for that field,
which includes building about 7 ½ miles of pipeline from Palm to Kuparuk.
Houston Contracting won the bid for that pipeline construction job, which
involves building three lines, Houston’s Egger said. Two of the pipelines are
eight-inch diameter pipe, and the third is a 16-inch diameter line.
Houston also is building another pipeline for Phillips in the Kuparuk River
Unit, Egger said. A little more than five miles in length, Houston crews are
building a 12-inch diameter pipe to connect an infield drill site to existing
infrastructure.
Phillips also is spending $20 million on West Sak, a viscous or heavy oil
deposit. Early estimates indicate about 50 million barrels of recoverable oil at
that Kuparuk satellite, according to Patience.
Finally, Phillips is
spending $17 million for its share of development at Borealis, a Prudhoe Bay
satellite field believed to contain about 90 million barrels of recoverable oil.
BP also is working at developing Borealis. BP’s total spending at Borealis is
$100 million, excluding drilling, according to BP Exploration Spokesman Ronnie
Chappell.
BP’s capital spending on the North Slope this year also focuses on satellite
field development and commercialization of heavy oil deposits. At Milne Point/Shrader
Bluff, Houston Contracting crews are building about five miles of pipeline to
connect the deposit to existing infrastructure. The job consists of two
pipelines, Egger said, one an oil sales line and the other a gas injection line.
“All the projects this year are rather small,” he added.
In
all, BP plans to spend $175 million on the viscous oil deposit, the first major
development of heavy oil on the North Slope, according to Chappell.
Another capital project being completed this year involves construction of a
32-inch pipeline that will allow operators to inject high-pressure water into
the gas cap at Prudhoe Bay. Once completed, an additional 200 million barrels of
oil should be pumped out of the deposit, according to Chappell.
BP
Exploration also has hired HC Price to construct a pipeline in the Eileen West
field, which will expand miscible, gas-enhanced oil recovery to two additional
drill pads. This year’s spending on that project is $20 million, Chappell said.
BP
also will spend about $26 million on reserve pit clean outs and other
remediation projects. Great Northwest of Fairbanks won the bid to complete the
closeouts for exploration reserve pits, and Peak Oilfield Service Co. will
complete the production reserve pits.
Projects planned for later this year include replacing original fire and gas
detection systems with new technology at Gathering Center 1. Work is slated to
begin late in 2002, Chappell said, pending approval of the new technology.
