Far From Tapped Out

Hilcorp

Hilcorp Energy is developing its Moose Pad prospect in the Milne Point field. This marks the first new pad at Milne Point since 2002 and will be home to fifty wells, according to a presentation given to the Resource Development Council by David Wilkins, senior vice president of Hilcorp Alaska. Facility construction was 86 percent complete in late 2018 and the pad was set for first production in January of this year. The company expects peak production of 16,000 bopd of viscous oil by 2021. The Milne Point field is owned by Hilcorp and BP in a 50/50 partnership and operated by Hilcorp. Hilcorp is using polymer flooding to help push more thick oil out of the ground, resulting in higher yields. In total, Moose Pad represents a $400 million investment that will result in recovery of 60 million barrels of oil, according to the company. Hilcorp expects Milne Point to be producing 35,000 bopd by the end of this year.

Oil Search

Oil Search, a relatively new player in Alaska, is developing the Pikka Unit in the Nanushuk formation. The company says Nanushuk will be a major area of development on the North Slope starting with Pikka, which it expects to produce approximately 620 million barrels of oil. The Pikka Unit is being purchased from Armstrong Energy in two increments; half was bought for $400 million in 2018 and the remaining $450 million is set to be paid before June. Oil Search is targeting first oil from the Pikka Unit in 2023 from two drill sites: Pikka B and Pikka C. The company, which commenced its first drilling operation in December 2018, said in an April release the winter drilling season “met or exceeded expectations for planning, safety, drilling, subsurface data gathering, and overall performance” with confirmation of well deliverability. It went on to say in Pikka C—which was spud in February—flow rates were impacted by well clean-up and mechanical issues, but “sufficient data was acquired from the well to support its pre-drill expectations.” Pikka B was spud in January.

Overall, Oil Search (operating in state as Oil Search Alaska) says it expects development will meet or exceed its project forecast. The company continues to advance its plans through permitting and cooperation discussions with other North Slope operators.

“The results of the drilling are in… Alaska represents an excellent start to 2019, which promises to be an exciting year,” says Peter Botten, managing director at Oil Search.

BP

BP Alaska spent part of the winter season conducting a 3D seismic survey of about 400 square miles of Prudhoe Bay to identify any small pockets of oil that may have been overlooked and could help extend the life of the oilfield for “another forty years.” The company conducted the survey during about a four-month period ending in mid-April using machinery that creates sonic energy waves that echo off rocks thousands of feet below the ground’s surface, returning to data receivers that differentiate the types of sound waves based on the type of rock they bounce off of.

Pantheon

Pantheon Resources, another Alaska oil and gas newcomer, in April announced it completed flow testing operations at the Alkaid well, acquired from Great Bear Petroleum in January of this year. Alkaid was drilled as a vertical test well in 2015 but was not flow-tested due to massive flooding in the region and was subsequently suspended. Pantheon resumed field operations after acquiring the assets from Great Bear Petroleum with the objective of gaining an “understanding of the geological and geophysical properties of the play and to assess the potential commerciality of the three targeted zones.” Pantheon saw successful flow test results at its primary target, the Brookian Formation in the Alkaid well, which confirmed the well as an oil discovery; however, flow testing operations at the shallower West Sak and Ugnu secondary targets found brackish water, resulting in Pantheon downgrading the probability of success in both secondary targets.

Future development wells at Alkaid will be horizontal, stimulated, and perforated over larger intervals which Pantheon says will deliver significantly larger production rates than April’s flow rate of 80 to 1,000 bopd of light oil. The company applied to the state to suspend and freeze the wellbore for use as a future development well and producer.

“Despite [the] news on the secondary targets, Alkaid has been a great success for Pantheon, exceeding our expectations in the primary target, and upgrading the adjoining Phecda prospect which appears analogous on seismic… Our decision to apply to the State to suspend and freeze protect Alkaid now was impacted significantly by the ‘brackish water’ produced in the West Sak and also by the recent exceptionally warm weather on the North Slope. It is imperative to preserve the Alkaid discovery well for future production. The Alkaid success provides ongoing confidence on future drilling operations where the high tech geophysics applied to Alkaid can be replicated across the entire portfolio and deliver material success, as has been the case with other operators chasing this similar play in adjoining leases,” said Jay Cheatham, CEO of Pantheon in an April press release.

It appears that forecasters were right on the money when they predicted the North Slope would see more activity this year than in the past decade as companies from around the world look to Alaska’s oil reserves with renewed interest. North Slope production is expected to average 511,500 bopd in FY2019 and 529,000 barrels per day in FY2020, according to the Resource Development Council. Whether these projections are right on the nose or even close to accurate, there’s no doubt that the North Slope is far from tapped out.