Statoil Names Chukchi Sites

Statoil has identified two promising locations for drilling on its Chukchi Sea leases.  The locations are based upon the results of last year’s seismic surveys.

Statoil reported on the survey results at the Arctic Open Water Meeting in Anchorage last week, stating that they are in the beginning stages of planning for an exploration season.

The two prospects in its leases have been named  Amundsen, after the Norwegian explorer, and Augustine, after the Alaska volcano. The prospects are about 150 miles west of Barrow, and about 100 miles offshore from the village of Wainwright.

Along with its own leases, Statoil has partnered with ConocoPhillips and Eni in their leases in the Chukchi.

New Norwegian Field

From Scandinavian Oil & Gas magazine (here):

Norwegian politicians have penned a compromise decision on drilling in northern waters and have agreed to delay oilfield activity near the pristine fishing villages of the Lofoten Archipelago while starting the process of opening offshore acreage bordering Russia.
The Lofoten area is said to possibly contain as much oil and gas as the oil-rich country of 4.7 million residents has produced during its 40-year petro “fairy tale”. The Barents Sea zone near Russia was amicably spit between the two northern nations a year ago and is believed equally reserves-rich.

Buccaneer Preps for Kenai Gas Well

Australian-Based Buccaneer Energy has started site-clearing operations in Kenai in preparation for drilling the Kenai Loop-1 well.  The well will be be a step-out from the adjacent Kenai Cannery Loop field and is scheduled to be spudded early next month.
Buccaneer holds a 100% working interest in the 7,734 acre Kenai Loop project, which lies between the Kanai Cannery Loop and Beaver Creek fields.  The project is estimated to hold likely reserves of 52 billion cubic feet of natural gas.  Initial flow rates are expected to be 5-10 million cubic feet/day if the well is successful.

Repsol and Armstrong in Joint Venture

The Spanish oil company Repsol, which joined forces with Statoil on several Chukchi Sea leases, recently announced a North Slope joint venture with Armstrong Oil & Gas and GMT Exploration.  Repsol will have a 70% stake in the exploration joint venture, which involves blocks covering about 770 square miles located near existing producing acreage.

Under the terms of the joint venture, Repsol commits to a minimum investment of $768 million to explore and evaluate the commercial viability of the potential resources.  Exploration work is expected to start next winter.

Cook Inlet Lease Sale Cancelled

The US Interior Department has canceled leasing offshore tracts in Alaska’s Cook Inlet that was tentatively scheduled for later this year.  Lease sale 219 was called off because of lack of sufficient interest by energy companies to search for oil or natural gas in the area, according to the department.

Cook Inlet sale 219 was scheduled to occur under the government’s revised 5-year offshore drilling plan for the 2007-2012 period, Reuters reported.

The last oil and gas lease sale in federal waters of the Cook Inlet was held in 2004, and no qualifying bids were received. There are currently no active federal leases in the Cook Inlet, the oldest producing oil and gas basin in Alaska.

The only federal leases that were the subject of recent development activity were those in Pioneer Natural Resources’ Cosmopolitan field, near the city of Homer.  That field consists of oil reserves that were discovered in the 1960s, and has been drilled in recent years from shore. But Pioneer in January announced that it was abandoning Cosmopolitan.

Shale Oil in Alaska?

A press release from Alaska state senator Joe Paskavan.

Press Release
For Immediate Release: March 1^st, 2011
Unconventional Development Could Save Alaska’s Pipeline
Unconventional Resources could reverse Alaska’s production decline and increase oil in TAPS

JUNEAU-This week, Senator Joe Paskvan, D-Fairbanks, took to the Senator Floor to encourage fellow lawmakers to start thinking about unconventional development of resources as a way to turn-around the state’s falling oil production.

Advances in Oil Well Technology – Lateral Wells

Advances in drilling technology, such as lateral wells, have reduced the footprint of the oil industry and increased the recovery of oil.

Prudhoe Bay Well Layout

Here’s a typical well pad layout from the 1970s and 1980s.  This is a section of Prudhoe Bay.  The red areas are the well pads and the black lines represent the horizontal component of the well bores.  Kind of looks like a quartet of shotgun blasts.  The technology of the day did not allow long sidetracks, so field development took place in a radial pattern.  The efficiency of oil recovery from the field is limited by how many pads can be checkerboarded on the surface.

 

Alpine Well Field Layout

Here’s a similar map of the Alpine field.  Alpine was discovered in 1994, and was the first North Slope field to developed exclusively with all horizontal wells, both producers and injectors.  Notice that one smaller pad covers the same area of the field that took four larger pads at Prudhoe Bay.  The use of laterals means that oil-bearing formations can be more efficiently drilled and produced with a smaller number of wells.

The use of multi-lateral technology has also  improved the economics and oil recovery of the West Sak and Schrader Bluff formations.  The technology is a cost-effective method to develop remaining oil or oil located in isolated but closely stacked sandstones separated by layers of shale, so more complicated stratigraphic plays can be developed.

Alaska North Slope & OCS Resource Estimates

Some numbers from the presentation that Kevin Banks gave to the Alaska legislature last Friday.

North Slope & Arctic OCS “Reserves” Estimates
Developed or Delineated Reserves
	Oil Remaining (MMBO)	Gas Remaining (BCF)
Barrow		34
Colville River	420	400
Duck River	102	843
Kuparuk River	990	600
Milne Point	210
Northstar	64	450
Prudhoe Bay	2,450	24,500
Oooguruk	73
Nikaitchuq	187
Liberty	114
Point Thomson	417	8,000
NPRA	140
Total North Slope	5,166	34,827
Discovered Undeveloped Resource Estimates
	Oil – Recoverable Resource (MMBO)	Gas – Recoverable Resource (BCF)
Umiat	70 –300(?)
Gubik		600(?)
Sivulliq (aka Hammerhead)	100 –200
North Tarn	27 –72
Kuvlum	160 –300
Sandpiper	12
FEX NPRA	300 –400(?)
Total Alaska/Beaufort	1,299 –1,984	600

Other undeveloped resources include Ugnu (Kuparuk / Milne Point area), with maybe 20 billion barrels of heavy oil, and the Chukchi Sea. Ugnu is heavy oil, so the technically recoverable portion is probably more like 2 billion barrels.
Chukchi is estimated to have somewhere between 31 million and 1.7 billion barrels of condensate and 8 to 27 TCF of natural gas in-place at Shell’s Burger prospect, plus whatever ConocoPhillips, Statoil, and Respol think they have.

Alaska North Slope Crude Weekly Update

Here’s the latest graphs from the Alaska Department of Revenue for North Slope crude price and production.

The department projected a FY 2011 ANS West Coast annual price of $77.96 per barrel in their Fall 2010 price forecast update. The graphic below shows actual ANS prices and forecasted prices for FY 2011. As shown, fiscal year-end ANS price is $80.94 per barrel. This is $2.98 per barrel (or 3.8%) above the Fall 2010 projection.

FY2011 Alaska North Slope Crude Oil Price

The Fall 2010 forecast for FY 2011 Alaska North Slope production is 0.616 million barrels per day.

Year-end production, based on actual data and Fall 2010 projections for FY 2011, is 0.598 million barrels/day. This is approximately 18,000 barrels per day (or 2.9%) below the state’s Fall 2010 projection.

FY 2011 Alaska North Slope Crude Oil Production

Eni fires up Nikaitchuq

Location of the Nikaitchuq Lease Area

From the Eni press release:

San Donato Milanese (Milan), 09 February 2011 – Eni began oil production at the Nikaitchuq field, located offshore the North Slope of Alaska at an average water depth of 3 meters.
The field, which is Eni’s first operated Arctic project, is 100% owned and operated by Eni with recoverable reserves estimated at 220 million barrels of oil. Nikaitchuq is expected to produce for over 30 years with peak production of 28,000 barrels of oil per day.
Nikaitchuq’s full development will be through 52 wells (26 oil producers, 21 water injectors, 5 water source/disposal wells) of which 22 onshore and 30 offshore, with the latter drilled from an artificial island. The processing facility has been completed and 12 onshore wells have already been drilled with the remaining wells to be drilled by 2014.
The Nikaitchuq wells, which benefit from the application of several of Eni’s proprietary technologies, are leading-edge since they combine a vertical depth of 4,000 ft with a horizontal reach of up to 20,000 ft.
The offshore facilities are connected to the onshore facilities by a under sea bed pipeline bundle, which is the heaviest bundle ever installed in the Arctic.
The two process and utilities modules of 4,000 tons each built in Louisiana. The remaining facilities comprise 22 modules all built in Alaska.
The facilities have been designed and built using technology aimed at minimizing the impact on the environment: zero flaring, pipe-in-pipe technology for hydrocarbon transportation, spill containment devices in all modules and low emission turbine generators.
The processing plant is capable of treating 40,000 barrels per day of heavy crude with sand and up to 120,000 barrel per day of water. These facilities will allow Eni to ship sales-quality crude oil through the Trans-Alaska oil pipeline, with no need for further processing.
In the USA, Eni owns lease interests in 376 blocks in the Gulf of Mexico and in 450 leases (15,000 acres) in the Barnett gas shales onshore Texas. In addition, Eni owns interests in 151 leases in Alaska in the North Slope, which include 30% of the Oooguruk oil field, in production since 2008. The total daily net production is in excess of 100,000 barrels of oil equivalent (60% operated).