YEAR IN REVIEW: New production by ConocoPhillips highlights ‘15
ConocoPhilliips had a busy 2015 on the North Slope, completing two new oil projects and planning two others, despite the plunge in crude oil prices.
Late in the year the company’s CD-5 project, near the Alpine field on the western Slope, was completed and began production. Earlier in the fall ConocoPhillips completed its Drill Site 2-S in the Kuparuk River field, and it is also now producing.
Other projects are in development or are now planned. One being constructed now is an expansion of the West Sak viscous oil project in the Kuparuk field, a project labeled North East West Sak, or NEWS.
ConocoPhillips has produced viscous, sometimes called heavy, oil from the West Sak deposit for years, but technical and cost problems have plagued plans to expand the project.
On NEWS, the company’s latest plan, new technologies are being employed that will solve some of the earlier problems.
A second new project now underway is the $900 million Greater Moose’s Tooth 1 project in the National Petroleum Reserve-Alaska. ConocoPhillips announced this Nov. 18 at the annual Resource Development Council conference in Anchorage, lifting spirits among oil contractors and suppliers in the audience.
GMT-1 is a few miles west of CD-5, a drillsite also within NPR-A but near the Colville River boundary with state lands. GMT-1 is expected to peak at 30,000 barrels per day and is to be in production in 2018. Anadarko Petroleum is a minority partner in the project, as it is with CD-5.
Mineral rights at GMT-1 are owned jointly by Arctic Slope Regional Corp. and the U.S. Bureau of Land Management, the Interior Department agency that manages the NRA-A. ConocoPhillips and Anadarko are now working on GMT-2, a drill site a few miles furthern into NPR-A.
2. Caelus advances Nuna project
Caelus Energy, the Dallas-based independent that now owns and operates the producing offshore Oooguruk field, continued in 2015 with its planning and development of Nuna, a new onshore oil production pad near Oooguruk.
A large gravel production pad and access road were constructed for Nuna in early 2015 and engineering work on production facilities continued through the year.
Caelus is obligated to have Nuna on production in late 2017 as a condition of an agreement for a temporary reduction of state royalty. The company now plans to construct facilities in the winter of 2016-17 and believes it can meet the deadline for production.
Nuna is expected to cost about $1.2 billion to construct and will produce 20,000 to 25,000 barrels per day when operations begin.
Caelus also plans additional development work at the Oooguruk field including the treatment of producing wells with large-volume fracturing, a technique aimed at stimulating production in tight rock by injecting fluids and sand at high pressures.
Use of large-volume fracturing was very successful on Oooguruk wells last winter, the company has said.
In another development for Caelus in 2015 plans were made and equipment was moved, for a strategic offshore exploration well in Smith Bay, northwest of the Colville River delta. The well will be drilled on state-owned submerged lands north of the National Petroleum Reserve-Alaska.
The Doyon Drilling “Arctic Fox” rig and other equipment for drilling was moved in the fall to an onshore staging point in NPR-A. As soon as the weather is cold enough construction of an ice island will begin at the well site, which is in shallow water. Two wells are planned to test the prospect.
3. Point Thomson nears production
ExxonMobil Corp. continued construction in 2015 on its Point Thomson natural gas condensate project 60 miles east of Prudhoe Bay. The project, with costs at or exceeding $4 billion, is near completion and will begin production of liquid condensates in early 2016.
The construction project has been the biggest for the North Slope over the last two years, stimulating employment and business for contractors and suppliers, many of them Alaska based.
Although it will initially be a liquids production project, Point Thomson is really intended to produce gas for the large Alaska LNG Project, which is now in the planning and preliminary engineering phase.
Production facilities at Point Thomson will initially produce gas with liquid condensates stripped out of the gas, which will then be injected back underground into the producing reservoir.
The gas would be “recycled” through the reservoir, being produced and injected repeatedly. As the injected gas, now “lean” after removal of liquids, moves through the underground reservoir rock from injection wells to producing wells, the gas soaks up more liquids, which are stripped off as the gas is produced again. The process will be repeated over and over again.
The condensates, at a 10,000 barrels-per-day production rate, will be shipped by pipeline to Prudhoe Bay and Pump Station 1 of the Trans Alaska Pipeline System, where they will be blended with the crude oil being shipped through TAPS.
If the Alaska LNG Project is built the production facilities at Point Thompson will be converted to conventional gas production, although facility additions will be needed.
Alternatively, if the project does not proceed, the production of liquid condenates can be expanded, possibly to about 30,000 barrels per day.
Another option is to convert Point Thomson to gas production and ship the gas to Prudhoe Bay where it can be used to repressure the Prudhoe field and produce more oil.
4. Hilcorp files plan for Liberty offshore
Hilcorp Energy filed a development plan for Liberty in late 2015. Liberty is an offshore oil deposit in shallow Beaufort Sea waters northwest of Prudhoe Bay that has long been planned for development by BP but had been shelved for various reasons.
If it is developed, Liberty would require construction of an artificial gravel island and a subsea pipeline to shore.
Liberty’s oil reserves are estimated at 80 million to 150 million barrels. If developed, the field could produce about 60,000 barrels per day, Hilcorp said in its application.
Offshore artificial island construction is a long-established practice for the Beaufort Sea “nearshore,” where waters are very shallow. Three fields are now producing from offshore gravel islands, the Oooguruk field owned by Caelus Energy, the Nikaitchchuk field owned by Eni Oil and Gas, and Northstar, developed by BP and now owned by Hilcorp.
Hilcorp purchased a 50 percent interest in Liberty and became the operator of the project when the Texas-based independent acquired four older North Slope fields, including Northstar, from BP in late 2014.
Because Liberty is in federally-owned waters five miles offshore, and beyond the state’s three-mile territorial limit, the development plan was filed with the U.S. Bureau of Ocean Energy Management, or BOEM, an agency of the U.S. Interior Department.
If it is developed Liberty would be a virtual twin to North Star, an offshore field developed by BP in 2001 and that is now in production. Northstar is northwest of Liberty and roughly north of the Prudhoe Bay field, and six miles offshore.
BP considered developing Liberty with a gravel production island some years ago but backed away from the plan after reviewing the company’s experience at Northstar, where there were cost increases and complex issues with regulatory agencies.
The company then considered tapping into Liberty’s underground oil reservoir with long-distance, high-angle production wells drilled from shore. Some of the wells would have reached as far as eight miles drilled laterally, and would have been the longest such wells in the world.
But this plan was scrapped too. When Hilcorp took over the gravel island plan was resurrected.
Although the distances from shore are similar one key difference between Liberty and Northstar is that Liberty is within the belt of barrier islands offshore the North Slope, which will protect the island from the moving Arctic icepack.
Northstar, in contrast, faces the open sea and is not protected by barrier islands, so that the island must contend with ice forces causes by the moving pack in winter and summer storms.
BP built Northstar strong enough to endure those forces and there have been no problems. Liberty, however, is in a much more benign ice environment, being surrounded in winter by “shore-fast” ice that does not move, in contrast to the polar pack farther offshore.
5. Furie completes first new Inlet platform in 30 years
Furie Operating Alaska became the first company to install a new offshore Cook Inlet production platform since the 1980s.
Furie began producing gas late in the fall from its Kitchen Lights No. 3 gas well to the production platform and to pipelines to the east side of Cook Inlet. Homer Electric Association, the Kenai Peninsula’s electric utility, is now purchasing gas from Furie.
Other production wells will be drilled as its markets expand, Furie says.
Development of the Kitchen Lights gas prospect has been a long process for Furie, a Texas-based independent that was formerly Escopta Oil and Gas.
Escopeta, under its former president, Danny Davis, identified the gas prospect at Kitchen Lights and worked over several years to bring a jack-up rig to Cook Inlet to drill exploration wells.