ConocoPhillips plans for busy exploration season

  • ConocoPhillips has plans this winter to explore west of its producing operation at CD-5, seen here, into acreage in the National Petroleum Reserve-Alaska where it has made a significant discovery. The company also plans to drill one exploration well to the east in a highly prospective area of its Colville River Unit. (Photo/Elwood Brehmer/AJOC)

It’s going to be a busy winter for ConocoPhillips.

The company that has led exploration into the National Petroleum Reserve-Alaska west of the existing North Slope oil fields is heading back into the federal lands to drill four more greenfield wells early in 2018, according to spokeswoman Natalie Lowman.

Last January ConocoPhillips announced the Willow discovery in the NPR-A that the company’s Alaska leaders believe contains 300 million barrels of recoverable oil and is capable of producing up to 100,000 barrels per day with the right production and processing facilities.

With another exploration well planned for state acreage recently added to the Colville River Unit just east of the NPR-A, the five wells make for the company’s largest North Slope winter exploration program since 2002, Lowman said.

“There’s three to help us further appraise Willow and Putu and then this other one that we’re calling Stony Hill,” she said further.

The Putu well could be ConocoPhillips’ last chance at developing a prized chunk of state land around the Native village of Nuiqsut just south of the company’s Alpine oil field in the Colville River Unit. It’s on the southern edge of the Pikka Unit, which holds the 1.2 billion barrel-plus Nanushuk oil prospect that operator Armstrong Energy just sold to Australia-based producer Oil Search Ltd.

ConocoPhillips took control of the area surrounding Nuiqsut — the now-defunct Tofkat Unit — in 2016 in a transfer from Brooks Range Petroleum Corp. after Brooks Range was unable to work out an access agreement with Kuukpik Corp., the Native village corporation for Nuiqsut that jointly holds surface rights to the area with the state.

The lease transfer was originally contingent upon the company drilling Putu last winter, as it’s an area Department of Natural Resources officials also see as highly prospective and want developed. However, ConocoPhillips held off on drilling Putu last winter after Nuiqsut residents raised concerns about the possible impacts of drilling the well roughly three miles from the village.

After going back-and-forth with the state in a regulatory fight that lasted several months DNR Commissioner Andy Mack ruled in August that the company could keep the leases for another year as long as it paid the state $7 million in lease bid replacement payments and drilled the well into the Nanushuk geologic formation by May 31, 2018.

The Willow prospect is similarly a Brookian Nanushuk oil play, according to ConocoPhillips. It could start producing as early as 2023 if development plans move ahead smoothly, company officials have said.

The Stony Hill exploration well will be drilled southwest of Nuiqsut and just inside the eastern NPR-A boundary, Lowman said.

To get all the work done the company has contracted for three exploration drilling rigs this winter, she added.

ConocoPhillips, along with bidding partner Anadarko Petroleum, was the winning bidder on nearly 600,000 federal acres in the NPR-A during the December 2016 lease sale.

The large exploration program, which Lowman noted is still subject to final budget approvals, is planned despite an announcement by ConocoPhillips executives during the company’s late October quarterly earnings report that its capital spend will likely end up being $4.5 billion worldwide in 2017, down about 10 percent from initial expectations.

Despite that, company leaders said Nov. 8 that capital expenditures should average $5.5 billion per year for the next three years as long as crude stays above $50 per barrel.

Armstrong Energy also plans to drill an appraisal well and sidetrack in the southwest portion of the Pikka Unit this winter before handing the operating reigns to Oil Search in June 2018. The appraisal wells will be in a portion of Pikka that has not been drilled and is nearby the Putu area.

Armstrong also has an agreement with ConocoPhillips to receive the drilling results from the Putu well, according to documents the company submitted to the state.

Elsewhere in the NPR-A, ConocoPhillips will be continuing work on its Greater Moose’s Tooth-1 and -2 oil developments. The mid-sized oil projects will collectively cost roughly $2 billion to develop and each is expected to produce up to about 30,000 barrels per day.

First oil is should flow in late 2018 from GMT-1 and from GMT-2 late in 2021, according to the company.

Elwood Brehmer can be reached at [email protected].

11/15/2017 - 10:18am