Winter exploration includes discovery, disappointment for Pioneer

Pioneer Natural Resources Co. has made a modest oil discovery in an exploration well drilled this winter but results of another well are still uncertain and a third well was a disappointment, according to the company.

Pioneer CEO Scott Sheffield announced the drilling results during an analysis of Pioneer’s first quarter results given to investment groups.

The Nuna No. 1 well drilled into the Torok geological formation that is part of the Ooogurk Unit flowed at 2,000 barrels per day. The company estimates that the find will add 50 million barrels of recoverable reserves estimates at Torok.

A second well drilled into the Nuiqsut formation, one of the formations in the Oooguruk field now producing, flowed at 4,000 barrels per day but tapered off during a production test, Pioneer spokesman Casey Sullivan said in an interview following Sheffield’s remarks.

A third well, Sikumi, was at an offshore location but found water instead of oil, Sullivan said. Sikumi was drilled into the deeper Ivishak formation, which is the main producing formation in the large Prudhoe Bay field southeast of Oooguruk.

The Oooguruk field is now producing about 5,820 barrels per day.

Sheffield said Pioneer used a new technique, “mechanically diverted fracture stimulation,” in the exploration wells. Sullivan said the technique enhanced the effectiveness of fracturing the tight reservoir rocks being tested, and the results of the trials were positive.

Pioneer is still reviewing the results of the Nuna well and may drill a second well to appraise the discovery, Sullivan said. That decision may come soon because of the time needed to contract for support services as well as permits for drilling next winter, he said.

No decisions have been made as to how the discovery might be developed.

“The next step may be the appraisal well but to get fund this we must compete with other Pioneer projects,” Sullivan said, which is a challenge given the high state production tax.

Pioneer is very active in drilling in Lower 48 shale oil projects in states where taxes are lower than Alaska and where the geologic and permitting risks are fewer.

The Torok is now estimated to have about 650 million barrels of oil in place, or oil physically in the reservoir rock, of which about 15 percent to 20 percent might be commercially produced.

Much of the formation lies under leases held by Pioneer but part of it extends into adjacent leases, according to sources familiar with the prospect. The 50-million barrel addition resulting from the Nuna will be to the commercially produced estimate from Pioneer’s leases on Torok, however.

The quality of the oil in the three known Oooguruk formations including Torok varies but average about 24 degrees API, according to data presented by Pioneer to government agencies.

Tim Bradner can be reached at tim.bradner@alaskajournal.com.