Bridge issue resolved, CD-5 project in the plan for ConocoPhillips, Anadarko

With uncertainties over state tax changes this year, several larger North Slope projects are in doubt. But one that appears to be firmly on the books for is development of the CD-5 drill site at the Alpine oil field.

The project has gained national attention because of a long delay in securing federal permits for a bridge across the Colville River needed to reach the site.

Having finally secured that permit, ConocoPhillips Alaska, the project operator, plans to ask for “sanction,” or formal approval, in 2012 and to be in construction in 2014 and 2015, with production expected in late 2015. Construction will involve drillsite facilities, gravel roads, pipelines and power systems.

The company’s board and its minority partner, Anadarko Petroleum Corp., must approve the plan, but “at this point we are planning to move ahead with CD-5,” ConocoPhillips’ vice president for external affairs Scott Jepsen told a state legislative committee in Juneau Feb. 15.

The official cost estimate for the project is $600 million, but that has not been revised in some time, Jepsen told the Senate Resources Committee.

“When it is updated we would expect it to be more,” he said

CD-5 is within the National Petroleum Reserve-Alaska and will provide the first commercial oil production from the reserve since it was created in 1923 by President Warren Harding. The project is expected to produce from 10,000 barrels per day to 18,000 barrels per day of new oil.

When it is built, CD-5 will be the new western anchor of the Alpine field, which is in the Colville River delta west of the large Prudhoe Bay and Kuparuk River fields. The bridge, road and other facilities also will provide infrastructure that will aid in the development of several oil and gas discoveries made farther west in NPR-A by ConocoPhillips and Anadarko.

Alpine is on state-owned leases, although Arctic Slope Regional Corp. receives a share of royalty income and the surface lands are owned by Kuukpik Corp., owned by the nearby Inupiaq village of Nuisut.

Alpine now has four drill sites, an oil and gas processing plant and 172 wells. Drilling in the field continues, and the wells are long, extended-reach horizontal production wells, which extend 8,000 to 10,000 feet laterally through the producing reservoir. The wells are expensive to drill, requiring an investment of about $14 million to $15 million per well, Jepsen said.

Alpine currently produces about 77,000 barrels per day, from five separate reservoirs in the field area, and has produced about 413 million barrels of oil since its production began in 2000.

When it was discovered Alpine was the largest U.S. onshore discovery since the 1970s, when the next largest North Slope field, Kuparuk, was found.

03/01/2012 - 7:53am