Pioneer sees large potential resource near Oooguruk field

Pioneer Natural Resources is using large multi-staged hydraulic fracturing in horizontal wells to open up a potentially large new oil resource on the North Slope.

“We’re excited about this. It is something that hasn’t been done before on the North Slope,” on a large scale, Pioneer Alaska President Todd Abbott said.

In one development, the Dallas-based major independent has successfully tested the procedure — used in the Lower 48 oil shale plays but not previously on the Slope at this scale — in two wells drilled last year. The wells were drilled in a lower-quality reservoir in Pioneer’s Oooguruk development, Abbott told the Journal.

Oooguruk is in shallow offshore waters northwest of the large Prudhoe Bay and Kuparuk fields.

Pioneer is doing the largest hydraulic fracturing procedures yet on North Slope wells, although fracturing at a smaller scale has long been done on the Slope and in Cook Inlet.

In a second, separate test Pioneer drilled from onshore into the Torok, a formation with potentially large resources.

Multi-stage hydraulic fracturing, which can target specific reservoir sections with precision over extended lengths of a horizontal well, is used by Pioneer and other companies in Lower 48 shale oil plays.

Halliburton, the oil services company, has moved specialized equipment to support large-scale fracturing to the North Slope including Oooguruk. Shlumberger, another well services company, also provides support for Pioneer’s fracturing projects on the Slope.

The results at Oooguruk were good enough that Pioneer has revamped the way it will proceed with field development, Abbott said. Oooguruk started production in 2008 from an artificial gravel production island about four miles offshore. It is connected by pipeline to nearby onshore Kuparuk River crude oil processing facilities and pipelines.

Oooguruk’s initial development has been with wells drilled into the Kuparuk C formation, where conventional wells performed as expected, and the Nuiqsut, where results were less encouraging. Using the technique, Pioneer hopes to double Ooogurk’s production, which is now about 6,000 barrels per day.

“These are shalely, low-deliverability reservoirs and they respond very well to this kind of hydraulic fracturing process,” Abbott said.

Last year Pioneer drilled its N-1 development well in the Oooguruk field to test large-scale fracturing in the Nuiqsut formation where the company has had only modest success with conventional wells. The fracturing was done over an approximate 6,000-foot horizontal section of the well.

“It was highly successful, producing 4,000 barrels per day initially,” Abbott said, and has performed well since then. This has encouraged Pioneer to drill three more Nuiqsut reservoir wells and one more Torok well from the island this winter, the last well to be finished soon, he said.

Once this drilling is completed, equipment will be moved to the site to do multi-stage fracturing on all four wells, Abbott said. Pioneer can do fracturing only in winter at Oooguruk because there needs to be stable ice to support equipment and trucks needed around the six-acre offshore gravel production island, he said.

Pioneer also used multi-stage hydraulic fracturing to test the Torok formation from an onshore location last year. The Torok is a large, shallow geologic formation that extends west and southwest from Oooguruk that is generally lower in quality.

Pioneer drilled the Nuna No. 1 appraisal well into the Torok with hydraulic fracturing with initial production of 2,000 b/d that was constrained at the time, said Casey Sullivan, Pioneer’s public affairs manager.

A second appraisal test, Nuna No. 2, is being drilled this winter to further test the resource. Pioneer is also doing additional production tests of Nuna No. 1, Sullivan said.

Pioneer is encouraged by the Nuna projects results and hopes move forward with development of an onshore new drill site next fall, and to begin construction next winter, Abbott said.

If the project proceeds it would cost $800 million to $1 billion for the pads, production facilities and a pipeline to tie into nearby pipelines.

Pioneer has told the state Department of Natural Resources that Nuna has the potential of producing 14,000 b/d to 15,000 b/d.

There is more potential in this formation to the west, Pioneer believes, and potentially another drill site.

“The Torok is a big resource. There is a lot of it,” Abbott said.

Independent industry analysts are enthused about Pioneer’s current work.

“Clearly the ability to employ fracturing at this scale could be a game-changer for any reservoir containing oil and with rock that is tight,” said Dudley Platt, industry liaison with the North Slope Borough and a petroleum engineer.

As a medium-sized company Pioneer is also able to make decisions faster on the employment of new technology, and that is good for Alaska, Platt said.

“The Torok could be an important resource. It appears to extend far to the west, even into the National Petroleum Reserve-Alaska,” he said.

State geologists are more cautious in their assessment, however. Paul Decker, a state petroleum geologist, said the Torok does appear to be extensive across the west central North Slope. However, its geology is complex with small compartments of potential oil-bearing sandstone spread across wide areas that are not connected.

Decker agreed large-scale hydraulic fracturing may be a good tool to exploit the resource.

Despite the potential, Pioneer is also keeping an eye on potential changes to the state’s oil and gas tax that may be done by the Legislature in Juneau this year.

Gov. Sean Parnell is proposing a revamp of the tax to give the companies an opportunity for more long-term profit on investments, but also to end a capital-investment tax credit that helps companies recoup capital at the early stage of a development.

The governor hopes the increased long-term gain will be enough to induce more industry investment on the North Slope, which is needed.

Pioneer is still studying the effects of the propose changes on its plans for Oooguruk and the potential Torok development, Abbott said.

Tim Bradner can be reached at [email protected].

01/30/2013 - 11:19am