Repsol finds oil in North Slope test wells

Repsol announced three oil discoveries on the North Slope April 23, two of them encouraging enough for future development, the company said.

All three exploration wells the company drilled this winter found oil, Repsol said in a press release.

Madrid-based Repsol holds a 70 percent stake in North Slope leases acquired from Armstrong Oil and Gas. Of the remaining 30 percent, 22.5 percent is held by 70&48 LLC, a subsidiary of Armstrong, and GMT Exploration Co. owns 7.5 percent.

“Repsol has completed its winter exploration campaign in Alaska with three new good quality hydrocarbon discoveries, boosting the project to develop the company’s reserves in the resource-rich North Slope region,” Repsol said in its press release.

The Qugruk (Q-1) and Qugruk (Q-6) wells produced two hydrocarbon shows, with encouraging results during production tests. In the Qugruk 3 (Q-3) well, hydrocarbons were identified at multiple levels.

“Wells Q-1, Q-3 and Q-6 reached depths of 2,493 meters, 3,214 meters and 2,637 meters respectively,” the press release said.

Repsol cited tax reforms enacted by the Alaska Legislature April 14 as a critical factor in ensuring development of the discoveries.

“This is very good news from our perspective, and on a whole number of fronts,” Department of Natural Resources Commissioner Dan Sullivan said.

“There will be more oil in pipeline if this moves into development, and their press release indicates they are leaning that way.

“It’s important for us to have another big player on the North Slope. The goal is more competition, and to have a company of Repsol’s size, experience and global reach is important. They are also a big LNG player.”

Dudley Platt, an independent petroleum consultant familiar with the area, said Repsol’s announcement is significant because oil was encountered in all three wells the company drilled this winter, which are several miles apart.

The two wells that were most encouraging, Q-1 and Q-6, are in the Colville River delta just north of the producing Alpine field. Both locations are also relatively near Fiord, a satellite of the Alpine field that is producing. The third well, Q-3, is further south and near the Colville River.

Q-6 is at the same location where Repsol encountered a shallow gas blowout in its winter drilling last year, which resulted in that well not being completed in 2012.

The area is believed by state and industry geologists to have substantial potential. Independents Pioneer Natural Resources and Brooks Range Petroleum are developing new discoveries to the east of where Repsol explored, and the owners of the Alpine field to the south, ConocoPhillips and Anadarko Petroleum, are planning further expansions of that field.

“We’ve known that there are substantial resources in the area for many years. The region is informally called ‘the billion-barrel fairway’ of oil-in-place,” based on what is known about the geology and discoveries to the east and south, Platt said.

“Industry has been exploring this area since the early days of the North Slope, by companies like Gulf, Texaco, and Sinclair,” Platt said.

However, it is only in recent years that industry has used new tools, like three-dimensional seismic, to better define targets. That led to the discovery of the Alpine field in the mid-1990s, for example.

Repsol did not identify which geologic formations were penetrated but Platt said the Kuparuk, Nechelik and Nuiqsuit formations are known to exist and be productive in the area.

One advantage for Repsol is that there is an established pipeline network and oil and gas processing facilities with spare capacity at the Alpine field, which is in the vicinity of the discoveries. In addition, the Alpine pipeline, connecting that field to the Kuparuk and Prudhoe Bay pipeline network further east, is a common carrier pipeline.

Repsol credited Alaska’s recent change of its state oil production tax as improving its prospects.

“Recent tax reform passed in Alaska was a significant factor in ensuring the development of this project, where extreme climate conditions and geographic remoteness result in high operating costs,” Repsol said in its April 23 statement.

Tim Bradner can be reached at [email protected].

04/25/2013 - 8:42am