Umiat results promising but more work needed

Photo/Courtesy/Linc Energy

Linc Energy has achieved one important thing at its Umiat oil development project: the company got oil locked in shallow permafrost to flow through a horizontal production test well.

What Linc has to do now is get the rate of production up. In tests conducted this spring, the test well flowed at a sustained average rate of 250 barrels per day and peak rates of 800 barrels per day in four separate flow-tests.

The company believes it can increase those rates to about 2,000 barrels per day by applying a “gas drive” boost to the production, and hopes to eventually produce 50,000 barrels per day overall at Umiat.

However, the company is now looking for a partner to help make that happen, Linc Energy spokesman Paul Ludwig said in an interview. Overall, the company is pleased with the results so far, although more geologic modeling is needed and possibly more test drilling.

However, just getting the shallow oil to flow from the permafrost is considered a technical feat. This is the first time crude oil has been produced in significant quantities at Umiat since 1952, Linc’s CEO said in a statement.

“The success of flowing oil at Umiat is a great milestone for Linc Energy and its team,” company CEO Peter Bond said. “We have now proved that the oil flows easily from the Umiat reservoir with very good permeability (the microscopic pathways for the oil to flow through the rock) and that the drilling process of using horizontal wells. With this success and the knowledge gained from last year’s drilling, we now have a clear path for the commercial development of the Umiat oil field,” Bond said.

What helped is that the oil is very light, 38.5 API gravity, and contains no water.

There are other examples of technically-challenged North Slope oil, such as the West Sak viscous oil, that initially flowed at rates as low as 250 barrels per day but where the production rates were boosted, over time, with research and the application of new technology.

Just drilling a horizontal production well through permafrost presented other challenges for Linc. A prototype drilling fluid was used that was designed to not damage the reservoir. Using conventional drill fluid might have warmed the permafrost, causing damage.

The logistics problems were also substantial. Linc had to build a 99-mile snow road in both winter seasons to move the drill rig and other equipment and supplies to the site. The rig, owned and operated by Kuupik Drilling, was left at Umiat between the two winter seasons but has now been taken back to the Prudhoe Bay area.

Umiat is a long-known oil discovery that was made in the late 1940s as the U.S. Navy and U.S. Geological Survey carried out early exploration of the then-Naval Petroleum Reserve No. 4 (now the National Petroleum Reserve–Alaska).

The Navy’s discovery was not large enough to merit development and there was then no pipeline from the North Slope. However, that oil was discovered and its high quality — it could be used to fuel diesel engines right out of the wells —caught the attention of many in industry, spurring further interest, exploration and eventually the large Prudhoe Bay discovery farther north.

Some in the industry have expressed caution about Linc’s results last winter, however.

“The company should have gotten higher rates out of a horizontal section of well-bore drilled a thousand feet through the reservoir,” said one consulting petroleum engineer familiar with the North Slope, asking not to be identified.

He agreed that production stimulation could help, however. There is gas in the vicinity of Umiat that could be tapped to aid oil production.

The horizontal well section drilled last winter was 2,000 feet in length but only half of this, 984 feet, was drilled through productive reservoir in the Lower Grandstand Formation, according to a statement issued by Linc. The oil was produced from reservoir section only 950 feet below surface, which is within the permafrost layer under Umiat.

As for a source of natural gas that could be tapped to boost oil production, a gas discovery was made decades ago in early North Slope exploration at Gubik, 10 miles east of Umiat, and was confirmed in a recent exploration well drilled by Anadarko Petroleum Corp., which holds leases at Gubik.

There has been no recent activity by Anadarko and the company has not released information on possible resources.

Umiat’s known oil reserves are estimated at 154.5 million barrels based on estimates of proven and probable resources, and when possible resources are added the estimate is increased to 194 million barrels. These are within a total resource of approximately one billion barrels of oil-in-place in the reservoir, Linc has said in statements.

If the deposit is developed, a pipeline would be built to a connection with the Trans-Alaska Pipeline System, along with a permanent gravel road. Several routes for the road and pipeline are still under study, Linc has said, including a route for the pipeline and road directly east that would connect with TAPS and the Dalton Highway.

An alternative that is being studied is a road and pipeline route to the north that would connect with existing field pipeline and road infrastructure in the Kuparuk River field area.

11/21/2016 - 3:32pm