Good news from the Slope: More oil, drilling

  • Oil is now flowing at ConocoPhillips’ new CD-5 North Slope production drillsite on the North Slope, the company announced Oct. 26. Peak production is expected to be about 16,000 barrels per day. It is the second new project by ConocoPhillips to begin production in October, following the beginning of oil flow at Drillsite 2S in the Kuparuk field. Photo and map/Courtesy/ConocoPhillips

There’s some good news from the North Slope.

First, oil is flowing at ConocoPhillips’ new CD-5 North Slope production drillsite on the North Slope, the company said in an announcement Oct. 26. Peak production is expected to be about 16,000 barrels per day. Anadarko Petroleum Corp. is ConocoPhillips’ minority partner, and mineral rights are held by Arctic Slope Regional Corp.

Second, a small independent has “spudded” a new exploration well south of Prudhoe Bay, aiming to test the oil production potential of the large shale formations. The company is 88 Energy and its “Icewine” well, planned to drill to 11,600 feet with a goal of testing the HRZ Zone, one of three large shale formations in the area. 88Energy is the second company testing the North Slope shales, the other being independent Great Bear Petroleum.

Thirdly, the U.S. Bureau of Land Management has approved drilling permits and access rights-of-way to ConocoPhillips and Anafdarko Petroleum Corp., after a lengthy regulatory proceeding. It doesn’t mean the estimated $900 million project will be built soon, but that approvals are in place so that when construction decisions are made, most likely when oil prices improve, the companies can move quickly.

CD-5’s startup follows the Oct. 12 production start of another ConocoPhillips slope project, Kuparuk Drill Site 2-S in the Kuparuk River field. At peak, DS-2S will produce 9,000 barrels per day, ConocoPhillips spokeswoman Amy Jennings Burnett said.

The new drill site is adjacent to the producing Alpine field and is on the west side of the Colville River, the boundary between state-owned lands and federal lands within the National Petroleum Reserve-Alaska. As such, CD-5 represents the first commercial oil production from NPR,-A, a large 23-million-acre federal land unit formed in 1923 for its oil potential.

However, royalties from CD-5 production will go to two Native development corporations in the region, Arctic Slope Regional Corp. of Barrow and Kuupik Corp., of the Inupiat village of Nuiqsut, which is near the Alpine field.

The two corporations received rights to subsurface and surface lands at CD-5 under the Alaska Native Claims Settlement Act, which was passed by Congress in 1971.

In another recent development, the U.S. Bureau of Land Management approved a drilling permit and right-of-way for ConocoPhillips’ proposed Greater Mooses Tooth 1, or GMT-1, oil development project in the NPR-A. GMT-1 is about eight miles west of CD-5, and would be served by road and pipeline connections from the Alpine oil field.

Natalie Lowman, a ConocoPhillips spokeswoman, said BLM’s approvals for GMT-1 were good news for her company and Anadarko but that there is not yet a timetable for sanctioning or final approval of the project, which is expected to produce 30,000 barrels a day at peak.

The regulatory approvals are significant, however, because they set precedents on federal permits for future development in the NPR-A, 23-million-acre federal petroleum reserve. When it is eventually developed, GMT-1 will help the state offset production declines from existing North Slope fields.

Alaska Gov. Bill Walker lauded the work by ConocoPhillips and BLM on the permit and right-of-way, following a lengthy regulatory procedure.

“The NPR-A is estimated to hold more than 800 million barrels of oil,” the governor said.

Rex Rock, CEO of Arctic Slope Regional Corp., the Alaska Native development corporation for the North Slope, was also pleased. ASRC owns the mineral rights at GMT-1, which were obtained through its land selection rights in the 1971 Alaska Native Claims Settlement Act.

“After a long and trying permit process, BLM has now lifted a couple of the last regulatory roadblocks to allow ConocoPhillips to move forward to develop ASRC minerals from GMT1,” Rock said in a statement. “GMT1 is an important next development of ASRC’s oil and gas resources by ConocoPhillips west of the Colville River Unit.”

GMT-1 is in the northeastern part of the petroleum reserve and about eight miles west of the producing Alpine field on state lands, which ConocoPhillips operates. The mineral rights at GMT-1 are split between ASRC and the federal government. ConocoPhillips has meanwhile been working on a “GMT-2,” another NPR-A drillsite a few miles further into NPR-A.

88Energy’s Icewine well is expected to take about 30 days to drill. The company was able to mobilize and begin drilling earlier than is normal for the fall/winter slope exploration season because the well location is adjacent to the Dalton Highway, an all-year gravel road from the North Slope to Interior Alaska. Because of that no ice roads are needed for access, which would have taken longer for the company and required regulatory approvals.

In its press release, 88 Energy said some data will be available immediately after drilling, but the definitive testing of the HRZ shale potential will take several months of analysis.

“The pivotal focus will be an extensive evaluation of core material by specialist laboratories, which will cover a number of parameters considered critical for the success of the play. Conventional potential may also exist in shallower (Brookian) and deeper (Kuparuk) horizons and the well has been designed such that testing of these horizons is possible, if warranted,” the press release said.

Tim Bradner can be reached at [email protected].

11/24/2016 - 3:35pm