BP aims for 40 more at Prudhoe
BP navigated its way through the oil price depression and is now focused on new targets to keep the old Prudhoe Bay field vibrant for another 40 years.
BP Alaska President Janet Weiss said the company’s emphasis on “40 more years” at Prudhoe, which began pumping oil in 1977, is more than just a mantra.
“It’s about 40 more, it really is. When you think about Alaska in an energy renaissance, it’s really important to have the strength of that foundation. You’ve got to have a strong Prudhoe Bay; you’ve got to have a strong Kuparuk area to really help support the infrastructure it takes for all of the sexy development that’s going on right now,” Weiss said.
The “energy renaissance” is a reference to the suite of new, large oil projects on the Slope that are in varying stages of advanced exploration, permitting and development.
Weiss and other BP Alaska leaders discussed the company’s plans, challenges and opportunities in the state during an hour-long sit down Jan. 31 with the Journal and Anchorage Daily News.
Company officials attacked the idea of producing from Prudhoe for decades more by working it backwards while oil prices were at their lowest, and what it takes is ongoing efficiency improvements, according to Weiss. BP Alaska is continually working to lower its cost base by 5 percent per year, she said.
“We took a look at what it would take for us to be at mid-life and we’re on that path and what it basically does take is really minimizing decline in a big way,” Weiss said.
The story of North Slope production decline — from more than 2 million barrels per day in 1988 to about 520,000 barrels per day currently — is well told.
Oil production at Prudhoe has followed the same trend; it plateaued at about 1.5 million barrels daily through much of the 1980s and has gradually fallen since.
BP, the operator of the field on behalf of co-owners ExxonMobil and ConocoPhillips, has largely managed to stabilize production from Prudhoe and smaller satellite fields in the 280,000 barrels per day range since 2016. Initially projected to produce about 9.5 billion barrels, the field has now surpassed 13 billion.
“Forty more is really about ushering in modernization, transformation, digitization, agile working,” she said. “Doing things better up there so we can extend the life of that absolutely world-class reservoir.”
BP Alaska Vice President of Reservoir Development Fabian Wirnkar said Prudhoe has a bit more than 1 billion barrels left to produce from traditional oil-bearing formations.
The company is currently in the midst of the first, full-field 3-D seismic data shoot over the field, which will cover 455 square miles. Started in late January, the shoot should take about 90 days to complete. The resulting data will start to become available over the summer, according to Wirnkar, who Weiss has dubbed “Dr. Grow.”
He came to Alaska a little more than a year ago at her request after working around the world for BP.
Wirnkar said he believes there are still new reservoirs to be found within Prudhoe and the seismic shoot will help the company identify those otherwise “hard to find fluids.”
BP also has two drilling rigs working at Prudhoe this winter. The rigs will combine to drill or work over 35 to 40 wells, according to Weiss.
“With our partners we are all in agreement that there are still some significant resources here; some that we don’t even know. I always tell Janet that when I was in the Lower 48 I worked a lot in the Permian and there was a time when they were like ‘there’s nothing left in the Permian,’ and you turn around now and you have some new resources and new rocks that are showing up,” Wirnkar said.
Revitalized by the shale revolution, the U.S. Geological Survey now believes the greater Permian Basin in West Texas and New Mexico holds more than 46 billion barrels of recoverable oil.
New drilling techniques, particularly horizontal drilling, have helped greatly in improving production while keeping costs down. Wirnkar compared horizontal drilling to doctors who install a stent in a patient’s heart by accessing the bloodstream at the femoral artery in the upper leg and winding their way towards the heart.
“Once you start doing some investigating you might be surprised with what you see and so that’s one of the things in BP we’re looking at,” he said. “OK, where can we start looking at some of the bypass rocks that we thought were just seals or that we thought were just source rocks and for some reason now the have become a reservoir? We have reservoir experts who are continually looking and testing the possibilities out there.”
One of the long-term possibilities to help keep Prudhoe going is making viscous, or heavy, oil production viable.
Industry officials believe there are upwards of 38 billion barrels of viscous oil under the Slope and much of it is quite shallow at depths of less than 5,000 feet.
Weiss said BP partnered with ARCO in the early 2000s to spend about $750 million first trying “really simple, straight-hole” wells to produce viscous oil, which doesn’t flow as well as the light crude Slope fields are known for.
Subsequent tests of complex multilateral wells proved unsuccessful when the wells started breaking at the junction of the lateral and vertical wellbores, Wirnkar added.
More recently, BP has concluded that viscous-focused wells do indeed need to be a bit “simpler” and the company believes it has a better completion technique to keep the junctions intact, according to Weiss.
The work has taken the cost to produce viscous oil from roughly $80 per barrel closer to the $50 range, she said, while explaining why viscous oil needs to be blended with current production sooner than later to keep all the oil flowing smoothly.
“You want to get after the viscous and heavy (oil) at the time that you’re still sending light down the pipeline. That is the biggest issue that’s out there and why we look at it a lot with TAPS (the Trans-Alaska Pipeline System),” Weiss said.
Alyeska Pipeline Service Co. spends significant time and money to find ways to keep the oil in the pipeline warm and moving at low volumes, and heavier oil could add to the challenge.
Italian major Eni and Hilcorp, BP’s partner in the North Slope Milne Point field and the Liberty prospect, have led improvements to viscous oil processing facilities, according to Weiss.
She noted that one of the major reasons BP agreed in 2014 to partner with Hilcorp at Milne Point was the Hilcorp’s work on developing viscous oil.
A final investment decision on Liberty, which has had its federal permit issued last year challenged in court, is expected in early 2020, according to the BP Alaska group.
Regarding Prudhoe Bay wells that have had their outer casing “jacked up” due to warming permafrost, Weiss said the issue has arisen on a “handful” of old wells from the 1970s before the field started production. The outer casing on those wells is set in the permafrost.
“Because that outer shoe was in the permafrost you saw this kind of ripping apart and this well jacking up,” she said, adding BP has removed the well houses on each well in question and has been working with the Alaska Oil and Gas Conservation Commission, which regulates production in the state.
The AOGCC has a hearing set for Feb. 7 on the issue.
Finally, a big driver of the recent cost reductions at BP — and in the industry overall — is automation, which likely means somewhat reduced job levels in aspects of the industry’s work.
However, automation also makes the work safer, Weiss highlighted.
“It’s about changing the nature of the jobs and automating solutions so we’re less transactional,” she said. “The workforce of tomorrow does need to move upstream, solving the new problems and then we automate those solutions. If you don’t do that you lose out.”
BP’s current Alaska workforce is about 1,500 and the company contracts for nearly another 4,000 workers, according to the group.
Elwood Brehmer can be reached at [email protected].