North Slope explorers prep for winter work as Oil Search waits a little longer on Pikka

A couple small explorers are planning wells on the periphery of the North Slope this winter.

Meanwhile, Oil Search leaders are going to wait a little longer to pull the trigger on their multibillion-dollar project.

Jade Energy Alaska is preparing to drill an exploration well into a corner of the Point Thomson gas unit otherwise controlled by ExxonMobil, according to documents recently submitted to the Division of Oil and Gas. That well was stalled by logistical challenges nearly two years ago.

Point Thomson sits on the eastern edge of state land on the North Slope and is adjacent to the northwest corner of the Arctic National Wildlife Refuge. The Jade-1 well is planned for the southeast corner of the unit, just more than a mile from the Canning River and the eastern boundary of ANWR.

Leaders of Anchorage-based Jade Energy first filed with state regulators in 2019 to drill the well in early 2020. However, the work was postponed in August 2019 after it was determined the seafloor would need to be dredged around the Point Thomson service pier to accommodate a barge carrying Jade’s contracted drilling rig. The company then set a drilling target for the 2021-22 winter exploration season, according to documents filed with Oil and Gas at the time.

The Jade well is set to be drilled to a true depth of approximately 11,000 feet with multiple, stacked conventional light oil targets in the Brookian geologic sequence. Similar oil is found in “over-pressured reservoir sands found throughout the (Point Thomson Unit) and nearby Badami Oil Field,” Jade’s Plan of Operations application states.

A Jade manager did not respond to questions in time for this story.

Company leaders expect to start the work by about Dec. 1 if their operations plan is approved.

Jade entered into a farm-out agreement with ExxonMobil in 2018 to develop the Brookian oil prospects in Point Thomson. The agreement gave Jade a 62% interest in the Point Thomson “Area F” lease.

The company acquired 3D seismic data from Area F during the 2017-18 winter.

BP drilled two exploration wells in the area in the mid-1990s known as the Sourdough wells and in 1997, BP and Chevron issued a press release stating they had confirmed approximately 100 million barrels of recoverable oil in the area.

However, the economic viability of the prospect was unclear at the time. The $4 billion Point Thomson development that ExxonMobil finished in early 2016 is focused on natural gas; the field is estimated to contain upwards of 8 trillion cubic feet of high-pressure natural gas. As a result, it is expected to be a lynchpin for any large gas export project.

To the south and west, London-based Pantheon Resources is continuing to hunt its own Brookian targets in a sparsely explored area that so far has yielded promising results, according to company leaders.

Pantheon’s operating subsidiary, Great Bear Pantheon, hopes to start drilling the Theta West-1 well about 20 miles south of Prudhoe Bay by Jan. 18, according to the company’s plan of operations.

The chosen location for the Theta West well is 10.5 miles northeast of the Talitha-A well drilled by Pantheon last winter, near the confluence of the Kuparuk and Toolik rivers. It would be drilled to a depth of approximately 9,300 feet with the intent of appraising multiple targets in the Brookian sequence there, according to the plan.

Pantheon leaders announced last May that two reservoirs intersected near the bottom of the Talitha-A well likely combine to hold 1.4 billion barrels of recoverable light oil. Technical Director Bob Rosenthal said in a prior interview with the Journal that the promising results from the Talitha well transforms the prospect called “Theta West” within the company to an oil project.

Pantheon purchased the assets of former Anchorage independent Great Bear Petroleum in early 2019 and has built on the exploration Great Bear previously did in the area.

Industry sources who have followed the Great Bear-Pantheon work have generally said it is very probable the company is on a significant oil column, but the porosity and permeability of the rock formations — and the ability to easily get the oil out of them — will most likely determine the ultimate size and success of the Theta West project.

Pikka decision delayed

Oil Search Alaska employees are likely to spend less time building their large Pikka oil project and more time getting to know their new bosses over the coming months.

The 2022 Pikka Unit Plan of Development filed by Oil Search with the Division of Oil and Gas states that the company will continue maintenance work on previously installed infrastructure at Pikka in 2022 and a final investment decision on the first, $3 billion phase of the North Slope development won’t be coming until next year, either.

Leaders of Papua New Guinea-based Oil Search and Australian Santos Ltd. in September announced a merger that will give Santos shareholders majority control of the new company. The deal is tentatively scheduled to close in early December.

Representatives of Oil Search Alaska in recent months have acknowledged challenges in funding Pikka despite significant appraisal drilling and its close proximity to other infrastructure, but also continued to say they hoped to sanction the project yet this year.

If construction of Pikka is approved next year, development drilling is expected to commence in 2023 with first oil in 2025, according to the development plan.

Oil Search bought into Pikka in the fall of 2017, when it agreed to an $850 million deal with then-operator Armstrong Energy and a silent minority owner to take a 51% stake in the project over two payment tranches.

Repsol remains a 49% working interest owner in the project.

Elwood Brehmer can be reached at [email protected].

11/17/2021 - 12:44pm