As Southcentral Alaska prepares for an increase in oil and gas exploration and development in the Cook Inlet basin, operators on the North Slope and nearshore Beaufort Sea are preparing for what promises to be one of the busiest exploration seasons since 1969, when 33 exploration wells were drilled after the discovery of the Prudhoe Bay oil field.
If all goes as planned, as many as 28 exploration wells could be drilled between October 2011 and mid-2012. It's a longer-than-normal North Slope exploration season because one company's wells can be drilled from old gravel sites along the Dalton Highway and therefore are not subject to off-road tundra travel restrictions.
Much of the stepped-up activity appears to be partly due to the exploration incentives offered by the state of Alaska, and partly because Alaska's governor is committed to fixing provisions in the state's production tax that could make development of any oil discoveries noncompetitive for investment capital with projects in other oil provinces.
The operators that have talked to Petroleum News and/or government regulators about their plans are Alaska-grown independents Brooks Range Petroleum Corp., or BRPC, and UltraStar Exploration, and North Slope newcomers Repsol, Linc Energy and Great Bear Petroleum, or GBP.
Also part of the upcoming exploration season are several seismic surveys and Anadarko Petroleum's rig-less testing of its Chandler No. 1 gas well.
In seismic testing, sound waves are blasted into the ground to show rock formations that might hold oil and gas deep below. It's done to identify locations to drill exploratory wells.
Seismic yields drilling opportunities for future exploration wells and Anadarko's work could mean it might resurrect its multiyear drilling program at the Gubik Complex on state, federal and Native acreage in the Brooks Range foothills. Inactive since 2009, the program was the first exploration effort in northern Alaska to explicitly target natural gas for other than local use. Anadarko is returning to the area as the state is ramping up its efforts to sponsor an in-state gas line to Fairbanks and Anchorage.
Repsol: 5 rigs, up to 15 wells
The largest of the three new players looking to drill oil exploration wells this winter is Spanish major Repsol, whose representatives have been talking to regulators and stakeholders about a five-rig program. All the rigs will be on separate ice pads on state acreage -- one offshore the Colville River Delta, north of the Colville River unit; two onshore between the Oooguruk and Colville units but drilling to offshore targets; one onshore farther south, adjacent to the Colville unit and drilling to onshore targets; and one south and east of the Kuparuk River unit.
The company is looking at drilling one vertical well and two sidetracks from each pad with measured depths varying from 12,000 to 16,000 feet.
Repsol's 65-mile-plus ice roads for its ice pads will start at Kuparuk's 2P pad, crossing the Colville River downstream from Conoco Phillips' Alpine Resupply Ice Road.
Repsol has interests in non-operated federal leases offshore northern Alaska but acquired state acreage for the first time in March, when it bought majority interest in 157 North Slope and Beaufort Sea leases on 494,211 acres from Armstrong subsidiary 70 & 148 and GMT Exploration.
Eighty-four of those leases are set to expire in the 2012-14 time period, including several in or near where Repsol plans to drill this winter.
Linc: 1 rig, minimum 4 wells
Linc Energy, the Australian independent that acquired Cook Inlet basin acreage last year and has already drilled its first well there, is planning to drill a minimum of four wells this winter at the undeveloped Umiat oil field in the Brooks Range foothills along the southeastern border of the National Petroleum Reserve-Alaska, some 80 miles west of the trans-Alaska oil pipeline.
Earlier this summer Linc's Alaska subsidiary purchased controlling interest in two NPR-A and two state leases on 19,358 gross acres in the Umiat field.
Umiat's reservoir is between 200 and 1,400 feet in depth, with a portion of the oil in permafrost.
Discovered by the U.S. Navy in 1946, the Umiat oil field was never developed because of its remoteness from infrastructure and the lack of technology to unlock its shallow oil, the last of which has changed in recent years.
The company plans to fly a drilling rig to Umiat's 5,583-foot airstrip before the end of the year.
Linc said the state of Alaska's plans to build an all-season gravel road from the Dalton Highway to Umiat was a significant factor in its development decision.
Great Bear: 1 rig, 3 plus 3 wells
Independent GBP, which holds 500,000 acres of central North Slope acreage that contains three world-class source rocks, plans to drill up to three vertical wells between October and the end of the year before the start of the winter exploration season. In the spring, after the off-road winter season drilling has ceased elsewhere on the North Slope and a rig is again available, the company will drill at least one horizontal production sidetrack from each vertical well bore.
Drilling will be on "existing gravel features (roads, pads and material sites)" along the Dalton Highway "about 20 to 35 miles south of Prudhoe Bay" according to GBP's proposed oil spill contingency plan, allowing the company to drill year-round.
Up to four initial wells have been discussed by GBP. Each will have an 11,000-foot vertical well bore that will first provide 9-10 inch cores and from which 4,000-foot horizontal production sidetracks will later be drilled.
Brooks Range Petroleum: 1 rig, 2 wells
Using one drilling rig, a joint venture led by BRPC plans to complete and test its North Tarn No. 1 A well, last winter's only northern Alaska exploration well.
The North Tarn prospect has since been renamed Mustang and is part of the joint venture's proposed South Miluveach unit, adjacent to the west side of Kuparuk unit (see the story in the April 24 issue of Petroleum News.
BRPC has said it will likely drill two more wells this winter to delineate Mustang, although drilling is contingent on North Tarn No. 1A results.
UltraStar: 1 rig, 1 well
UltraStar Exploration should know in the next few months whether it will be able to drill a well at its Dewline unit this winter or whether the project will need to wait another year.
The Anchorage-based independent led by managing member Jim Weeks is currently "close to getting a deal" for the venture capital it needs, Weeks said.
Weeks began permitting the North Dewline No. 1 well several months ago and said that once financing is in place he plans to find an available rig to drill one well this winter.
"If we can't find a suitable rig, we still have another season," Weeks said, referring to an Alaska Division of Oil and Gas deadline to drill a follow-up well at the Dewline unit by May 31, 2013. "I'd rather not push it that far ... but we can be somewhat selective."
Weeks said the entire program must be in place by October in order to drill this winter.
UltraStar drilled the vertical Dewline No. 1 well in early 2009 to 9,900 feet to test a primary oil target in the Ivishak formation.
The North Dewline No. 1 well would be a directional well from an onshore pad to an offshore target. The 14,000- to 15,000-foot well would have a 6,000-foot displacement.
That well would also test a primary oil target in the Ivishak formation, as well as secondary targets in the Sag River and Kuparuk formations, Weeks said.
Eric Lidji contributed to this article.
By KAY CASHMAN
Petroleum News