By OGJ editors
HOUSTON, June 16 – Linc Energy Ltd., Brisbane, has acquired a controlling interest in giant Umiat oil field in the National Petroleum Reserve-Alaska and plans to develop Umiat to produce more than 50,000 b/d via a connecting conduit to the trans-Alaska oil pipeline.
Umiat, 140 miles southwest of Prudhoe Bay and 80 miles west of TAPS, is estimated to contain 1 billion bbl of original oil in place. The 37° gravity oil is in Lower Cretaceous Nanushuk sandstones at 500-1,400 ft (see map, OGJ, Jan. 11, 2010, p. 30).
Linc Energy is acquiring an 84.5% interest in Renaissance Umiat LLC, which owns a 100% working interest and 80% net revenue interest in the Umiat project, for $50 million. Closing is set for July 6.
The 80% net revenue interest in the acquired leases is attributed net probable and possible reserves of 201 million bbl of oil equivalent.
The Alaska government unveiled plans in late 2009 to build a 92-mile, all-weather road from the TAPS to Umiat and has commenced planning and environmental studies. Road construction would substantially decrease project development risk, timeframes, and capital requirements, said Linc Energy, which would build a pipeline in conjunction with the road project.
The development will qualify for state investment incentives that have the potential to greatly reduce early drilling and construction costs, the company added.
Umiat is in the western foothills/foldbelt province of the North Slope foothills on two leases managed by the US Bureau of Land Management and one state lease.
Road construction could start within 12-24 months and take 18 months to complete. The US Army Corps of Engineers and the state have begun work on the federal environmental impact statement for the road.
Completion of the pipeline will mark the first all-season oil transport infrastructure into the southern part of the NPRA, opening the area for further development, Linc Energy said.
Previous independent studies by NANA WorleyParsons LLC commissioned by Renaissance
Umiat LLC confirmed the viability of a cold pipeline buried in the road, with a preliminary
construction estimate of $207 million including a 25% contingency and a construction period
of 4-5 months in one season.
Linc Energy will complete further detailed feasibility and engineering studies on the pipeline development before finally committing to the pipeline project.
During the Umiat road and pipeline development period, Linc Energy intends to undertake
further exploration, resource delineation, and development of Umiat field. The final capital
budget allocation for this work will be determined immediately following the completion of the
acquisition; however Linc Energy’s Alaskan team has already commenced a detailed evaluation and review of existing plans and costings as part of due diligence on the asset.
Subject to permitting, Linc Energy aims to fly a drilling rig into Umiat’s 5,583-ft airstrip as soon as practical start further drilling. In addition, Linc Energy plans to commence shooting additional 2D and 3D wireless seismic on the Umiat leases as soon as practicable and before this Alaskan winter.