Bob Williams
Associate Managing Editor-News
Alaska's accelerating exploration and development activity is setting the pace for the U.S. West Coast.
Continued wildcatting in the Chukchi Sea and Beaufort Sea-albeit hamstrung by permitting problems-significant new development projects on the North Slope, and the most ambitious lease sale schedule in years highlight Alaskan action in 1991.
California highlights include expansion of massive steamflood projects in San Joaquin Valley giant heavy oil fields and start-up of the long-delayed Point Arguello project.
There is little of note in the Pacific Northwest outside extension of the Mist gas complex in Oregon.
ALASKA
CHUKCHI ACTION
Groups led by Shell Western Exploration & Production Inc. and Texaco Inc. have mapped ambitious exploration programs for the highly prospective Chukchi Sea.
In its latest estimate, Minerals Management Service pegs the area's resource potential at 6 billion bbl of oil.
Shell is preparing for its third season of Chukchi drilling. Last season it completed drilling of two wildcats and spudded a third before shutting down for winter (OGJ, June 4, 1990, p. 72).
Shell drilled the Klondike prospect well to total depth of 11,680 ft and spudded Burger and Popcorn prospect tests in summer 1989 (see map, OGJ, Mar. 27, 1989, p. 27). Water depths average 130-150 ft. In the second season, Shell completed drilling of Burger and Popcorn-TDs of 8,208 ft and 10,200 ft, respectively-and drilled Crackerjack to 5,500 ft before shutting down for the winter.
Shell plans to reenter and finish drilling Crackerjack and may spud a fifth well this year, although it has not disclosed a location. Shell has the Canmar Explorer III ice strengthened drillship under long term contract for the Chukchi campaign.
Shell and partners spent about $80 million for the first Chukchi season and about $60 million for the second. It plans about $70 million for Chukchi drilling this year.
Shell's partners in the 165 tracts the groups acquired for about $390 million in the first Chukchi Sea lease sale include Amoco Production Co., Conoco Inc., Elf Exploration Inc., and Exxon Corp. Other companies are participating in individual wildcats.
Texaco's Chukchi Sea exploration plans have been stymied by what the company contends are unreasonable permit stipulations set by Alaska on its exploration plan.
The company had planned to spud in early July 1991 its Diamond prospect well with the Beaudril Kulluk conical drilling vessel in 150-170 ft of water about 120 miles west of Point Barrow. If ice conditions allowed, the company would have spudded a second well on the Tourmaline prospect between Shell's Popcorn and Klondike wells. Both wildcats are permitted to 15,000 ft.
However, the state has drawn up new regulations, effective June 1991, that would require Texaco to halt drilling operations at about the midpoint of the brief summer weather window. That would allow, state officials contend, enough time to drill a relief well in the event of a blowout before ice encroachment. The state also required Texaco to demonstrate its capability to handle a major spill resulting from a blowout within 72 hr.
Those and other conditions make the Chukchi operation too costly, Texaco claims. The company is appealing the state's action to the U.S. secretary of Commerce. Texaco also was still trying to negotiate a compromise with the state at presstime. Even with a speedy resolution of the dispute, it seems unlikely the company could mobilize in time for the 1991 drilling season.
BEAUFORT ACTION
A regulatory dispute also has delayed Chevron Corp.'s $100 million Beaufort Sea wildcat program.
Chevron, as operator for itself and Conoco, had planned to use the Kulluk to spud wildcats on the West Maktar prospect in the eastern Beaufort and on the Canvasback prospect in the western Beaufort.
Its exploration plan called for one or two wells per year on Sale 87 leases OCS Y-0729, Y-0732, and Y-0733 on the Canvasback prospect in 118-210 ft of water 50 miles east of Point Barrow during 1991-93.
A group led by Chevron proposes to drill one or two wells per year to explore the West Maktar prospect covering Sales 87 and 97 leases OCS Y-0852, Y-0866, Y-0867, Y-0877, and Y-1 102 in 108 ft of water off Camden Bay during 1991-93.
In both proposals, Chevron asked for an exception to the state's rule that drilling and other downhole activity be prohibited during the spring and fall bowhead whale migrations.
In addition, Alaska has applied the standards governing oil spill cleanup capability demonstrations and allowing enough time for a relief well.
Chevron has apparently resolved its differences with the state on drilling restrictions but not in time to obtain commitments from partners for the 1991 drilling season. The state waived part of the bowhead migration restriction, providing it restricted vessel traffic and allowed onsite monitoring during migration. Chevron also complied with oil spill contingency and relief well capability stipulations-much less daunting than in the far more remote Chukchi Sea.
Elsewhere in the Beaufort, ARCO has proposed to drill as many as two wells on behalf of itself, Shell, Amoco, and Unocal Corp. on Sale 71 leases OCS Y-0267 and Y-0268. Operations have ceased, but the rig is still on location on the Fireweed prospect off the National Petroleum Reserve-Alaska. Site is 16.5 miles northeast of Camp Lonely. ARCO also has wrapped up operations at its Camden Bay Stinson prospect well off the Arctic National Wildlife Refuge Coastal Plain.
Amoco may spud a wildcat on its Galahad prospect in the eastern Beaufort this summer.
OTHER OFFSHORE
A big slate of leasing in federal and state waters off Alaska highlights Alaska's offshore scene in 1991.
Beaufort Sea Sale 124 will offer 3,894 blocks covering 21 million acres, mostly in federal waters less than 300 ft deep, in June.
Chukchi Sea OCS Sale 126 will offer 4,319 blocks covering about 23.7 million acres in 98-263 ft of water in August.
Navarin basin OCS Sale 107 will offer 5,036 blocks covering more than 28 million acres in the Bering Sea about 250 miles offshore in waters mostly less than 600 ft deep in September.
Alaska will hold two sales involving mostly offshore acreage in 1991. Cook Inlet Sale 74, scheduled for Sept. 24, will offer 124 tracts covering about 606,000 acres in the southern Cook Inlet and on the Kenai Peninsula.
Alaska state Sale 65, scheduled for June 4, will offer 108 tracts covering about 489,000 acres in the eastern and western Beaufort Sea.
In other Offshore Alaska action, Unocal is stepping up exploratory and development drilling in Cook Inlet after acquiring four platforms and ancillary facilities from Amoco-covering Amoco's 66% interest in Middle Ground Shoal and Granite Point fields - in 1990.
Long term, Unocal could spend as much as $300 million on Cook Inlet E&D. For 1991, the company has earmarked $40 million for 20 additional wells at former Amoco platforms Anna and Bruce in Granite Point field and Dillon and Baker in Middle Ground Shoal field. In addition, Unocal plans outlays of about $35 million for work at its Grayling platform in McArthur River field and at its monopod platform in Trading Bay field.
Overall, Unocal expects to spend about $60 million/year during 1992-94 on Cook Inlet E&D in addition to a total of about $25 million for environmental and safety measures in the Cook Inlet region.
NORTH SLOPE ACTION
North Slope interest owners will spend more than $1 billion on North Slope development projects in 1991.
It is part of an overall push by North Slope producers to stem the decline of North Slope production by boosting recovery in older fields, developing recent discoveries, and exploring for new reserves. That effort could account for more than $15 billion in the 1990s.
Topping North Slope activity in 1991 will be development of Point McIntyre field, at 300 million bbl the biggest U.S. discovery in almost a decade. Plans call for installation of two drillsites and production through Lisburne field facilities.
At presstime, the project had received approval by operator ARCO but not yet by partners BP Exploration (Alaska) Inc. and Exxon or the U.S. Army Corps of Engineers for a controversial West Dock causeway drillsite. It would start up in late 1992, with commingled Lisburne/Point McIntyre production peaking at 100,000 b/d.
Another North Slope development, marginal 58 million bbl Niakuk field in shallow water just west of Endicott field, slipped to the back burner last year after engineering led BP to double its estimate for development costs to about $250 million.
Another marginal development on the slope, Hurl State, jumped back onto the fast track last year after being shelved early in the year in the wake of Alaska's changing its formula for calculating oil and gas severance taxes. The $80 million project, involving a separate development of a thin pay, low porosity fringe of the Prudhoe Bay Sadlerochit reservoir, is expected to be producing 14,000-16,000 b/d by yearend 1991.
Conoco plans four wells to develop the Upper Cretaceous Schrader Bluff oil pool in Milne Point Unit. It expects the project to hike Milne Point oil flow to 33,000 b/d from about 18,000 b/d in 1990.
Installing increased gas handling capacity at Prudhoe Bay to 5.2 bcfd is expected to add another 90,000-100,000 b/d to North Slope production this year. The $450 million GHX-1 project is expected to add 400 million bbl to Prudhoe incremental recovery. ARCO earlier this year also let contract for the second phase of GHX, a $1.1 billion project to further boost gas handling capacity to 7.5 bcfd. That will hike production by 100,000 b/d after 1995.
The Persian Gulf crisis and resulting loss of Middle East oil supplies and higher oil prices in second half 1990 spurred Alaskan North Slope operators to do their utmost to increase oil output from producing fields.
ARCO and BP accelerated a hydraulic fracturing program in Prudhoe Bay field that added 50,000 b/d to production with as many as 140 frac jobs. Production also was jumped by 10,00012,000 b/d at the 100,000 b/d Endicott field and to 10,000 b/d from 4,000 b/d at Endicott satellite Sag Delta.
CALIFORNIA
The shutdown of leasing and almost all exploratory drilling off California means that E&D in that state is largely limited to onshore development and infill drilling, notably in the heavy oil giants of the San Joaquin Valley.
That was given impetus in 1990 with implementation by the state division of oil and gas of tougher idle well rules. After years of minimal enforcement, operators were suddenly faced with having to decide whether to abandon or commit to further work on wells. That resulted in the highest U.S. rate of utilization for service rigs in 1990-often reaching essentially capacity levels in the state.
California well completions rose 11% to 1,615 in 1990 from 1989, according to Petroleum Information. That breaks out to 1,415 oil producers, 83 gas wells, and 117 dry holes.
PI put California new field wildcats at 32 in 1990, five of which opened gas fields. Other exploratory wells totaled 58, including three oil producers and 10 gas wells.
The success rate for all wells in California in 1990 totaled 92.8%, the highest In more than a decade. For development wells, California operators posted a 97% success rate.
CALIFORNIA OFFSHORE
As always, controversy over Offshore California E&D has overshadowed other work on the West Coast in 1990-91.
OCS and state lands leasing-and for the most part, exploratory drilling-is dead off California and will remain so until 1996, when a sale of only 87 blocks in the Santa Maria basin and Santa Barbara Channel off southern California is tentatively scheduled.
President Bush last year pledged to delay all leasing off California for at least 6 years while Minerals Management Service conducts $10 million/year of environmental and other studies of leasing's effects there.
Two long embattled projects off California, Santa Ynez Unit and Point Arguello field developments, will make some headway in 1991.
Exxon is continuing construction of the Las Flores Canyon onshore oil and gas processing facilities related to SYU further development. Addition of two platforms will help boost SYU flow to 90,000 b/d in 1994-95 from 25,000 b/d currently.
Point Arguello's prospects, however, remain clouded by controversy, although the $2.5 billion project is finally getting off high center in a limited sense after three platforms have sat idle for 3 years. Disputes over whether to move Aguello crude to market via pipeline or tanker have blocked start-up.
Chevron in late 1990 approved a start-up, probably in May 1991, of about 20,000 b/d of Arguello production to move to market via onshore pipeline to California refineries outside Los Angeles.
The project is permitted to produce as much as 100,000 b/d, but state and county opposition to increased tankering in the Santa Barbara Channel probably ensure that won't happen until another onshore pipeline alternative acceptable to Chevron and partners develops, which may be 3-4 years away.
Meantime, ARCO has proposed to California to resolve a dispute over another offshore development project while it proceeds with a major secondary recovery project elsewhere in the state.
ARCO wants to implement an improved waterflood in the Long Beach Unit (LBU) that would add 50-80 million bbl to incremental recovery. In return for approval, ARCO will dismiss all claims against the state related to its stymied Coal Oil Point development off Santa Barbara County. If its LBU proposal is not approved, ARCO will submit an alternative development proposal for Coal Oil Point field.
ARCO has filed lawsuits totaling almost $800 million against the state and county after being denied permits for two platforms off the county that eventually would have produced more than 80,000 b/d of oil.
SAN JOAQUIN VALLEY
The news is brighter on the San Joaquin Valley development scene, accounting for 90% of the state's development completions in 1990.
Venerable giants set the pace: Midway-Sunset field with 410 completions, South Belridge 409, and Kern River 157.
Other key fields with big development programs continuing in 1991 and their 1990 completion totals are Lost Hills 120, Cymric 79, and Coalinga 75.
Those totals could rise as efforts proceed to bring natural gas via interstate pipeline projects to California's heavy oil fields, allowing expansion of massive thermal enhanced oil recovery projects under strict air quality rules.
Of the San Joaquin basin wells drilled in 1990, PI reports only 19 exploratory wells- none of which opened new fields or new pay zones. Horizon Operating Co. confirmed its 2 Lerdo Land Co. discovery in Kern County, and ARCO completed a 2 MMcfd Etchegoin producer as a step-out to its 1 SE Bowerbank.
OTHER CALIFORNIA
The Sacramento Valley, a haven for independents, has fared better on the wildcat scene, with exploratory drilling accounting for about 39% of the basin's 139 completions in 1990.
Benton Oil & Gas Co., Ventura, Calif., cut 34 ft of Upper Cretaceous Winters pay and gauged 870 Mcfd in its 2-1 Benton Herzog field discovery in Sacramento County.
Bakersfield independent Nahama & Weagant, with a slate of 15-20 wells on the West Coast last year, gauged 6.25 MMcfd of gas from the upper 10 ft of a 40 ft Winters sand with its 1-10 Glide in Yolo County.
Nahama & Weagant also plans to develop in 1991 its 1-5 South Davis strike in Solano County. The discovery well flowed 2.6 MMcfd from Winters.
Elsewhere in northern California, the Eel River basin is seeing stepped up activity. ARCO has drilled three offsets to its 1-15 Christiansen gas field strike in Humboldt County plus two other wells in the basin.
There was only one successful exploratory well along California's central coast in 1990. Oryx Energy Co. extended Barham Ranch oil production about a half mile north-northwest in Santa Barbara County.
In the otherwise moribund Los Angeles basin, Trio Petroleum opened a new pool in Montebello field in Montebello city limits. Its 2-6 Benton-Montebello flowed 175 b/d of 35 gravity oil and 65 Mcfd of gas from upper Miocene Puente, Yorba member.
PACIFIC NORTHWEST
Nahama & Weagant, Oregon Natural Gas Development, and John Hancock Mutual Life Insurance Co. acquired a farmout from ARCO covering 70,000 acres around Mist gas field in Columbia and Clatsop counties, Ore.
The deal, which includes access to 700 line miles of seismic data, calls for 25 wells by yearend 1993 at a cost of more than $10 million.
Nahama & Weagant accounted for the only wells drilled in the Pacific Northwest in 1990.
It extended Mist Eocene Clark & Wilson gas production with its 41-21-64 Cavenham Energy Resources and completed a development well and a dry hole in Mist field.
Mist is the only commercial hydrocarbon production in the Pacific Northwest.
Copyright 1991 Oil & Gas Journal. All Rights Reserved.