Operators in Alaska's Cook Inlet area are shifting focus from exploration to maintaining production in the face of budget cuts.
That follows last year's flurry of exploration that came on the heels of what at first appeared to be a world class discovery, Sunfish, in an area that is the cradle of Alaska's commercial oil industry (OGJ, May 24, 1993, p. 23).
Disappointing follow-up results dampened Cook Inlet exploration excitement, matching industry's recent experience on the North Slope (OGJ, June 6, p. 23; June 13, p. 42).
In the Cook Inlet, the only exploratory well active thus far this year is Phillips Petroleum Co.'s 3 Sunfish appraisal on the Sunfish prospect in North Cook Inlet.
However, a strong campaign to bolster production continues in the inlet, where a number of giant fields are well into their third decade of production.
In Cook Inlet, overall production in the first quarter largely held its own. Seven fields-McArthur River, Middle Ground Shoal, Granite Point, Swanson River, Trading Bay, West McArthur River, and Beaver Creek-produced an average 39,640 b/d, down only 0.2% from last year's 39,700 b/d. That compares with a high of about 72,000 b/d in 1983 but is down only slightly from 41,575 b/d in 1992.
Although slowed by budget cuts, Unocal Corp. continues as the major player in the inlet with its Chakachatna project.
The project involves development of what Unocal has described as significant bypassed reserves from Platforms Bruce and Anna in the northern portion of Granite Point field and Platforms Baker and Dillon in Middle Ground Shoal field.
SUNFISH FOLLOW-UP
Phillips, operator for itself and partner ARCO Alaska Inc., drilled 3 Sunfish from its Tyonek gas production platform. Directionally drilled to 14,705 ft measured depth, it apparently is the third commercial well on the Sunfish structure, about 30 miles southwest of Anchorage.
On drill stem test of the Sunfish sand, the well flowed 412 b/d of oil and 155 b/d of water from perforations at 13,394-706 ft. Phillips said the test indicated the zone could be capable of flowing at two to three times the test rate under normal development and production conditions.
A second test recovered small amounts of oil from a sand interval at 12,478-538 ft. The well failed to find the secondary North Foreland sand objective.
Sunfish and North Foreland pavs are Tyonek equivalent of Tertiary age.
The 3 Sunfish, the third appraisal to the Sunfish discovery, was scheduled to test the area north of the platform.
The 1991 Tyonek discovery well, drilled by ARCO Alaska from the Glomar Adriatic VIII jack up, flowed 1,100 b/d of 42 gravity oil through a 24/64 in. choke from Sunfish sand at 12,160 ft.
The 1 North Foreland confirmation well, also drilled by ARCO, flowed from two zones on different tests at combined rate of 3,610 b/d of oil. Drillsite is 1-1/4 miles south and slightly west of the discovery well.
Phillips drilled 2 Sunfish from Platform Tyonek in 1992 to define the downdip limit of the play but failed to find hydrocarbons.
Future work at Sunfish awaits further analysis of test data and a 3D seismic survey.
ARCO and Phillips are 6040 partners in the Sunfish prospect.
Last summer, ARCO drilled a pair of wildcats to test the southern extent of the structure at sites 9 and 12 miles south of 1 Sunfish. Both were abandoned as dry holes.
The Rowan Gilbert Rowe jack up that drilled one of the wells left Alaskan waters last fall. The Glomar Adriatic VIII is stacked at Nikiski on the Kenai Peninsula.
ONSHORE EXPLORATION
Union Texas Petroleum Alaska Corp. (Utpac), Houston, set the stage for onshore exploration on the eastern side of Cook Inlet.
Under terms of a 3 year exploration agreement signed this year with Cook Inlet Region Inc. (CIRI), an Alaska native corporation, Utpac will process and interpret about 1,100 line miles of 2D seismic data on more than 340,000 acres held by CIRI on the Kenai Peninsula southwest of Anchorage.
Utpac will have a 100% working interest and an option to acquire leases on prospects identified during the study and CIRI the option to participate in exploratory drilling and development programs. Utpac will have the option to conduct more seismic surveys as early as this year, with the possibility that a wildcat could be drilled as early as the 1995-96 season.
One of the casualties of this year's exploration downturn is a 100 line mile seismic survey that ARCO had planned to run last year in the Katalla area along the Gulf of Alaska, 50 miles southeast of Valdez. Ice breakup ended last year's season about 1 month early, canceling work at Katalla. ARCO in May said it is not going to conduct any seismic surveys at present.
The Katalla area of interest was the setting for Alaska's first commercial oil field, a small one discovered shortly after the turn of the century. The field passed into oblivion in 1933 when fire destroyed a small refinery built to process Katalla crude. Cumulative production from the field's shallow wells was 154,000 bbl of 40-44 gravity oil.
UNOCAL'S ALASKA ROLE
In an overview of Unocal's role in Alaska, Wylie R. Barrow, Jr., Unocal's general manager for Alaska, said, "Basically, our focus is the Cook Inlet. We've been there more than 30 years. In the last 3-4 years we've expanded our interest by purchase and trade."
As operator of eight of 15 platforms in the inlet and owner of working interests in three others, the company has become the major operator there.
"Cost efficient operation is a major focus for us, along with protecting the environment," Barrow said. "A second focus is a long term stable gas supply for our urea plant at Kenai. The third focus is development of Chakachatna."
Oil prices lower than forecast have caused the company to cut its budget, to $66 million this year from $87 million last year, and Chakachatna has been affected.
The company was running two rigs, including a conventional platform rig on Bruce and a new, specially designed rig on Platform Baker. The Bruce rig was shut down at the end of the first quarter in response to the spending cut.
NEW RIG ADVANTAGES
"One big step we made," said Edward J. O'Donnell, Unocal asset manager, Cook Inlet Offshore/North Slope Alaska, in reviewing the Chakachatna project, "was when we designed and built the new rig."
The rig has two main modules-one for drilling, the other for utilities-each made up of smaller modules. Modules were designed to be moved from one platform to another with platform cranes and on the company' supply boat. The rig began work on Platform Baker in fourth quarter 1993.
"The initial loadout went quicker than expected," O'Donnell said. "The performance has been superb."
Unocal owns the rig, built in Clearwater, Utah. Pool Arctic has the drilling contract. The rig drilled three production wells to 10,000-12,000 ft on Platform Baker before moving to Platform Dillon in the second quarter.
"The rig allows us to do some of the more difficult well paths," O'Donnell said. Because of the ease of movement from one location to another on the platform, the company has come up with a system, in effect, of drilling two wells at a time.
For example, the rig may drill surface hole to about 2,000 ft at Well A, then move to Well B to drill surface hole and 5,000-6,000 ft of intermediate hole.
From there, the rig moves back to Well A to drill intermediate hole and the production portion that will take the well to 10,000-12,000 ft. After that, the rig moves back to Well B to drill the production hole.
"It's cost effective for drill bits, blowout presenters, and other equipment," O'Donnell said. "You don't have to change equipment as often."
In addition to the three wells on Baker, Unocal drilled two wells on Platform Bruce before idling the rig on that platform. Of the five wells, some were true horizontal wells, others extended reach, and the two on Bruce each had two laterals of 250-650 ft. The company is still production testing the various wells, O'Donnell said.
In addition to idling the rig on Bruce, Unocal cut the number of wells to be drilled in Phase 1 of the Chakachatna project from 20 to about 15. The company also began looking for another participant to join it in the project, which is 100% Unocal owned.
"We plan to keep the new rig active to finish Phase 1," O'Donnell said. "If we get additional funding, we will accelerate the pace."
Results of Phase 1 will be used in planning Phase 2, but the company plans additional work. "We see the drilling program as about a 10 year program," O'Donnell said.
CHAKACHATNA FOCUS
While the Chakachatna focus is on oil, Unocal also concentrates on supplying about 55 bcf/year of gas to its Kenai urea plant. There the gas is used to manufacture agricultural fertilizers shipped mainly to markets in the U.S. Pacific Northwest and Pacific Rim countries.
The company maintains an ownership position in nine of 11 producing gas fields in Cook Inlet, drawing on offshore McArthur River field's 1.2 tcf gas cap and onshore Swanson River field for major gas supplies.
"With the limited market we have, we're in pretty good shape," said Martin T. Morrell, asset manager, Cook Inlet Onshore/Trading Bay Unit Asset Group, Alaska. Citing geological judgment, Morell added, "In the long term, there are in the neighborhood of 10 structures in the Cook Inlet basin with the possibility for producing about 100 bcf apiece."
Looking ahead, Unocal's Barrow said, "I think the future is going to belong to those who are cost effective. We have to work in an area where we are cost effective, take advantage of scale, strength, and alliances with the community, and protect the environment. That will give us a future. I don't think we can work in an area where we are not regarded as a friend."
NEWCOMER PRODUCER
A newcomer to the ranks of producing fields in Cook Inlet is West McArthur River field, 65 miles southwest of Anchorage.
Stewart Petroleum Co., Anchorage, found the field in 1991 with a wildcat directionally drilled in Cook Inlet from an onshore site in the West Foreland area.
The discovery well began production in August 1993, followed by one field's confirmation well last January.
Cumulative production from the two wells on May 10 stood at 428,000 bbl, breaking out as 208,000 bbl from the discovery well, 1 West McArthur River Unit, 16-8n-14w, and 220,000 bbl from the confirmation well, 2 West McArthur River, another directional hole drilled from the same pad. A third well is planned to spud from the pad the end of summer.
West McArthur River pay is Oligocene Hemlock, topped just below 9,200 ft in the discovery well. Oil gravities are 32-34'.
With field start-up, Stewart became the first independent to join Alaska's producing ranks in the modern era of the state's oil industry.
W.R. Stewart, president and chief executive officer, said the West McArthur River prospect was based on shows turned up by wildcats drilled in the 1960s and seismic surveys shot with today's more sophisticated stacking technique for processing and better data than that of earlier surveys in the first wave of Cook Inlet exploration in the 1960s.
In an April speech to the North Kenai Chamber of Commerce, Stewart said more than 100 million bbl of oil may be recoverable from the field, along with 35 bcf of associated gas. Stewart added that $36 million has been spent so far in discovery and development of the field. The total will be about $100 million by the time the field is fully developed.
Crude from the field moves by tanker to Marathon Oil Co.'s Trading Bay site 3 miles away, pending completion scheduled for July of a pair of pipelines that will link wellheads with the Marathon facility. An 7-5/8 in. line will carry oil, and a 6-5/8 in. line will transport gas.
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