June 13, 1994
Alaskan North Slope/Beaufort Sea explorationists must cope with a climate of greatly diminished expectations for prospects as well as oil prices. After follow up drilling failed to live up to the initial excitement generated by the Kuvlum offshore find last year, together with budget cuts spawned by the late 1993 early 1994 oil price slide, North Slope/Beaufort operators have a shrunken exploration portfolio. The emphasis on the North Slope largely has shifted to focusing on cost efficiencies

Alaskan North Slope/Beaufort Sea explorationists must cope with a climate of greatly diminished expectations for prospects as well as oil prices.

After follow up drilling failed to live up to the initial excitement generated by the Kuvlum offshore find last year, together with budget cuts spawned by the late 1993 early 1994 oil price slide, North Slope/Beaufort operators have a shrunken exploration portfolio. The emphasis on the North Slope largely has shifted to focusing on cost efficiencies in production.

Still, a handful of exploratory wells are going ahead in arctic Alaska, as well as lease sales off western and southern Alaska, and new state approaches to licensing interior acreage for exploration.


ARCO Alaska Inc. recently drilled a pair of wildcats in the Colville High sector west of Kuparuk River field.

Information was not released on 2 Fiord in 24 12n 5e, which went to total depth of 8,400 ft, or 1 Bergschrund in 32 12n 5e, which went to undisclosed depth. Rowan Drilling's Rig No. 33 handled the contract drilling work. The 2 Fiord is 4 miles south of ARCO 1 Fiord, 10 miles west of Kuparuk River field. The 1 Fiord was drilled in 1992 and tested at an average flow rate of 1,065 b/d from one zone and 180 b/d from a second interval after fracturing. The Bergschrund well is 4 miles southwest of 2 Fiord.

As for the coming winter's drilling, James M. Davis, ARCO Alaska's senior vice president for exploration and land, said his company, in the face of low prices, has not finalized its plans.

No decision has been made yet on whether to develop the Colville High area, where six wildcats scattered over a large area have been tested at high rates. "You have to be pretty sure of what you have," Davis said, "and we are not sure yet."

Development hinges on finding enough accumulations to warrant construction of a centralized processing plant at a site to which oil could be piped from as much as a 40 mile radius.

Of Kuvlum, the 3,400 b/d discovery well in the Beaufort Sea that was followed by a pair of dry holes last year, Davis said, "It's pretty well evaluated. There's a reservoir of some size, but certainly not enough to warrant the cost of investment."

The future also looks clouded for a pair of earlier finds, West Sak and Ugnu. The former pool overlies Kuparuk pay in the Kuparuk River field and is believed to hold 15 25 billion bbl of heavy oil in place at an average depth of 3,500 ft. The latter pool is the Ugnu, which overlies the West Sak pool and is estimated to hold 611 billion bbl of heavy crude at a depth of about 3,000 feet.

"They suffer a disadvantage in terms of quality," Davis said. "Given the amount of capital that would have to be invested, they wouldn't have that advantage of efficiency of other Alaska operations. They are not even on the screen."


Two years ago, Davis introduced to the state the idea of exploration licensing, which would encourage exploration by allowing companies to choose areas of land large enough to explore an entire geological concept. The state would give up immediate lease payments in the form of bonus bids in return for the promise of accelerated exploration and development.

On May 9, Gov. Walter Hickel signed into law a version of exploration licensing that will allow companies to apply for licenses to control blocks of as much as 500,000 acres without leasing them through the state's competitive bid process. The company will have to post bonds with the state to guarantee that it explores for oil. The company will have the option to lease the land if oil is found. However, the bill does not apply to the North Slope or Cook Inlet, leaving the exploration license seeker to explore Alaska's interior basins.

"This is a good first step," said Davis. "I commend the state for getting to this point." However, he is doubtful about any immediate effect. "I would expect to see exploration at its current anemic level until we see price improvement and other incentives." Davis expressed disappointment that the North Slope and Cook Inlet were not included in the bill signed by the governor, describing them as not fully explored, but added that there are other basins in the state that warrant exploration.

"There's not enough exploration for Alaska to even hope to replace production that's going on right now," Davis added. "We produce out two Point McIntyres a year just in Alaska. I find that troubling as an explorationist and an Alaskan.

"The state should review itself with regard to its competition. It's not the Lower 48. It's the rest of the world. Right now, everything in Alaska is right off the top. Pretty soon you've used up the top and there isn't much left. In the rest of the world, that isn't the way it's done."


BP Exploration (Alaska) drilled and abandoned a pair of wildcats in the Staines River area 50 miles east of the Prudhoe Bay field.

The exploratory wells were 1 Yukon Gold, in 13 8n 23e, abandoned at 12,800 ft, and 2 Sourdough in 31-9n 24e, about 3 miles northeast of the Yukon Gold well, which went to undisclosed depth before the rig was released 2 months after spud. Pool Arctic's Rig No. 4 drilled both wells.

BP, current operator of Milne Point Unit, drilled I North Point, in 6 13n-10e, as an appraisal well to former operator Conoco Inc's Northwest Milne discovery. The well was drilled as a tight hole. Nabors Drilling's Rig No. 22E handled the contract drilling job.

Meanwhile, BP Exploration hopes next winter to drill an exploratory well on the North Slope that was deferred this year. The well is 3 Badami, in 10 9n 20e, programmed as a directional hole to bottom about 4,800 ft to the northwest in 3 9n 20e. The surface location falls 1 miles east of 1 Badami discovery well. The area of interest lies in Mikkelsen Bay about 25 miles east of Prudhoe Bay field.

The discovery well, drilled in 1990 by Conoco and Petrofina Delaware Inc., flowed at a rate of 4,250 b/d of oil and 1.2 MMcfd of gas, based on a 4 hr test. Conoco drilled a confirmation well in 1992 about 3 miles northwest of 1 Badami. Results have not been released.

BP entered into a joint venture with Conoco and Petrofina in 1993 to further evaluate the Badami discovery and the 17 lease joint venture area comprising more than 70,000 acres in return for a 35% interest. Later in the year, BP in an exchange of exploration and production assets in Alaska and the Gulf of Mexico with Conoco acquired 40% interest in the Badami discovery. With the interest acquired from Conoco and the 35% earned through appraisal of the discovery, BP's stake at Badami is 75%. The remaining 25 percent is held by Petrofina.

Depending on further delineation of the held, it could set the stage for bringing on line Exxon's long undeveloped Point Thomson field, a nearby neighbor to the east, which has reserves estimated at more than 300 million bbl of condensate and 5 tcf of gas.


Another BP discovery, drilled in first quarter 1993 and disclosed in January, also figures to contribute to North Slope production soon. The Cascade find proved pay off the southeastern edge of Milne Point field in an area surrounded by Milne Point, Kuparuk River, and Prudhoe Bay fields.

BP's 1 Cascade, in 3 12n 11e, discovered several oil bearing zones. The initial program called for directionally drilling the hole to bottom about 800 ft southwest of surface location. The program for a redrill called for bottoming about 700 ft west and slightly north of the surface location. BP said the discovery made in the first hole was confirmed by the sidetrack. The company took the exploratory well to 10,109 feet the first time down and to 9,175 feet on the redrill.

The Cretaceous Kuparuk River formation, productive in Kuparuk River and Milne Point fields, flowed at a sustained rate of 1,720 b/d. Other oil bearing zones have not been tested.

BP acquired additional 3D seismic data of the discovery area and adjacent leases this winter to delineate the discovery and assist in development. Oil from Cascade will be processed through Milne Point production facilities.

"Results of the Cascade well reinforce our belief that there are still attractive exploration prospects in Alaska," said Eric Luttrell, vice-president of exploration. "Discoveries like Cascade near existing infrastructure not only provide new sources of oil reserves and production, but also extend the lives of existing fields and production facilities. "


Amerada Hess Corp. drilled 3 Northstar in 17 13n 13e, idling the exploratory well 2 months after spudding in with no release of information.

The drillsite fell about 3 miles south of the company's 1 Northstar, an 11,800 ft well drilled in 1985 that flowed oil from Sadlerochit sand at rates of as much as 4,700 b/d.

The area of interest lies about 6 miles off the Kuparuk River delta and Prudhoe Bay field. Parker Drilling's Rig No. 141 drilled Amerada 3 Northstar.

Unocal Corp. abandoned 1 Amethyst State in 12 2n 7e at total depth of 11,136 ft. The company was looking for production about 55 miles south of Prudhoe Bay field. BP shared interest in the prospect. Pool Arctic's Rig No. 6 drilled the wildcat.


While onshore exploration lags, Offshore Alaska may be opening up for more exploration. Two federal sales are in planning stages, including Gulf of Alaska/Yakutat OCS Sale 158, tentatively scheduled for July 1996, and Chukchi Sea Sale 148, tentatively scheduled for June 1997.

The area to be studied for inclusion in the Gulf of Alaska/Yakutat sale includes about 997 whole and partial blocks encompassing about 5.3 million acres near Yakutat, extending 365 nautical miles into the Gulf of Alaska. Water depths range from 165 ft to more than 13,000 ft. A draft environmental impact statement is scheduled for completion in March 1995.

The sale would be the fourth OCS sale in the Gulf of Alaska. Minerals Management Service said the area selected was based on nominations received from industry and comments received regarding environmental and other issues.

The call for information for Chukchi Sea Sale 148 covers about 26 million acres, or about 4,700 whole or partial blocks. The area is located 3 200 miles off Alaska's arctic coast in 98 260 ft of water. There have been two previous lease sales in the planning area.

MMS issued a total of 378 leases, 252 of which have been relinquished or have expired. Currently, there are 126 active leases in the planning area. Lessees have drilled 4 exploratory wells. All have been plugged and abandoned.

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