Alaskan North Slope operators continue to 'press efforts to bolster Oil flow from currently producing fields in the province, notably giants Prudhoe Bay and Kuparuk River.
This is occurring against a backdrop of an improving political climate at the federal and state levels for the future of North Slope production.
North Slope operators also have programs aimed at developing marginal fields (OGJ, May 1, p. 31) and sustaining exploration (OGJ, May 15, p. 55).
PRUDHOE BAY GHX
Prudhoe Bay field received a significant boost with last September's startup of ARCO Alaska Inc.'s second phase gas handling expansion (GHX-2).
Start-up of GHX-2 enabled the field to achieve a gas handling record of 7.56 bcfd last Oct. 13. That same day, Prudhoe Bay produced 1.115 million bbl of oil. Since start-up of GHX-2,several gas handling records have been set, and the record as of March stood at 8.28 bcfd set Jan. 31, 1995.
The milestones underscored the 24 hr/day effort to tie in GHX-2 modules to existing Prudhoe facilities in record time of about 46 days. The start-up goal was Sept. 30, but the goal was accomplished Sept. 23. "We came in under budget, on time, with the facilities performing extremely welt," said ARCO Alaska Pres. Ken Thompson.
The $1.1 billion project is expected to add as much as 400 million bbl to Prudhoe Bay recovery.
There are no plans for a GHX-3.
Thompson said, "We plan to optimize performance of GHX-I and 2. GHX-2 allowed more in gas handling capability, higher NGL production, and higher miscible injectant production. We are working with BP to determine the right volume to send down the pipeline vs. manufacturing of miscible injectant."
IMPROVING RECOVERY
Among other efforts to improve oil recovery at Prudhoe Bay, ARCO's plans call for 18 workovers and recompletions with coiled tubing and further well testing with multilateral holes. "We're working on trying several wells with two laterals," Thompson said.
Sidetracks will continue to be part of the Prudhoe pic- ture. "Some have been horizontals," Thompson said. "They are particularly useful for wells near the gas cap to prevent coning and in bypassed stringers to get additional recovery."
One focus for the continuing effort to find ways to improve recovery is miscible gas injection. "We are doing research on different ratios within miscible gas injectant and the effect on recovery in different parts of the field," Thompson said.
"As a working interest owner, we will be looking at BP's Bartlesville project," he said.
Thompson was referring to the U.S. Department of Energy's recent approval of a $6.3 million cooperative research and development agreement with BP Exploration (Alaska) Inc. to develop a process to recover heavy oil from Prudhoe Bay field (OGJ, Feb. 13, p. 32).
Laboratory research and development for the BP-DOE project will be conducted at DOE's National Institute for Petroleum and Energy Research, at Bartlesville, Okla., operated by BDM-Oklahoma Inc.
The target is an estimated 1.54 billion bbl of heavy oil in a 30-80 ft thick, relatively deep, high gas content zone in the southern portion of Prudhoe Bay field.
OTHER FIELDS
In Kuparuk River field, ARCO has obtained approvals from its board of directors and co-owner BP to expand miscible gas injection from the current five drillsite program to 15 drillsites. The expansion will add an estimated 160 million bbl to the field's recovery, or 80 million bbl net to ARCO.
The company hopes to begin construction of modules in Alaska late this fall.
Point McIntyre field also continues to be a bright spot for ARCO.
"Greater Point McIntyre set a production record of 184,400 b/d in February," Thompson said.
Contributing to the record were Point McIntyre's 23 producing wells and 36 producing wells in Lisburne, West Beach, and Niakuk fields as well as 3 North Prudhoe Bay State.
Key elements in the performance were advances in drilling mud technology and process engineering.
"We found that a lot of the original wells had high skin damage," Thompson said. "With the staff here and in Plano (Tex.), we tailored the mud to be friendly to the reservoir rock, which has some clay in it that swells and chokes production."
The answer proved to be potassium chloride based mud that virtually eliminated formation damage by not causing the clay to swell.
When process engineering found some areas of pressure drop in handling of fluid in the Lisburne processing facility, ARCO debottlenecked those areas, further increasing production.
While Prudhoe Bay and Kuparuk River fields last year held firmly to their positions as the top fields in the nation, production on the North Slope continued to decline, although at a slower rate.
Production from North Slope fields totaled 553.4 million bbl in 1994 compared with 564.1 million bbl in 1993, a decline of 1.9/(. North Slope fields accounted for 93% of Alaska's production of 594.9 million bbl last year,
with Cook Inlet fields accounting for 41.5 million bbl, or 7%.
In 1993, North Slope fields accounted for 93.3 17, of Alaska's production of 604.8 million bbl, with Cook Inlet fields accounting for 40.8 million bbl, or 6.7 %.
Here's how North Slope production last year stacked up in millions of barrels, with 1993 production in parentheses: Prudhoe Bay 363.1 (39.5.4), Kuparuk River 111.8 (115.2), Point McIntyre 37.5 (7.5), Endicott 34.3 (39.2), and Milne Point 6.7 (6.8).
Estimated remaining reserves in millions of barrels as of the first of this year were Prudhoe Bay 3,581, Kuparuk River 1,491, Point McIntyre 405, Endicott 226, and Milne Point 188.
ARCO, GAS PROSPECTS
Still to be resolved is the matter of how and when to market an estimated 26 tcf of gas reserves in Prudhoe bay field.
"We have formed a joint team with BP and Exxon to look at the next steps to make the sale of North Slope gas commercial," said ARCO's Thompson.
"The first phase will be to look at alternatives for transportation; the second, to look at ways of reducing costs; the third, to look at ways to greatly reduce cost. We are also discussing supply and demand for LNG in the Pacific Rim.
"The goal is to find a way that makes economic sense so when the opportunity presents itself, we'll be ready to go forward. We don't see gas sales occurring before 2005."
Of the future in Alaska, Thompson said, "I feel very positive about ARCO Alaska's future. We've been here 40 years, and we want to stay another 40 or more. We've set a direction of being ,safe, low cost, and long term. That's our bumper sticker.
"We will maintain a high priority on -employee and contractor safety. The key to future prospects in Alaska and development of marginal new resources will be to use low cost technologies. On low cost, we set external competitive benchmarks for operating and overhead costs.
"Long term, the first thing we emphasize is maintaining our protection of the environment and continue being environmentally responsible."
CHANGING POLITICS
On the political scene, the future looks brighter for the oil industry in Alaska.
At the federal level, a bill to permit export of Alaskan North Slope crude has marked progress in the Senate (OGJ, Mar. 20, Newsletter). In addition, prospects for industry gaining access to the Coastal Plain of the Arctic National Wildlife Refuge - however remote they may still seem - nonetheless are better than they have been since just before the Mar. 24, 1989, Exxon Valdez tanker spill off Alaska.
At the state level, newly elected Gov. Tony Knowles Feb. 24 introduced legislation designed to create jobs for Alaskans and keep oil dollars flowing into the state treasury and the Permanent Fund by encouraging development of marginal oil and gas fields.
The Permanent Fund is a state savings account funded with state oil revenues. The fund now totals about $15 billion, which pays a dividend of about $950/year to every Alaska resident.
The measure grants the commissioner of the state Department of Natural Resources (DNR) increased discretion to work with oil companies to make smaller fields more economic to develop.
"As Prudhoe Bay production declines, we need creative partnering with the oil industry to ensure that Alaskans keep working in the oil patch and the state receives its fair share of our revenues," Knowles said. "This bill gives us an impor- tant tool in creating a stable economic future for all Alaskans."
BP Exploration Pres. John Morgan said, "Gov. Knowles' royalty legislation represents an important first step toward state government and the Alaskan oil industry working together to compete globally for investment capital.
"Flexible royalty terms would provide a tool for the state and industry to share risks and rewards in this new era of marginal development that holds the key to Alaska's future."
ARCO's Thompson said, "With introduction of this legislation, Gov. Knowles has taken another important step in restoring Alaska's competitiveness in the world oil market. He continues to put teeth in his commitment to open Alaska for business."
ROYALTY CHANGES
Knowles' legislation would change royalty reduction provisions in state law to give the DNR commissioner greater discretion in adjusting royalty rates.
Traditionally, the industry pays Alaska 12.5% of the wellhead value of oil produced. Reduced royalty would allow development of some smaller fields, the industry says.
The bill requires the commissioner to make a convincing case that a reduction in royalty is necessary and in the state's interest. The commissioner could require a producer to disclose all confidential data about a field to a third party with oil industry experience for an independent review.
Under the bill, the royalty contribution to the Permanent Fund could not be less than under current law. Depending on when leases were issued, the Permanent Fund now receives either 25% or 50% of royalties.
The bill is designed to produce new revenues for Alaska by bringing on line marginal fields that would not otherwise be developed.
The legislation is part o Knowles' plan to work close with oil companies to generate jobs for Alaskans.
A week before introducing the legislation, the governor set up an Oil and Ga Policy Council to help develop industry related jobs.
He also directed three commissioners - of the Departments of Natural Re sources and Revenue, along with the attorney general - to work with the industry in making Alaska's tax policies fair and stable. That effort will result in an oil and ga tax conference, likely to be held this summer.
Massive module, sealifted to Alaska's North Slope last summer, is part of the second phase of gas handling capacity expansion in Prudhoe Bay oil field that was completed last fall. Photo courtesy of ARCO Alaska Inc.