Another big season for slope
Another big exploration and appraisal drilling season is shaping up for the North Slope this winter. Oil Search will have two rigs working on new appraisal wells aimed at confirming resources in the company’s Pikka project and new discoveries on adjacent leases. Oil Search hopes to increase reserves now pegged at 500 million barrels to 1 billion barrels or more. Meanwhile, ConocoPhillips plans another aggressive winter drilling season this winter in the National Petroleum Reserve-Alaska, or NPR-A, as well as on state lands in the Colville River area. The company will do additional drilling around Willow, a major NPR-A discovery, and will do appraisal drilling at Harpoon, a new discovery southwest of Willow. A new horizontal well will also be drilled to Narwhal, a discovery on state lands and additional flow tests will be made on a horizontal well drilled to Narwhal last winter.

On Willow, ConocoPhillips is now at work on “sizing” production facilities and will make a Final Investment Decision next year, with possible production beginning in 2025 or 2026. Willow will be a major multi-billion-dollar development because new “stand-alone” facilities will be built for the field. On the company’s current NPR-A projects, GMT-1 and GMT-2, produced fluids are and will be shipped by pipeline to production plants in the Alpine field. Given the timing for Willow, there will be major construction happening from 2021 through 2024. That roughly coincides with the possible schedule for Oil Search in building facilities for Pikka. There is likely to be a lot of demand for contractors and skilled labor in that timeframe with the two projects underway simultaneously.

BP-Hilcorp Prudhoe deal?
Reports circulated fast last week, and were published in Petroleum News, on a deal for Hilcorp Energy to take over from BP as operator in the eastern side of the Prudhoe Bay field. ConocoPhillips would step in as operator on the western side. Nothing is confirmed and the companies aren’t saying anything, but there are reports of key staff being notified. The assumption is this involves Hilcorp purchasing all or some of BP’s slope assets, which include shares of Prudhoe as well as Point Thomson and the Trans Alaska Pipeline System. Hilcorp purchased small slope producing fields from BP several years ago, including NorthStar, Endicott and 50 percent of Milne Point and Liberty, which is not producing but is planned for development.

If the deal actually happens it will have Hilcorp, with its reputation for investment and aggressive redevelopment of aging fields, step into a much bigger role on the slope. However, it will also bring the company under scrutiny by regulators over past safety and environmental compliance problems. State officials and legislators can be expected to focus on environmental liability and Hilcorp’s financial capabilities for emergency response.

It has been known for years that Alaska is no longer an oil priority area for BP. The company is very interested in developing its huge undeveloped North Slope gas resource but a gas pipeline now seems on the back burner more than ever.

Small firm explores Gulf of Alaska
State officials issued a draft exploration license to Cassandra Energy Corp., an Alaska-based independent, to explore 65,773 acres of state lands near the mouth of the Bering River east of Cordova. Exploration licenses give companies rights to explore large areas for up to 10 years and to convert any discoveries to a conventional oil and gas lease. Cash work commitments are also required.
Cash work commitments are also required.

Slope production lower this year, year to date
Alaska North Slope production is running 10,963 barrels per day lower, on average, for the six-month period from February through July. In May, the most recent month where production totals were not affected by scheduled maintenance at facilities, total production from the slope averaged 502,380 barrels per day, compared with 528,710 barrels per day in May 2018, according to Alaska Department of Revenue production data. Production declined each month from February through May compared with the same months of 2018. Some of the monthly declines were due to temporary shutdown of facilities at the small Nikaitchuq field operated by Eni Oil. Production picked up in June, rising 3,831 barrels per day compared with June 2018, while July showed a gain of 5,571 barrels per day in monthly averages. The gains in June and July reflect scheduled maintenance shutdowns of field production facilities and the Trans Alaska Pipeline System in 2018 rather than gains this year. On the upside, one new project, Moose Pad in the Milne Point field operated by Hilcorp Energy, showed production increases after starting in April. Production averaged 3,368 barrels per day in May and 4,900 barrels per day in June.