Australian company reports more encouragement in North Slope test well results

An Australia-based independent oil explorer, 88 Energy, reported additional encouraging results from an exploration well drilled last winter south of Prudhoe Bay. In a second “flow test,” the well produced 50 barrels per day of high quality crude oil measured at 39 degrees API gravity from the “SMD-B” reservoir, one of two oil-bearing sections being tested.

88 Energy’s new results were announced April 14.

Another reservoir section tested, “Upper SFS, flowed 70 barrels per day of high quality oil measured at 40 degrees API gravity, 88 Energy announced April 2.

API gravity measurements are a generally accepted indicator of oil quality and value. Prudhoe Bay oil, in comparison, is 29 degrees API gravity. The well being tested was 88 Energy’s Hickory 1 well located near the Dalton Highway about 20 miles south of Prudhoe.

The daily flow rates were done under test conditions mainly to establish that hydrocarbon fluids will flow through the reservoir rock as well as to gather oil samples for analysis.

If the oil formations are developed they would be produced with horizontal production wells achieving 10 to 12 times the flow rates of the tests done over the past few days, 88 Energy said in a statement.

Horizontal production wells are drilled laterally through a reservoir section from a drill rig at the surface some distance away. They typically produce much more oil than a vertical well drilled from the surface down.

What is significant is that Hickory 1 is a few miles south of where Pantheon Resoures, a U.K. company, has drilled and found oil in other wells. Pantheon is now doing development planning for its discoveries.

The discoveries by both companies are also near the existing Trans Alaska Pipeline System, which runs south from its Pump Station One at Prudhoe Bay. 88 Energy said it is updating its resource estimates for Hickory 1 and will release them in the second half of the year.

Both 88 Energy and Pantheon have continued their exploration despite setbacks. 88 Energy has drilled several North Slope locations but the discovey of a commercial oil deposit has so far eluded the company until possibly now.

Great Bear Petroleum, now the Alaska operations arm of Pantheon, had high expectations for its initial plan of developing production from the deep oil and gas source rocks on the slope, but early drilling was disappointing. Great Bear, and now Pantheon, went on to explore conventional oil prospects it had found while drilling into the source rocks.

The company is now encouraged by those results.