ConocoPhillips increases estimated production on the western North Slope

ConocoPhillips has increased its estimated production from GMT-2, a new North Slope oil project scheduled to begin production in late 2021, according to plans filed by the company with the U.S. Bureau of Land Management.

GMT-2 is in the National Petroleum Reserve-Alaska, a large 23-million-acre federal land enclave on the western North Slope and which is administered by the BLM.

In a related development, U.S. Department of the Interior is in talks with state and North Slope Borough officials about a revision to the Integrated Activity Plan, a land management plan for the reserve developed by the Obama administration.

The current land management plan places much of the most oil-prospective lands in the NPR-A off-limits to oil exploration. Critics of the plan argue it far exceeds what is needed to protect ecologically-sensitive areas, mostly coastal wetlands.

The increased estimate at GMT-2 is from 30,000 barrels per day estimated earlier to 38,000 barrels per day, and it results from a new assessment of what the project can produce using new horizontal drilling technologies being applied on the North Slope, according to Scott Jepsen, ConocoPhillips’ Alaska external affairs vice president.

“We’re able to reach a lot more of the underground reservoirs with these technologies,” Jepsen said.

Horizontal drilling is the drilling of underground oil wells laterally, at a 90 degree angle, off conventional vertical well to the surface. Sometimes more than one well can be drilled from a single vertical well.

Drilling laterally allows more of the underground reservoir to be drained from a single surface production pad and it results in big savings as well as a lower environmental impact. This illustrates how rapidly-advancing new oil and gas technology is making new slope projects more productive and lower-cost, which will allow development to expand even at lower oil prices.

BLM approved a final Environmental Impact Statement, or EIS, for the project July 20 based on ConocoPhillips’ plan of development. The final EIS sets the stage for a Record of Decision by the agency within a month and federal permits for the project.

ConocoPhillips has yet to formally sanction, or approve, the project.

GMT-2 is one of a string of medium-sized new developments the company is pursuing in the petroleum reserve, a large 23-million-acre federal enclave on the western North Slope.

GMT-1, a similar development eight miles to the east, is now being completed and is due start production later this year, with estimated peak output of 30,000 b/d.

The company is also pursuing development of Willow, a larger discovery a few miles west, which could produce 100,000 b/d or more with first production in 2023 or 2024, ConocoPhillips has said.

As these projects are developed road and pipeline infrastructure is being pushed into the NPR-A from the producing Alpine field, which is on state-owned lands in the Colville River delta at the northeast border of NPR-A.

As infrastructure is built more areas of the federal reserve will be explored, making smaller discoveries economically viable. ConocoPhillips has made a new discovery further west that it calls “Willow West,” that it will delineate in drilling planned this coming winter.

In another NPR-A development, a revision to the Integrated Activity Plan, the land management plan for the reserve, is being pursued by federal, state and North Slope Borough officials.

The present plan puts almost half the NPR-A, about 11 million acres, into areas restricted from drilling including its most prospective areas for large oil discoveries. No formal revision process has yet been announced, but Interior officials would like to see a new plan in place for the 2019 regular November areawide” NPR-A lease sale.

Critics of the Obama plan now in effect, including the North Slope Borough, the regional municipality, say the off-limits designations far exceed what is needed to protect sensitive coastal areas like Teshekpuk Lake, a region of lakes and wet lands important to migrating birds.

In 2013 Interior Secretary Sally Jewell used the new plan to roughly double the Teshekpuk Lake special management area to 3.6 million acres. The borough says sensitive areas can be protected through stipulations on permits, and wants the restricted areas scaled back.

One question is whether Interior will use a streamlined Environmental Assessment for a revision of the land management plan or whether a more lengthy Environmental Impact Statement process will be used. The existing plan was adopted through an EIS process.

Some in industry argue there are provisions in the current plan where the U.S. Bureau of Land Management can offer leases within the Teshekpuk Lake special management area.