Diminutive Glacier Oil and Gas boosting its Alaska production

A small Alaskan independent oil company, Glacier Oil and Gas, is rebuilding production at two small fields it owns after acquiring them in 2014 from Miller Energy Resources, of Tennessee, which had filed bankruptcy.

The overall production is small, about 5,000 barrels per day, but it was up 50 percent in mid-2017 compared to the same time in 2016, company president Carl Giesler said.

Giesler spoke to the Alaska Industry Support Alliance, an oil service company contractor group, in Anchorage on Sept. 14.

Glacier Oil and Gas is owned by two private equity investment firms, Apollo Global Management and HPS Investment Partners.

Giesler said the company has plans for new work in 2018 that it hopes will boost output substantially at the company’s two small Cook Inlet fields on the west side of Cook Inlet, Redoubt Shoal offshore and West MacArthur River field onshore, along with the small Badami field east of Prudhoe Bay on the North Slope.

The company also produces gas from the small onshore North Fork gas field near Homer, on the east side of Cook Inlet, with the gas sold to utilities in the Southcentral region.

The increase in 2017 oil production was at Redoubt Shoal and West McArthur River and it resulted from new drilling and work on existing producing wells earlier this year, Giesler said. The new wells were successfully “fractured,” a procedure where fluids are injected at high pressure to crack open the reservoir rock. There is also a new “waterflood” program that is performing satisfactorily, Giesler said.

Waterflood is a procedure where water is injected into the underground reservoir to flush out oil from the rock that was bypassed earlier. The well work had results that were much better than anticipated, Giesler said.

Meanwhile, two new projects planned by Glacier include “Starfish”, an exploration well planned for the North Slope that will test prospects adjacent to the producing Badami reservoir, and Sabre, a Cook Inlet test well near Redoubt Shoal. Sabre was initially planned last year but delayed.

Drilling will start at Starfish in January or early February, 2018, Giesler said, as soon as an ice road can be built from Prudhoe Bay to allow a drill rig and other heavy equipment to be moved to the site. The well will require about 60 days to drill. Sabre, in Cook Inlet, is planned to be drilled in the summer of 2018.

Giesler said Glacier sees big prospects for growth of oil production east of Prudhoe Bay on the North Slope. There are good prospects for new oil around Badami, he said. “There has never been a well drilled in this area that didn’t find oil,” Giesler said, although many of the wells did not reach expected production levels.

However, the infrastructure Glacier owns at Badami, including production facilities and a 25-mile pipeline to Prudhoe Bay, will facilitate new development.

A processing plant built originally by BP for Badami’s development has 38,500 barrels per day of processing capacity that is now largely unused and available for new oil, Giesler said. BP built the plant and pipeline but reservoir problems impeded production at the field.

The field was eventually sold to Denver-based independent Savant Resources, which was subsequently acquired by Miller Energy and is now owned by Glacier.

Badami now produces only 875 barrels per day but Giesler said the new Starfish well could open up new reservoir intervals. “If Starfish produces what we think it will, it will open up about 10 new ‘Starfish’ prospects,” he said.

Meanwhile, oil has also been discovered around the Point Thomson field further to the east. Point Thomson is now producing gas along with condensate, a natural gas liquid, but there are also small deposits of oil in the area that are known but not developed.

A 25-mile pipeline has already been built from Point Thomson to a junction with the Badami pipeline.

Exxon Mobil Corp., which operates the Point Thomson field, had expected to produce 10,000 barrels per day of condensates but technical problems at the field have impeded production. Still, the company recently filed plans with the state of Alaska to expand Point Thomson and increase condensate production to 35,000 barrels per day.

Tim Bradner is co-publisher of the Alaska Legislative Digest. He can be reached at timbradner@pobox.alaska.net