ConocoPhillips will resume its drilling on the North Slope. The company is making plans to reactivate two rigs before the end of the year and to have four rigs operating in 2021.
Joe Marushack, CEO of ConocoPhillips’ Alaska subsidiary, said the decision to restart activity was made following the defeat by voters in the Nov. 3 state general election of a ballot proposition that would have raised state taxes on oil and gas production.
“Since April, when COVID-19 caused oil prices to drop we were facing a potentially large increase in taxes. We’ve had no rigs running in the Prudhoe Bay, Kuparuk and Alpine fields,” for the first time, Maushack told the Resource Development Council’s annual conference, held virtually this year because of COVID-19.
The drilling wlll make a dent in the approximate 3,000 oil workers laid off in Alaska since the start of the COVID-19 pandemic. Each working drill rig supports about 100 jobs directly and many more through support services that are needed. The drilling of more wells in producing fields is a key part of companies’ plans to stem the natural decline of the fields by adding production.
Marushak said work will resume in the commissioning and startup of Doyon Drilling Co.’s new Rig 26, a heavy unit designed to drill long “extended reach” horizontal producing wells. These will be drilled to Fiord West, a deposit in the Alpine field that is isolated by a river channel from existing Alpine infrastructure.
Fiord West would be costly to develop with conventional surface production pads and roads. ConocoPhillips will instead drill into the deposit from existing nearby production pads using horizontal wells.
Drilling will also resume in the Kuparuk River field with one drill rig and a smaller “workover” rig used to do maintenance and stimulation work on existing wells.
Meanwhile, a rig that had been working at CD-5, a small “satellite” field to the Alpine field will resume drilling. Later in the spring the rig, Doyon 21, will move to GMT-2, a new ConocoPhilips project under construction in the National Petroleum Reserve-Alaska, where it will drill production wells in anticipation of a production start in late 2021.
GMT-2 is expected to produce 35,000 barrels a day to 40,000 barrels a day of new oil production at its peak.
There’s no word yet on a resumption of drilling in the big Prudhoe Bay field now operated by Hilcorp Energy, Marushack said. That decision requires agreement among the three Prudhoe Bay owners that include ConocoPhillips and Hilcorp, but also ExxonMobil. Hilcorp took over as Prudhoe operator after purchasing BP’s Alaska “upstream” producing assets in July.
However, while BP and ConocoPhillips shut down rigs last spring Hilcorp kept two rigs working in the Milne Point field where it is operator and now sole owner. Milne Point id adjacent to the Prudhoe Bay field.