Conoco Phillips

ConocoPhillips is on a roll on the North Slope. Three weeks ago the company announced it has discovered major new oil resources on the North Slope.

Now it has confirmed a new expansion of a highly-successful small “satellite” field near the producing Alpine field on the North Slope.

Ten more production wells are to be added at CD-5, bringing the total wells producing to 44 by mid-2019, ConocoPhillips spokeswoman Natalie Lowman said in an interview Tuesday.

CD-5 is now producing 36,000 barrels per day, more than twice its predicted peak of 16,000 barrels per day when the field was brought on production in October 2015 with 16 wells.

A satellite field is a separate producing reservoir near a large field where production is tied into the pipeline and processing plant infrastructure of the large field, achieving cost savings.

CD-5 is also the first commercial oil production from the National Petroleum Reserve-Alaska, or NPR-A, a large federal land reserve on the western North Slope.

Lowman could not say if the additional wells would add production but said they would at least stabilize production at CD-5 for an extended period.

The success at the satellite is a result not only of surprisingly good reservoir and well performance but also new technologies being brought to the slope, particularly the drilling of “extended-reach” horizontal production wells and “multi-lateral” wells, where multiple wells drilled below ground from a single well to surface.

These techniques allow producers to tap into thin layers of oil-bearing strata that extend for distances around the drill site. These become more economic when produced by wells drilled from existing surface infrastructure than if they were tapped by conventional vertical wells, which would require construction of new surface gravel pads, roads, utilities and pipelines.

Because of those savings and other efficiencies, ConocoPhillips has been able to lower to cost of new oil supply from CD-5 from $66 per barrel estimated when the project was “sanctioned,” or approved by the company, to about $30 per barrel, a 55 percent reduction, according to a presentation given to analysts in Anchorage on July 16.

ConocoPhillips now expects to harness the technologies used at CD-5 to develop Willow, a large new discovery in the NPR-A that is west of CD-5, for an oil supply costs of about $40 per barrel, according to the analyst presentation.

The company is also using the new drilling techniques to tap another, undeveloped small Alpine field satellite, Fjord West, which is separated from the main Alpine field pipeline and road infrastructure by river channels, making conventional surface production infrastructure likely uneconomic.

They will also be applied at two new projects besides Willow in the NPR-A that ConocoPhillips is bringing on line, GMT-1, which will begin production later this year, and GMT-2, scheduled to start up in 2021.

What is significant about the lower supply cost is that is means that CD-5 and other projects will be able to survive even if oil prices slump. “We know there will be continued volatility in oil markets,” Lowman said.

That is giving the company confidence to proceed with an aggressive new exploration and development program in the western slope region.

In announcements earlier this year ConocoPhillips said it discovered oil is all five exploration wells drilled last winter, and in mid-July the company said the drilling results have allowed it to expand its expected resource base at Willow, a discovery announced last year, from 300 million barrels to between 400 million and 700 million barrels.

New oil resources were also confirmed by two exploration wells drilled last winter near the Colville River, in what the company calls the “Narwhal” trend.

CD-5 has meanwhile become a showcase project for the new drilling techniques. Last April ConocoPhillips announced completion of its CD5-25 production well, breaking North American records for the longest land-based horizontal well lateral, at 21,748 feet.

Since two wells were drilled in the well, called a “multi-lateral” (multiple wells drilled below ground from a single well to surface) the combined lateral lengths of both segments was 34,211 feet, and 42,993 feet when the vertical segments drilled included.

The dual-lateral well will be able to drain oil from over six miles of reservoir because of the extended reach of the horizontal laterals, ConocoPhillips said last April.

Cost reductions per-barrel are partly due to the new drilling technologies but also other efficiencies.

Across its North Slope operations ConocoPhillips has been able to increase productivity by 45 percent since 2015, increased the barrels-produced per person employed in operations from 96 barrels per day per person to 139 barrels per day per person in 2018, according to the July 16 presentation to analysts.

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