New oil will be coming into the trans-Alaska oil pipeline by the end of the year. ConocoPhillips’ GMT-1 project in the National Petroleum Reserve-Alaska will be starting production. Also, Hilcorp Energy expects to have first production by the end of December at its Moose Pad project in the Milne Point field.
Moose Pad is expected to reach 10,000 barrels per day in 2019 and over 20,000 barrels per day in 2020, David Wilkins, the company’s senior vice president for Alaska, told the Resource Development Council in Anchorage last Friday, Sept. 20.
GMT-1 is expected to attain peak production of 30,000 barrels per day. The project is one of several ConocoPhillips is working on in the NPR-A.
Meanwhile, Hilcorp is also continuing development planning for Liberty, an offshore project in offshore Beaufort Sea waters, which will produce 60,000 barrels per day of conventional light oil when it goes into operation, which is expected in 2023, Wilkins told the RDC on Friday.
Liberty is in federally-owned Outer Continental Shelf waters. The U.S. Bureau of Offshore Energy Management issued a Final Environmental Impact Statement for Liberty Aug. 31 and a federal Record of Decision is expected in mid-October. That will clear the way for final federal permits for the project, Wilkins said.
Meanwhile, the new heavy oil project in Milne Point will triple Hilcorp’s production of the thick, viscous fluid. “Moose Pad will be nice bump up in heavy oil for us,” Wilkins said.
Hilcorp is now producing about 10,000 barrels per day of heavy oil from the Shrader Bluff formation, a part of the Milne Point field, which produces mostly conventional oil.
Schrader Bluff oil is similar to West Sak oil produced in the nearby Kuparuk River field, where Kuparuk operator ConocoPhillips calls it viscous oil. The geologic formation is the same although there are different names. Schrader Bluff and West Sak oil are both in the range of 19 degrees API.
Hilcorp is also experimenting with a polymer flood procedure that it hopes will loosen the thicker oil, and improving recovery from the large oil resource in place, Wilkins said. Schrader Bluff is now expected to produce about 10 percent of the oil in place, and the company hopes the polymer can hopes boost that to the 25 percent recovery.
Liberty, meanwhile, is 15 miles east of Prudhoe Bay and is six miles offshore and in 19 feet of water. Liberty is now estimated to hold 80 to 130 million barrels of recoverable oil.
Hilcorp is 50 percent owners along with BP, at 40 percent, and Arctic Slope Regional Corp., the regional Alaska Native development corporation, at 10 percent.
Hilcorp plans to develop Liberty with an artificial gravel production island and a buried subsea pipeline to shore that would connect with existing pipelines, Wilkins said.
It would be virtual twin to Northstar, a small offshore project further west developed by BP in 1999, he said. Hilcorp now operates Northstar after purchasing it from BP.
Environmental groups have raised concerns about new offshore production in the Arctic but Wilkins said Northstar has produced safely for 17 years now with no accidents. Since Northstar was built two other Alaskan offshore projects have been built, the Oooguruk field by Caelus Energy and Nikaitchuq, by Eni Oil and Gas, both also involving offshore gravel islands and buried pipelines to shore.
There have been no spills or problems with these fields either, Wilkins said.
Mike Dunn, Hilcorp’s Liberty project manager, said the deposit was originally discovered by Shell in the 1980s but not developed. At the time companies were looking for large finds. BP acquired Liberty in 1996 and planned to develop it with an artificial island similar to Northstar, which BP was then constructing.
When oil prices dropped in 2000 BP delayed Liberty and worked on a plan to produce it with long, extended-reach wells drilled from shore. When technical problems complicated that approach BP went back to the artificial island, but then sold half of the field to Hilcorp as part of a larger sale of North Slope assets.
“This deposit has been known for years. We think it’s time to develop it,” Dunn said.
Hilcorp is now confident in the project economics but the partners, BP and ASRC, will have to be convinced, he said. Discussions among the partners is planned next spring, with a goal for a decision in mid-year, Dunn said.
If the go-ahead is given construction of the offshore gravel island could happen during the winter of 2020 and 2021 – on the North Slope the bulk of construction is in winter – followed by installation of the 16-inch pipeline to shore the winter of 2021-2022, Dunn said. Production would begin in May, 2023, under that plan.
Having more conventional “light” oil produced on the slope would be a benefit for all, Wilkins said. Overall production on the slope is gradually getting heavier as more viscous, or heavy, oil is produced, and Liberty’ oil, which Is about 27 degrees API, would bring up the quality of the blended crude flowing through the Trans Alaska Pipeline System.
North Slope oil work is important to residents of the Matanuska-Susitna Borough. The most recent state labor data, for 2016, shows 2,871 Mat-Su residents employed on the slope with about $281 million in wages earned.
Interestingly, while slope workers constituted only 7 percent of Mat-Su’s employment in 2016 the wages amounted to over 25 percent of the total $1 billion estimated to be earned in 2016 by Mat-Su residents.
2016 is the most recent year the residency data can be compiled because labor economists match employer reports against Permanent Fund Dividend applications to verify residency, and there is a two-year lag in doing that.
Mat-Su slope employment dropped from 3,588 in 2014, but that reflects the effect of the oil-price drop in 2015 and cutbacks by companies and contractors.