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Producers 2024: Mustang moving to production
Company looking to bring Southern Miluveach unit back online by end of 2024
Kristen Nelson Petroleum News
Mustang Holding LLC, the current operator of the Southern Miluveach unit on the North Slope, is aiming to bring it back online by the end of the year, according to the 10th plan of development for the unit the company filed with the Alaska Department of Natural Resources' Division of Oil and Gas Nov. 27, 2023.
Ownership of Mustang passed from the Alaska Industrial Development and Export Authority to Finnex Operating LLC on Oct. 27, 2023, the division said in a Dec. 15, 2023, approval of the POD. Mustang Holding is the operator. AIDEA had taken over from the field's developer, Brooks Range Petroleum Corp., in 2020 after BRPC defaulted on a loan agreement with AIDEA.
So far BRPC has had the only production at Mustang, producing its North Tarn 1A well from the Kuparuk River pool for one month in 2019, a total of 10,999 barrels over a 23-day period.
10th POD In its approval of the 10th plan of development for the Southern Miluveach unit the division said work commitments by Mustang included moving the facility out of cold storage by applying for necessary environmental and operating permits and fulfilling state bonding requirements; installing either new or repurposed early process facilities with the capacity to handle expected oil and gas production, processing or reinjecting "from the existing NT-1A, M-02 well, completion of the M-01B well" and reconnecting the pipeline connection to the Alpine pipeline.
Phase 1 would include completion of drilling and well work operations for North Tarn 1A; SMU M-02 -- reperforation and possible stimulation; and SMU M-01B -- drilling lateral extension, possible stimulation.
Phase 2 would include drilling M-03 and up to two additional wells in 2025 or 2026 "to further demonstrate reservoir productivity and lateral continuity."
The division said Mustang was targeting resumption of production in the late fourth quarter of 2024.
Alaska Oil and Gas Conservation Commission records current as of late November show Mustang Holding has completed two sidetracks at SMU: M-01B on Sept. 6, 2024, and M-03A on Sept. 13.
The company also has AOGCC approval to flare for up to 180 days in conjunction with pre-production well testing.
Pad expansion On Sept. 13, 2024, the division approved an application from Mustang Holding to expand the Mustang Pad by some 5 acres at the southeast corner of the pad, requiring 70,000 cubic yards of gravel.
The company said material from the Mustang Mine was used for original pad construction, and said the pad "has experienced some settling and erosion" which will be addressed by using "methods for gravel placement that were not used during the initial construction of the pad," including screening the gravel to remove excess fines and using geotextile on the tundra. Gravel will be placed on the geotextile "in one-foot lifts until design grade elevation is reached."
The work will occur before winter so material can be appropriately compacted and an additional foot of gravel will be placed on top of the design grade "and left until the following season, when the pad will be graded to design elevation."
The pad expansion will provide space for camps to be placed "at an appropriate distance from current and planned well sites."
The pad work was scheduled to begin Sept. 1, 2024.
Mustang history Mustang was the first oil field on Alaska's North Slope to have been taken from discovery to production by a small independent -- Brooks Range Petroleum Corp., or BPRC.
BRPC was formed in 2004 as the operating arm of the Kansas-based Alaska Venture Capital Group, or AVCG, to pursue large or mid-sized oil fields passed over during the first decades of North Slope development. The lead individual was Bart Armfield.
The small independent spent 8 years looking for the right North Slope play before drilling the North Tarn No. 1A discovery well in 2012. The resulting Mustang field was estimated to hold some 21.2 million proven barrels of oil in place.
BRPC then spent the next several years responding to a series of technical, economic, political and logistical challenges at the Mustang field. While some of those complications were inherent to the field and to the company, others were external, such as the crash in oil prices in 2014, as well as the 2017 veto by then-Gov. Bill Walker of previously approved oil and gas tax credits designed to offset exploration expenses for companies such as BRPC.
Despite these challenges, BRPC succeeded in putting Mustang online in early November 2019. Per the Alaska Oil and Gas Conservation Commission the field produced 10,999 barrels of oil that month, averaging 478 barrels a day for the 23 days it was in production.
BRPC conducted an extended production test from the North Tarn No. 1A well using its temporary processing facilities and exported oil to the Alpine Pipeline System. By the time a flaring permit for the unit expired on Nov. 27, 2019, the company had produced 11,944 barrels of oil, according to its estimates.
Although Mustang production was small by North Slope standards, it was a sign that the basin was at least theoretically accessible to players beyond multinational majors and even beyond large and mighty independents with strong balance sheets.
But the challenges that had plagued earlier years continued apace.
As the production test was proceeding, a private sector backer failed to meet its financial obligations on the project. BRPC and working interest owners began refinancing a major loan with the Alaska Industrial Development and Export Authority, their main financial backer.
According to BRPC, AIDEA issued a notice of default on that debt in early October, and then, in early November exercised its rights to accelerate debt repayments.
BRPC suspended operations.
The story continues from there, but BRPC was not able to re-start the field without AIDEA's backing.
The division approved change of control to Finnex on Feb. 29, 2024, with an effective date of Nov. 1, 2023.
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