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The Explorers 2024: Jade's Sourdough project on hold
Goal to deliver oil to Skid 50 meter as soon as Q2 2025
Kay Cashman Petroleum News
In its sixth and latest annual plan of development, or POD, Jade Energy LLC proposes to move the Sourdough development project forward with the goal of delivering oil to the Skid 50 meter as soon as the second quarter of 2025, with an overall objective of the project to come fully online to produce 35,000 barrels of oil per day by 2028.
This would make Sourdough the next project in the queue for supporting construction and operation jobs in Alaska's oil and gas industry.
The Alaska Department of Natural Resources and its Division of Oil and Gas were clearly supportive of Jade's efforts to drill an exploration/appraisal well into BP's Sourdough discovery until Dec. 21, 2022. Then everything changed, putting the entire project on hold.
The parties are, however, talking.
Readers can follow that story in the weekly Petroleum News.
Brookian reservoirs Erik Opstad's Jade Energy is 100% working interest owner of ADL 343112 Segment 2 in Area F of the Point Thomson unit on the eastern North Slope.
Going back in history, Area F was created more than a decade ago as part of the Point Thomson unit settlement talks between the state of Alaska and the PTU working interest owners. They brought together 7,647 acres of non-contiguous leases in the northeast and southeast corners of the Point Thomson unit. Jade's Sourdough project targets the southeastern leases, known as Tract 32.
Potential Brookian reservoirs have been encountered by numerous wells drilled in and near the Point Thomson unit since the 1970s.
Jade's acreage holds BP's two mid-1990s oil discovery wells, Sourdough 2 and 3. BP drilled the 12,562-foot Sourdough No. 2 well in March 1994 and the 12,475-foot Sourdough No. 3 well in March 1996.
In 1997 BP estimated the prospect held 100 million barrels of recoverable oil.
But BP never pursued development because at the time there was no pipeline near the Sourdough prospect which borders the 1002 Area of the Arctic National Wildlife Refuge.
One hundred million barrels of oil did not justify the cost of a pipeline and related facilities. The Point Thomson project had yet to be developed, and even with it, Sourdough development was considered by state of Alaska and Jade officials as uneconomic, carrying a 40% net profit share burden plus a 12.5% royalty.
Nonetheless, Jade's Sourdough project has steadily been gaining ground since the initial 3D seismic survey covering the Sourdough prospect (Yukon 3D data set), which was conducted by Jade stakeholders in 2018.
Jade has demonstrated a continuous record of ongoing technical and field work to advance understanding of the high pressure reservoir and requirements for its potential development, spending approximately $20 million to date.
Land use permit Jade applied for a 5-year off-road travel land use permit in late May 2023 with DNR's DOG.
According to the public notice posted by the division the permit was for "off-road travel, ice construction, and associated activities on state land between the Canning and Colville Rivers. Activities would be in support of oil and gas operations using approved vehicles," specifically for "off-road travel and ice/snow trail construction for the Jade 1 Exploration Program."
In fact, it was more of an appraisal and development program, than an exploration program since BP had already done the Sourdough exploration.
Jade asked in its application to end the 5-year permit in 2027. The months of each year in which the permit was needed were December through July.
Drilling and support operations for Jade 1 were to take place in winter 2023-24 during the open tundra winter travel season and were to be supported by using the 61.5-mile Jade snow road that would run from Deadhorse to the Point Thomson unit.
The Jade 1 ice drill pad would be accessed by the 4.2-mile Jade ice road running from the PTU gravel lease roads to Jade 1 and by the Jade ice airstrip which would be adjacent to the pad.
Jade also might opt to drill additional wells and/or re-enter and test existing wells on its lease in the future. This might require revised alignments for snow roads, ice roads and airstrips, and ice pad locations within the Arctic Coastal Plain in an area bounded by the Sag River to the west and the Staines River to the east.
Jade had a facility sharing agreement with ExxonMobil Alaska Production Inc. and Hilcorp North Slope LLC to use PTU facilities and heavy equipment.
Opstad told Petroleum News June 5, 2023, that Jade 1 would be drilled to a depth of about 12,500 feet true vertical depth.
Jade's application said drilling would evaluate stacked conventional objectives within the Brookian, before plugging back and sidetracking into a horizontal production completion.
In its lease plan of operations filed in early May 2023 with DOG, Jade said drilling was expected to include laterals, sidetracks or additional penetrations from the same pad.
"Half the project is funded at this time; we're still looking for investors," Opstad said in the June 5, 2023, interview with Petroleum News.
At that time Opstad seemed confident that the company would be able to raise the money it needed to move forward with its plans for Jade 1.
(Those investors backed off the project starting Dec. 21, 2022, when DNR/DOG took the position of a hostile agency, Opstad said.)
One challenge Opstad was focusing on in June 2023 was the "enormous strain" on the supply chain because of the "extremely elevated activity level on the North Slope" from projects such as Pikka Phase 1, Willow and Lagniappe's exploration program.
Editor's note: As of March 2024 Jade had completed nearly all permitting required to deliver the drilling program. The few permits not in hand are waiting on the resolution of administrative issues with DNR/DOG.
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