State OKs Oooguruk unit contraction delay

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources' Division of Oil and Gas has approved a request from Oooguruk unit operator Eni to delay contraction of the unit until Sept. 30, 2026.

In an Aug. 13 approval, division Director Derek Nottingham said Eni provided evidence to the division "that hydrocarbon resources extend onto leases within the OU, beyond the current participating area boundaries." He said the company has been working to assess and develop the Nuiqsut formation within those leases and has a current plan of development which includes drilling two Nuiqsut wells in 2025.

If the wells are drilled, and found productive, "it is likely the surrounding area would be included in a participating area," but if contraction is not delayed, the company "may lose the right to drill into these areas." If the Oooguruk unit were contracted, "the resources outside the unit are unlikely large enough to justify development by another lessee who might acquire the area in a future lease sale."

Nottingham also noted that Eni has an agreement to sell the Oooguruk unit to Hilcorp Alaska. "If the sale is to occur, delaying unit contraction would allow the incoming operator to evaluate the resources and develop a strategy to minimize economic and physical waste." Hilcorp's purchase proposal includes the nearby Nikaitchuq unit, both north of the Kuparuk River unit on the North Slope.

Sustained production from Oooguruk began in 2008 from the Kuparuk participating area. State regulations and the unit agreement require contraction of the unit to lands within a participating area and lands facilitating production 10 years after first production, but regulations allow the director to delay contraction, and it has previously been delayed to the end of September 2024.

Alaska Oil and Gas Conservation Commission production data for June, the most recent available when this issue of Petroleum News went to print, show combined production from the fields accounted for just over 4.5% of North Slope production, with Nikaitchuq averaging 14,396 barrels per day and Oooguruk averaging 5,550 bpd.

--KRISTEN NELSON