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Proposed Narwhal unit in West Harrison Bay
Owners initial 5-year exploration plan calls for drilling up to four wells
Kay Cashman Petroleum News
Anchorage-based Narwhal LLC and EE Partners Corp., the designated operator, filed an application with Alaska's Division of Oil and Gas to form the Narwhal unit in state submerged lands of West Harrison Bay offshore the National Petroleum Reserve-Alaska. Filed June 25, the application was deemed complete July 25 by the division, which is part of the Alaska Department of Natural Resources.
(See chart and map in the online issue PDF)
The proposed unit encompasses approximately 77,848.60 acres and encircles Shell Offshore's recently relinquished West Harrison Bay unit.
Narwhal/EE Partners' application includes a proposed initial five-year unit plan of exploration, which calls for drilling at least two and up to four exploration wells, as well as the evaluation of all available geologic and geophysical data that relates to the Narwhal unit area.
Shell's 81,000-acre West Harrison Bay unit lies close to major Nanushuk formation discoveries west of the central North Slope.
It's northwest of Santos' Pikka unit and approximately 7 miles directly north of ConocoPhillips' Bear Tooth unit, which holds the big Willow discovery.
On May 6 operator and 100% owner Shell Offshore surrendered its 18 leases in the nearshore West Harrison Bay unit to the state of Alaska, the notice of which was posted May 14 on the division's website.
Narwhal, EE Partners spend $6.8M Narwhal incorporated in Alaska and began to acquire leases in West Harrison Bay in 2016.
In the 2016 Beaufort Sea Areawide Lease Sale, Narwhal acquired six leases comprising 31,214.80 acres for a total cash bonus bid and interest of $782,573.08. Narwhal then acquired seven additional West Harrison Bay leases totaling 28,899.36 acres in the 2019 Beaufort Sea Areawide Lease Sale with a bonus bid and interest of $784,460.52.
Narwhal's combined current leasehold is 57,950.34 acres. The company has made annual lease rental payments on these holdings that total $3,289,490 as of the date of the June 25 unit application.
Narwhal affiliate EE Partners was the high bidder on seven Beaufort Sea leases in the 2023 Beaufort Sea Areawide Lease Sale. These leases comprise 23,370.00 acres for a total cash bonus bid and interest of $689,415.00.
The EE Partners leases in West Harrison Bay are adjacent to the Narwhal leases and on-trend with the Narwhal leases' potential hydrocarbon accumulation, Narwhal/EE Partners said in their Narwhal unit application.
EE Partners was the highest bidder and largest participant in the 2023 Beaufort Sea Areawide Lease Sale, and the only company to acquire leases in Harrison Bay.
To date, the applicants have invested more than $6.8 million in the Narwhal unit leases and continue to expend funds toward evaluation of those leases.
Narwhal and Shell After acquiring its initial set of leases in 2017, Narwhal began to acquire and analyze subsurface data. In 2018, Narwhal initiated negotiations with Shell Offshore to coordinate an exploration drilling program in West Harrison Bay and share the multi-billion-dollar infrastructure cost required to bring oil to market.
Although Shell did not mention any negotiations with Narwhal, the major said publicly that it was looking for a partner finically able to both operate the West Harrison Bay unit and afford the multi-billion-dollar cost of drilling and development.
Without Shell In 2022, Narwhal embarked on a comprehensive geological program to identify other Nanushuk formation prospects to justify the payment of the enormous infrastructure costs required to develop West Harrison Bay leases independent of any financial or other cooperation by Shell.
This work included: acquiring all available 3D seismic data for West Harrison Bay; retaining independent geologists and geoscientists to reprocess and interpret the seismic data for the Nanushuk and Torok formations; and applying to expand the West Harrison Bay unit to include the Narwhal leases. Much of this geological work was detailed in Narwhal's 2023 application for rental reduction, which was approved by the division in June 2023, Narwhal/EE Partners said in their June 2024 application for the Narwhal unit.
Following the acquisition of the EE Partners leases in November 2023, Narwhal retained geologists and geophysicists to conduct an in-depth evaluation of the EE Partners Harrison Bay prospects using seismic data available from the division's previous SALSA block auctions.
Narwhal also retained Wood Mackenzie to assist with estimating development costs and construct a valuation model for the Narwhal/EE Partners potential reserves. Based on this valuation, Narwhal confirmed that the Narwhal leases and the EE Partners leases collectively contain sufficient potential reserves to justify the high estimated development and infrastructure costs of more than $8 billion for the success case of a commercial discovery without the participation of other leaseholders in West Harrison Bay.
The applicants, who hold a 100% working interest in all the leases proposed to be included in the Narwhal unit, deferred the establishment of participating areas for the unit until appraisal wells have been completed and testing or production information is obtained, at which point they will make appropriate PA designations.
Advancing permitting, field work "In 2024, Narwhal has continued to advance the permitting and field work for an exploration drilling program by" doing the following, per the June 2024 Narwhal unit application filed by Narwhal and EE partners:
--Amending and filing long-lead permits required for the proposed exploration drilling campaign, including incidental harassment authorization from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service;
--Expanding the team of geological consultants to conduct a deep technical assessment and identify optimal drilling locations on Narwhal unit leases;
--Conducting outreach to local communities and Alaska Native groups, including with the Alaska Eskimo Whaling Commission and the North Slope Borough regarding a Plan of Cooperation and Open Water Conflict Avoidance Agreement;
--Engaging Nordic-Calista Drilling and Doyon Drilling to coordinate procurement and transport of fit for purpose exploration drilling rigs from Canada to Alaska;
--Entering into consulting and service agreements with 10 different entities, and engaging in negotiations with other service and equipment providers to prepare for the exploration drilling campaign; and
--Preparing an oil spill response plan, expanding Narwhal's operating team, and finalizing and filing "this application."
In their application to form the Narwhal unit, Narwhal/EE Partners said they've made "significant investment in the Narwhal unit leases over the past eight years and extensive efforts to prepare for the proposed Narwhal unit area exploration drilling campaign demonstrate their commitment to developing the Narwhal unit leases for the maximum benefit of Alaska and its people."
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