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The Explorers 2024: 88 Energy announces light oil at Hickory well
Flow test confirms oil discovery at Project Phoenix, testing will continue
Eric Lidji for Petroleum News
In an announcement on April 2, 2024, as The Explorers was going to print, 88 Energy Ltd. announced that flow testing of the Upper SFS reservoir had confirmed a light oil discovery at the Hickory No. 1 well "in line with expectations." Production during the flow test peaked above 70 barrels per day of approximately 40-degree API oil gravity.
Through its subsidiary Accumulate Energy Alaska Inc., 88 Energy perforated a 20-foot section of the Upper SFS reservoir at Hickory No. 1 and conducted a single fracture.
The well flowed for 111 hours -- 88 naturally and the rest with nitrogen lift. The well flowed at an average rate of 42 barrels per day and a total range between 10 and 77 barrels per day with a maximum of 15% oil cut by the end of the flow test. The flow included unmeasured quantities of natural gas liquids as well as associated gas.
88 Energy CEO and Managing Director Ashley Gilbert said in a statement, "Outcomes from this test represent a significant milestone for 88 Energy and its shareholders, with the first successful flow of oil to surface achieved at the company's Alaska projects.
"The completion of flow testing in this zone and recovery to surface of light oil, in addition to (natural gas liquids) and associated gas, confirms our understanding of the substantial potential of these reservoirs. Significantly, these flow rates were achieved from only a 20-foot perforated section in a vertical well with a low volume stimulation over a short period. As previously highlighted, production rates in long horizontal production wells are typically multiples of six to 12 times higher than tested in vertical wells, as evidenced in many Lower 48 analogues.
"Importantly, the Upper SFS zone had not previously been intersected or tested at either Project Phoenix or on adjacent acreage. It is particularly exciting for us to produce oil to surface and demonstrate the producibility of this additionally discovered reservoir. Future plans for the assessment of the commerciality of Project Phoenix will be communicated post analysis of the Hickory-1 program.
"We will now proceed to undertake flow testing of the shallower SMD-B reservoir over the coming weeks. This is a zone which has previously been successfully tested on adjacent acreage to the north."
The next phase of the flow test will focus on the SMD-B reservoir.
The flow test is part of 88 Energy's Project Phoenix.
The company drilled Hickory No. 1 in early 2023 using Nordic Calista Rig No. 2 and secured All American Oilfield Rig-111 for the flow test. The project was financed, in part, through funding committed from junior partner Burgundy Xploration, LLC.
Icewine Under the name Tangiers Petroleum Ltd., 88 Energy originally pursued oil and natural gas prospects offshore Morocco and both onshore and offshore Australia. Following a pivot, 88 Energy Ltd. came to Alaska in late 2014 to pursue North Slope opportunities.
The company arrived in Alaska in late 2014 through an agreement with Burgundy Xploration to acquire 87,000 acres in the central North Slope south of Prudhoe Bay.
88 Energy initially saw Icewine as an unconventional play but later pursued conventional opportunities as a way to generate cash flow to fund a wider range of projects.
Project Phoenix was originally an unconventional HRZ play called Icewine East. The company renamed the play in 2022 to reflect a new strategy: focusing on proven oil-bearing conventional reservoirs identified during by previous drilling activities.
The Icewine prospect always included eastern and western blocks. The company drilled the Icewine No. 1 well in 2015 and the Icewine No. 2 well in 2017 on the eastern block, and it drilled the Charlie No. 1 conventional well in 2020 on the western block.
88 Energy drilled Hickory No. 1 to test four reservoirs: the Shelf Margin Delta, Slope Fan System, Basin Floor Fan and Kuparuk. The Shelf Margin Delta (SMD-C, B and A) was the primary target. The Slope Fan System and Basin Floor Fan reservoirs were secondary targets. The deeper Kuparuk reservoir was a tertiary target. The company has said it is targeting "647 million barrels of oil unrisked net mean prospective resources."
The project is a joint venture with Burgundy Xploration. Through subsidiary Accumulate Energy, 88 Energy holds 75.2% percent working interest in some 184,000 net acres.
Project Phoenix is south of Pantheon Resources acreage, and 88 Energy has been touting similarities between the projects. Pantheon recently discovered resources in the Lower Basin Floor Fan reservoir. "The Basin Floor Fan reservoir was the deepest of the multiple hydrocarbon-bearing pay zones intersected as part of the Hickory-1 exploration well. This reservoir, along with our primary, high-priority SMD, Upper SFS and SFS targets, is planned to be flow tested as part of the upcoming program," Gilbert said in September 2023.
Charlie No. 1 in Icewine West "confirmed large condensate discovery in the Torok formation in both Middle Stellar and Lower Stellar targets," according to 88 Energy. The company is considering a future flow test, pending the results of the Hickory project.
A recent mapping initiative at Icewine West identified a series of Mid Schrader Bluff prospects. Building on its enthusiasm for Hickory No. 1, as well as its interpretation of Pantheon Resources' certified contingent resources at the nearby Kodiak prospect, 88 Energy is evaluating the Schrader Bluff prospects as part of its Icewine West portfolio.
Leonis 88 Energy is also working to advance its Project Leonis this year.
Through its subsidiary Captivate Energy, the company is preparing a "prospective resource estimate ahead of targeted farm-out next year and potential drilling of a new well early in the 2025/26 winter season," according to an October 2023 statement.
In a November 2022 lease sale, Captivate Energy acquired 10 state leases covering some 25,600 acres south of the Prudhoe Bay unit, adjacent to the Trans-Alaska Pipeline System and the Dalton Highway. The acreage had previously been included in the Storms 3D seismic data from 2005 and contains ARCO's Hemi Springs Unit No. 3 exploration well from 1985 and Pioneer Natural Resources' Hailstorm No. 1 well from early 2006.
88 Energy is interested in an Upper Schrader Bluff reservoir that is productive in the West Sak and Polaris fields to the northwest but was not a zone of interest for ARCO.
Hemi Springs Unit No. 3 well files indicated more than 200 feet of logged net pay in the Upper Schrader Bluff reservoir, with good porosity and oil shows evident over the interval. An initial internal interpolation of the Storm 3D data indicated an Upper Schrader Bluff prospect bound by faults on three sides, according to 88 Energy.
Yukon Although currently low on its list of priorities, 88 Energy continues to hold a lease position on the eastern North Slope through its subsidiary Regenerate Alaska LLC.
The company began acquiring acreage near the border of Area 1002 of the Arctic National Wildlife Refuge in 2017 and 2018. The company asked federal regulators to cancel those leases after the Biden administration suspended ANWR activity in 2021.
Even after surrendering the leases, 88 Energy holds some 38,681 acres in the area through its subsidiary Regenerate Alaska. The leases include BP's Yukon Gold No. 1 discovery from the early 1990s. 88 Energy acquired 3D seismic over the acreage in 2018.
88 Energy estimates that the acreage contains some 90 million barrels of prospective resource and believes there is an opportunity to utilize new Point Thomson infrastructure.
Peregrine After several years of work at Icewine, and acquiring leases at Project Yukon, 88 Energy shifted to Project Peregrine, drilling two wells at the Merlin prospect in 2021 and 2022.
Through its subsidiary Emerald House LLC, 88 Energy is looking to farm out exploration activities that could prove up several newly identified prospects at its Project Peregrine, located in the southeastern part of the National Petroleum Reserve-Alaska.
In October 2023, 88 Energy released an independent prospective resource update for Project Peregrine identifying two new prospects in the Nanushuk -- N12 and N13.
According to the company, a short sidetrack of the proposed Harrier No. 1 well could now assess as many as three independent prospects from a single ice pad. The company said it was undergoing "multiple ongoing discussions with near-field operators regarding potential cost-sharing arrangements for Project Peregrine over the coming years."
The U.S. Bureau of Land Management approved a 12-month suspension of the Project Peregrine leases in December 2023, running through Nov. 30, 2024. The suspension relieves the company of conducting activities on the leases aside from basic maintenance activities and also relieves the company of lease rentals due in the first quarter 2024.
Without the pressures of drilling commitments and lease payments, the company can focus on the preliminary activities underpinning future exploration work at the site, including "the refinement of internal geological and geophysical models/interpretation, including further optimization of the Harrier No. 1 location," according to the company.
Project Peregrine covers 195,373 net acres in the NPR-A north of the Umiat prospect and a south of the Willow prospect. 88 Energy is the sole working interest owner.
Project Peregrine includes three prospects: Merlin and Harrier in the Nanushuk formation around 5,000 feet and Harrier Deep in the Torok/Basin Floor Fan around 10,000 feet.
Emerald House drilled the 5,267-foot Merlin No. 1 well in early 2021 using All-American Rig 111, which was deconstructed and transported over existing snow trails. The well encountered oil targets of the N20 and N18 intervals of the Nanushuk, according to 88 Energy. It also noted a "hydrocarbon signature" in the N19 interval.
The Merlin No. 1 results also suggested the potential of a proposed 6,000-foot Merlin 1A sidetrack targeting the N14 interval. The company has yet to sanction Merlin No. 1A.
The proposed Harrier No. 1 well would provide further information about those deeper targets by pursuing the N15 and N14 North intervals to the north of the Merlin wells.
Encouraged by the results, Emerald House drilled the 7,334-foot Merlin No. 2 appraisal well east and down-dip from Merlin No. 1 using the Arctic Fox rig in 2022. It targeted an estimated 652 million barrels of oil in three Nanushuk zones -- N18, N19 and N20.
The tightness of the formation prevented 88 Energy from logging samples from all three targeted zones, and the company ultimately plugged and abandoned the well.
Umiat 88 Energy acquired the Merlin prospect amid the upheavals of the coronavirus pandemic in mid-2020 through an off-market takeover of XCD Energy, secured a farm-out partner toward the end of the year, and acquired the neighboring Umiat prospect in early 2021.
The Umiat oil field is immediately south of Project Peregrine. Given the remoteness of the area, any development of one would certainly improve the economics of the other.
Umiat is one of the largest undeveloped oil fields in Alaska. The U.S. Navy discovered the field in 1946, during a post-war campaign to increase domestic oil supplies.
While the majors were focusing on massive central North Slope oil fields, independents Arctic Falcon Exploration, Renaissance Alaska, and Rutter and Wilbanks pursued Umiat in the late 1990s and early 2000s, but none advanced the project beyond exploration.
The remoteness of the Umiat leases and the technical complications of the geology have forced many companies to scale back or abandon ambitious exploration efforts.
Australian independent Linc Energy Ltd. drilled the vertical Umiat No. 18 well, collected 300 feet of core and encountered 100 feet of net pay in the Lower Grandstand in early 2013. Using chilled drilling mud to prevent permafrost from thawing in the shallow reservoir, and employing an open-hole completion design, the company drilled the 4,100-foot Umiat No. 23H well in early 2014. It was the first horizontal well ever drilled at the Umiat oil field and the first successful flow test at the field in decades.
An ambitious development program for Umiat was thwarted by a decline in oil prices, leading Linc to file for bankruptcy protection in 2016 and sell its Alaska assets.
Arctic Acquisition Inc. grabbed Umiat with an $80 million credit bid and turned over operatorship to Malamute Energy Inc. Malamute Energy spent several years de-risking the property before selling it to the 88 Energy subsidiary Emerald House in 2021.
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