Kuparuk 2022: Following 1981 startup, Kuparuk build continues

CPF-2, CPF-3, seawater treatment plant, drill sites added; one-day production record set in October 1985 of 264,490 barrels, oil price crash in late 1985

Kay Cashman

Petroleum News

The years immediately following the mid-December 1981 startup of the Kuparuk River oil field saw major facilities work completed at the field, with the addition of the second and third central processing facilities and the seawater treatment plant, construction of drill sites and an expanded Kuparuk sales line.

By the end of 1986, big development projects at Kuparuk were considered complete, oil prices had plummeted, and operator ARCO Alaska’s focus began to shift to reservoir management.

The 1982 sealift included modules for the Kuparuk field including additional compression capacity for CPF-1 so the facility could handle more natural gas and maintain production levels.

The sealift also contained the first increment of the Kuparuk waterflood project for installation at CPF-1, the first large-scale water injection project on the North Slope.

Production from Kuparuk, which had begun the previous December, was averaging more than 90,000 barrels per day in 1982.

Operator ARCO Alaska had 163 employees working at Kuparuk, with about half of them on the slope at any given time.

The first waterflood on the North Slope was initiated in February 1982 at Kuparuk, more than a year ahead of the Prudhoe Bay waterflood.

Kuparuk waterflood began with 3,200 bpd of water at drill site 1A. The rate was to be gradually increased to 5,000 bpd, and then expanded to other wells at drill sites, such as 1E.

Because of Arctic conditions, the water had to be heated before injection to avoid having it freeze in the pipelines. And the pipelines had to be insulated and freeze protection systems installed.

“The key is to keep the water moving and keep it warm,” said Landon Kelly, Kuparuk operations manager at the time. “And we have to pump enough volume to overcome heat loss as the water travels down through the permafrost.”

Water came initially from wells; water for full-field waterflood would come from the Beaufort Sea.

By March 1982, 22,000 bpd of water were being injected into wells on drill sites 1A and 1E, Kelly said.

In Phase I the rate was gradually increased to 50,000 bpd.

ARCO said it expected to recover an additional 800 million to 900 million barrels of oil with waterflood.

A joint venture agreement between Kuparuk leaseholders was reached in 1983 for a 24-inch pipeline, expected to handle as much as 250,000 barrels per day by the late 1980s.

The Kuparuk River oil field’s 16-inch line, which could handle more than 100,000 bpd, was converted to other service once the 24-inch line was completed.

In 1983, sealift modules for Kuparuk were offloaded at a new dock at Oliktok Point, west of Prudhoe Bay, and then transported 10 miles south to the Kuparuk field. Previously Kuparuk modules came into Prudhoe Bay and were transported 40 miles overland.

The 1983 sealift carried the utilities portion of CPF-2; the oil handling portion of the new facility was scheduled for the 1984 sealift.

Installation of the second processing facility, CPF-2, was begun following its arrival on the 1984 sealift, which also carried a tripling of bed capacity for the Kuparuk Operations Center.

The sealift also included a crude oil topping plant that would be producing 3,000 bpd of diesel fuel by the end of 1984.

The sealift arrived a week ahead of schedule and that contributed to getting CPF-2 online at the end of October 1984, more than a month early, increasing production by 75,000 bpd and raising the field’s total daily production to 182,000 bpd by the end of the year.

The new 24-inch Kuparuk pipeline went into operation October 6, 1984.

Harold Heinze, president of ARCO Alaska in the mid-1980s, attributed the early startup of the Kuparuk River oil field to exceptional teamwork, as well as “excellent productivity” by field construction workers and supervisors. “This is the fastest major facility ever put into service on the North Slope.”

According to the1985 Annual Report on Alaska’s Mineral Resources from the U.S. Geological Survey, oil output from the Kuparuk River oil field at the end of 1984 pushed Kuparuk past the nation’s previous No. 2 oil producer, California’s Elk Hills, to make it the country’s second largest producer.

During 1984, Kuparuk River oil field production averaged 126,400 barrels per day, approximately 16% more than in 1983. During that year, approximately 110 production wells were drilled in the Kuparuk field, bringing the total number drilled to date to 240.

A landmark was reached August 23, 1984, when the field produced its 100 millionth barrel of oil.

The Alaska Spark reported in December 1984 that drilling records were being set nearly every month at Kuparuk. During development drilling in 1980, it took an average of 22 days at a cost of $2.5 million to drill and complete a well.

The average time had dropped to 11 days and the average cost to $1.5 million, with the 1984 drilling record held by Parker rig 141. It drilled and cased a 6,704-foot well in four days, 23 and three-fourths hours, a drilling average of 1,348 feet per day.

Four rigs had been working at Kuparuk since the spring of 1984, with 117 new wells drilled by the end of the year; 155 wells were planned for 1985.

ARCO also announced the startup of a pilot project in 1984 to determine the feasibility of developing the multibillion-barrel oil accumulation, West Sak.

This accumulation overlies the Kuparuk oil field at depths of 3,000-4,000 feet.

ARCO said it involved injecting hot water into the reservoir to heat the oil sufficiently to reduce its viscosity and make it easier to produce.

In 1984, 13 producing and injecting wells were in operation in the West Sak pilot project, producing 1,000 barrels of oil per day.

Major construction by ARCO at Kuparuk in 1985 included waterflood, with construction for the seawater treatment and injection plants underway, the Alaska Spark said in May 1985.

The seawater treatment plant, two modular buildings connected by a 100-foot Arctic walkway, was scheduled to go in at Oliktok Point some 20 miles from the Kuparuk main camp and would process 585,000 barrels of seawater a day through four intake bays.

A jet pump in the new seawater treatment plant would separate marine life from the Arctic water and safely return them to their environment.

Kuparuk set a one-day production record in October 1985 of 264,490 barrels.

“We had expected that Kuparuk production would not reach 250,000 barrels a day until late 1986, after the installation of a third central production facility,” said Ben Odom, ARCO’s senior vice president for operations. “However, our aggressive and innovative engineering and operations people have been able to achieve higher rates than expected from only two production facilities.”

The water injection program went into operation Oct. 28, 1985, and was expected to triple recoverable oil, from 500 million barrels without waterflood to 1.5 billion barrels with waterflood.

“It’s a major shift from primary production to secondary waterflooding,” senior reservoir engineer Paul White told the Alaska Spark. “The recent history of Kuparuk focuses on expanding the field by drilling new wells. We’ll still be expanding the field, but the focus will be coming around to managing a developed field.

“This will include developing the less productive areas of the field,” White said, “where the costs will be about the same, but the benefits are much less.”

Dana Dayton, manager of Kuparuk reservoir engineering, told the Alaska Spark in 1986 that “CPF-3 is the culmination of a development era. This year is unique because of a feeling of transition which many of us have.

“While we may have a big sense of satisfaction and accomplishment, we may also have some apprehension about the change from development to reservoir management,” she said.

The increase in Kuparuk oil production was in part responsible for the 5.6% increase in Alaska oil production in 1985 and for the highest U.S. oil production level recorded since 1974 (World Oil, August 1, 1985).

Kuparuk passed the 200 million barrel production mark January 8, 1986, two months ahead of schedule, with daily output averaging approximately 240,000 bpd.

The 1986 sealift was considered ARCO’s last committed shipment of facilities to the North Slope, ARCO said in January of that year. For the first time since the discovery of oil on the North Slope, no future major projects were in the design or construction stages, and no new facilities were planned for the 1987 sealift or beyond.

The 1986 sealift included Kuparuk’s third central production facility which would allow development of the northern portion of the field.

Kuparuk also had modules for five new drill sites on the 1986 sealift.

In 1983, 1984 and most of 1985, ARCO advertised in Alaska for skilled instrument technicians and other oilfield operating personnel to operate the new facilities and did receive Alaska applicants.

“The problem is that there simply are not enough experienced and technically qualified Alaskans to fill the large number of positions which are being created by the new facilities,” said Heinze. “We have created so many new jobs in the past several years, in bringing online new facilities that we have already drawn heavily from the pool of qualified Alaskan workers.”

As a result, he said, ARCO had begun placing ads in Lower 48 papers.

According to the1987 Annual Report on Alaska’s Mineral Resources from the USGS a decline in the world price of oil that began in late 1985 continued into 1986.

Between December 1985 and July 1986, the price declined from about $27 per barrel to $9 a barrel.

By the end of 1986, the price of North Slope crude oil had increased a little, to $14.25 a barrel delivered

to the West Coast (Petroleum Information’s Alaska Report, January 7, 1987).

Alaska’s economy was especially vulnerable to fluctuations in crude oil prices because 85% of the state’s revenue at the time was derived from royalties and taxes paid on state-owned oil and gas leases, per the 1986 Alaska Division of Geological and Geophysical Surveys.

DGGS said the sensitivity of exploration for, and production of, oil fields to world oil prices was reflected in the curtailment of many industry activities.

For example, the Milne Point oil field, the third field to produce on the North Slope, was completely shut down by the end of the year.

The major operators had announced drastically reduced capital budgets, which affected all aspects of the business and had a trickledown effect on other industries in the state.

By early March 1986, ARCO said the declining price of oil had forced it to reduce its North Slope development drilling activity by nearly 50%.

Of the nine drilling rigs operating on the North Slope earlier in the winter, five were to be idled by the end of April or early May, leaving four rigs drilling new production wells for ARCO, only one at Kuparuk, with an estimated 400 North Slope jobs affected.

The cut in development drilling was part of ARCO’s 30% capital spending reduction announced in February 1986.

The number of wells to be drilled at Kuparuk was reduced from 150 to 90 that year.

1987 PRODUCTION PRICES

For 1987, the price of North Slope crude oil delivered to the West Coast rose to a high of $18.75 per barrel in August and then declined to $15.75 per barrel by the end of the year.

According to the 1988 Annual Report on Alaska's Mineral Resources from USGS, Alaska oil production increased by about 90,000 bpd in 1987, mainly the result of production increases from the Kuparuk River and the Endicott fields.

The daily rate of oil production increases from the entire state of Alaska at the end of 1987 amounted to 1,950,322 barrels, or about 23% of the United States' daily production.

In 1987, unofficial production data indicated that Alaska, with 2.0 to 2.1 million barrels of oil per day, had passed Texas, with 1.96 million barrels in daily oil production (Anchorage Daily News, Jan. 14, 1988).

The Kuparuk River field produced about 99.6 million barrels of oil in 1987 or an average of about 273,000 bpd.

The Alaska Oil and Gas Conservation Commission issued 157 drilling permits in 1988; 135 development wells and exploratory wells were drilled. Seismic exploration was underway at Granite Point, Kuparuk River and Yukon Flats.

The Prudhoe Bay, Kuparuk River, Lisburne and Endicott North Slope fields produced almost 95% of the state's total oil in 1988.

TAPS was carrying around 2.1 million barrels of this oil daily.

Following the Exxon Valdez oil spill in March 1989, the Alaska State Legislature increased the severance tax on oil produced from the Prudhoe Bay and Kuparuk River fields by 20% and 65% respectively (Alaska Report, June 7, 1989).

The impact of this increased taxation along with fluctuating oil prices was reflected in many industry activities: development at the West Sak project was postponed and some development drilling in the Kuparuk River field was delayed; on the other hand, the Milne Point oil field, in a “warm shutdown” mode since 1986, resumed production in April 1989 due to improved oil prices.

In June 1989, the 7 billionth barrel of North Slope crude oil was produced.

Overall production from the North Slope averaged about 95,000 bpd less in 1989 than in 1988 (Alaska Report, December 27, 1989). About one-third of the reduced production was attributable to the Exxon Valdez oil spill, and the remaining decline in production was the result of maintenance undertaken by the fields’ operators.

A total of 130 development and service wells were active in Alaska in 1989, 12 in the Cook Inlet basin, 13 at the Endicott field, 31 at Kuparuk River, six at Milne Point and 68 at Prudhoe Bay, per AOGCC’s May 1990 bulletin.

In 1969 Atlantic Richfield said the Ugnu No. 1 discovery well was “one of the most significant follow-up wells to Prudhoe Bay No. 1” because it led to the discovery of the Kuparuk River oil field.

North America’s second-largest oil field, Kuparuk was originally thought to hold recoverable reserves of approximately 1.6 billion barrels. By year end 2021, Kuparuk River Unit (including its satellites) have produced 2.8 billion barrels.

Ugnu No. 1 was drilled by Sinclair and Sohio, but since Sinclair and Atlantic Richfield had merged earlier in 1969, Atlantic Richfield had a strong ownership position in the new field and would become the field operator.

Although only Atlantic Richfield leases were involved in Phase 1 of the Kuparuk development in 1979, several other oil companies later agreed to an expansion of the unit to include surrounding leases that they held.

By 2001 ARCO owned more than 50% of the total Kuparuk River unit leases. Other leaseholders in 2001 included BP Exploration (Alaska) Inc., Union Oil of California, ExxonMobil Oil Corp., Phillips Petroleum Co. and Chevron Corp.

By Dec. 1, 2021, ConocoPhillips held 94.5% of the working interest in the Kuparuk participating area within the Kuparuk River unit, which encompasses a total of 271,475 gross acres, and varying working interests amongst the Meltwater, Tabasco, Tarn and West Sak satellites ranging from 89.2%-94.7%.

Initial production, or Phase 1, from the Atlantic Richfield-operated Kuparuk River oil field was from 40 wells on five gravel drill sites. A 16-inch diameter, 26-mile pipeline was built to carry Kuparuk oil to Pump Station 1 of the trans-Alaska pipeline at Prudhoe Bay.

In 1981, ARCO Alaska President Paul Norgaard said in a statement that Kuparuk field startup, which occurred Dec. 13, 1981, was more than three months ahead of schedule.

By giving the project priority status, ARCO Alaska was able to speed up completion. Norgaard said 120 employees worked round the clock during the last few weeks of the project to bring the field online.

The project was expected to achieve an average daily production of 80,000 barrels of oil per day. A year later, on Dec. 13, 1982, Atlantic Richfield said that the field was averaging 87,000 barrels a day.

Kuparuk production peaked at 322,000 bpd in 1992.

On Jan. 10, 1986, Kuparuk cumulative production passed the 200-million-barrel mark.

In July 2005, cumulative production reached 2 billion barrels, and Kuparuk and its satellites have produced more than 2.8 billion barrels as of the end of 2021.

In a 2010 interview, H.C. “Harry” Jamison recalled the 1960s forward when he began as a young geologist with Richfield Oil Co. (predecessor to Atlantic Richfield). Jamison was generally regarded as the Richfield executive most responsible for the discovery of the Prudhoe Bay oil field, though he steadfastly maintained that the feat was the best of team efforts.

He said the economics of the Kuparuk oil field were questionable from the original discovery in 1969 through the early 1980s:

“The development wasn’t really” seriously considered “until the middle 1970s,” he said, “primarily because in comparison with Prudhoe the production would be considerably lower, the oil was more difficult to get out of the ground, and it was another 35 miles away, so it required a separate development pattern and distribution system.”

A 1983 article in the ARCO Spark, the company newsletter, gave some insight into work at the new Kuparuk oil field, which was producing 100,000 barrels per day.

“There’s an attitude up here that everybody’s looking for oil,” said Bob Appling, Kuparuk operations manager. “It’s a personal pride that everyone shares, and everyone sees to it the job’s done right.”

Appling said there are a number of differences between Kuparuk and Prudhoe Bay.

“Because Prudhoe can still produce more oil than it is allowed to sell, in some cases, repairs can be made in a less than critical manner.

“Over here, we get to sell every barrel we can get our hands on. If something goes down, man, you get it fixed right then and back into production. Every minute lost is less money to the company. We take all down-time very seriously.”

Appling said that Kuparuk people are constantly looking for ways to boost production levels. “Not a week goes by that somebody isn’t in here with an idea. Some we can use, some we can’t. But it sure helps to have that kind of input,” he said.

Appling listed a number of people as responsible for the field’s first-year success, above all Landon Kelly, the field’s overall operations chief. “I think everyone would agree that Landon is the single most important player at Kuparuk. He’s the guy who pushed this field as a high priority long before it became one. And he’s the one largely responsible for bringing it on earlier than anyone expected.”