State approves 2 North Slope easements

Subsurface easement at Milne Point allows drilling from Moose Pad across corner of KRU; Pikka surface easement is for tie-in pad

Kristen Nelson

Petroleum News

The Alaska Department of Natural Resources, Division of Oil and Gas, has approved two easements at North Slope units, a subsurface easement at Hilcorp Alaska’s Milne Point field and a surface easement at Oil Search Alaska’s Pikka unit.

Both easements are private, non-exclusive and both June 16 decisions may be appealed within 20 calendar days of that date.

Milne Point

The division said wellbore M-27 (Frostlands wellbore) is planned as a producing well targeting the Schrader Bluff OA sands and would pass through some 692 feet of ADL 025519 at an approximate depth of 3,600 feet.

The second wellbore, M-33 (New Natanan wellbore) is planned as a polymer water injector well targeting Schrader Bluff OA sands; it would pass through some 192 feet of ADL 025519 also at an approximate depth of 3,600 feet.

“The Moose Pad wells will not be producing hydrocarbons from KRU and no pay zone will be open within 500 feet of the MPU boundary,” the division said, with the nearest KRU well, 3K-108, some 5,900 feet from the proposed wellbores at the closest point.

“Moose Pad is the only suitable surface location because there are no other pads nearby that can feasibly drill in the Schrader Bluff Reservoir,” the division said.

The scope of the decision is limited to whether it is in the state’s interest to issue the easement. “The subject of this decision is to review the portions of the Moose Pad wellbores project impacting state land, which would support Moose Pad production.”

The easement is within the Kuparuk River unit on an active oil and gas lease held by ConocoPhillips Alaska. “Hilcorp has received a letter of non-objection from CPAI for activities proposed in the Moose Pad M-27 and M-33 wellbore easement areas,” the division said.

The decision, signed by division Director Tom Stokes, said the division found the proposed wellbores necessary for development of Hilcorp’s Milne Point resources. The term of the easement is 35 years.

Hilcorp brought the Moose Pad online in April 2019. In a 2018 presentation to the Resource Development Council, David Wilkins, the company’s senior vice president for Alaska, said the Moose Pad would be the first new pad built at Milne Point since 2002. He said the pad could accommodate 50 to 70 wells. Pad construction began in 2017; processing facilities at the pad can handle 85,000 barrels of fluid per day.

Hilcorp acquired a 50% interest in the Milne Point unit as part of its 2014 acquisition from BP of properties on the North Slope. BP had been the field’s operator since 1994. The Milne Point discovery was made in 1969 by Standard Oil Company of California and the field was delineated and developed by Conoco Inc. beginning in 1980, with regular production beginning in 1985 from the Kuparuk River oil pool.

Hilcorp acquired the remaining 50% working interest at Milne as part of its acquisition of BP’s Alaska assets, a sale which was announced in August 2019 and closed in December 2020, following conditional approval by the Regulatory Commission of Alaska.

Moose Pad is on the western edge of the unit. The initial target from Moose Pad is oil in the Schrader Bluff formation on leases ADL 25514, ADL 25515 and ADL 25509, the company said in permitting submitted in 2016, with both production and injection wells planned.

Pikka

In April 2020, Oil Search asked the division to put the easement adjudication process on hold due to the market condition changes as a result of the COVID pandemic. This April, Oil Search notified the division it was ready to move forward with the easement and confirmed that there had been no significant change in project details during the hiatus.

The purpose of the project, the division said, is to produce hydrocarbons from previously inaccessible areas from onshore drill sites on state land. This decision only authorizes a private non-exclusive easement for the tie-in pad on state land near Kuparuk Central Processing Facility 2 in the Kuparuk River unit.

“The TIP location will provide space for the tie-in of Pikka pipeline infrastructure to existing North Slope facilities,” the division said. The pipelines will include a sales oil line, fuel gas lines and seawater lines, with infrastructure on the TIP to include a pig receiver, metering skid, transformer skid, pipe rack, shutdown valve, laydown area, communication tower and remote electrical and instrumentation module.

Surface dimensions of the pad will be 260 feet by 150 feet, 0.9 acres, wit the requested easement to include the pad and an easement buffer around the pad varying in width to accommodate existing infrastructure. The requested construction easement is some 385 feet by 255 feet, 2.2 acres.

The division said the decision grants Oil Search Alaska an entry authorization for 5 years after issuance of the easement and a private non-exclusive easement with a term, once terms and conditions of the entry authorization have been met, of 35 years from the date of the decision.

The division said the easement is within the Kuparuk River unit on active oil and gas lease ADL 25654, issued to ConocoPhillips Alaska and is near the Kuparuk Transportation Co. pipeline right of way. Oil Search has engaged KTC, the division said, “and will continue to coordinate activities to avoid any unreasonable interference with existing operations in the vicinity of the proposed TIP.”

Access to the area will be through existing KRU infrastructure and oilfield roads, regulated by security checkpoints in Deadhorse and under agreements for the use of those improvements, and the division said the decision does not authorize use of other improvements.