In a May 25 operations update, 88 Energy Ltd. said costs associated with that winter’s Merlin 1 North Slope exploration well were estimated to be US$9 million. Along with a partial cash payment, the lead contractor on Merlin 1, ELKO International LLC, took shares in lieu of payment and was issued 345 million new ordinary 88E shares, which was on top of the 360 million shares ELKO was issued in late March.
An Anchorage-based limited liability corporation, ELKO is owned by long-time Alaska geologist Erik Opstad.
In 88E’s Dec. 5 and 6 public announcements the company said its contractor will accept 407.7 million new 88E ordinary shares as pre-payment of up to US$7.5 million (A$10.7 million) against the costs of the Merlin 2 well this winter.
Both Merlin wells are in 88E’s Project Peregrine in the National Petroleum Reserve-Alaska.
In a Dec. 8 interview with Petroleum News, Opstad confirmed it was ELKO again helping finance Merlin prospect drilling.
In October 88E said it had contracted with Doyon Drilling for use of the Arctic Fox rig to drill Merlin 2, which the company calls an appraisal well. On Nov. 24 the company said it had selected “locations” for the well, where it aims to begin drilling by February.
In the Dec. 8 interview Opstad said they had received state, federal and North Slope Borough approvals to begin pioneering (same as the prepacking that’s done for ice roads) of the 111-mile snow road between KRU 2P and the Merlin 2 well location.
“We already have people working across the Colville River,” he said. Using track vehicles, they are building ramps down the east side of the Colville and up the west bank and beyond.
To the southeast of Merlin 1 and closer to the shelf break where the company expects enhanced sand thickness and quality, Merlin 2 is expected to be drilled down to a total depth of 8,000 feet. The well is targeting some 652 million barrels of oil.
Geologic targets
Per 88E, Merlin 2’s Nanushuk targets are the N18, N19 and N20 horizons that were encountered in Merlin 1, as well as N14, the primary target of Merlin 1.
Merlin 1’s three objectives, N14, N18 and N20, which were identified from reprocessed seismic data, came in considerably deeper than expected.
Merlin 1 was drilled to a depth of 5,267 feet.
Post well analysis indicated that the N14 horizon, which was not intersected in Merlin 1, was about 600 feet deeper than the well’s total depth.
The company said in earlier announcements that its evaluation of Merlin 1 successfully demonstrated the presence of oil in multiple stacked sequences in the N20 and N18 sands. An additional new target, the N19 sand, that was not previously mapped, also returned a strong hydrocarbon signature following geochemical analysis.
Analysis indicates 41 feet of net log pay across the three intervals, which are in the Nanushuk Grandstand sands.
These sands, 88E said, show close correlation to the Lower Grandstand sands seen in the company’s nearby Umiat field and petrophysical analysis has returned 138 feet of possible net pay.
In addition, 88E said geochemical analysis of the cores from Merlin 1 established the “presence of a light oil with an estimated API gravity between mid-30 to low-40 API.”
Rig commissioning
On Dec. 5, 88E said in an operations update that pre-commissioning inspection of the lightweight, truckable Arctic Fox rig is planned for early January with an inspection prior to contracting the rig confirming it to be in excellent condition.
Commissioning of the rig is expected to occur following the rig inspection in January and immediately prior to mobilization of the drill site.
88E also said that it expects a drilling permit to be issued by year-end.
- KAY CASHMAN
