Glacier Oil and Gas leaders are asking state regulators to let them shut in two West Cook Inlet oil projects indefinitely as oil prices continue to hover about 30 percent below pre-pandemic levels.
The Anchorage-based independent wants to put facilities in both the West MacArthur and Redoubt into “cold-shutdown and unmanned” status, according to applications filed Sept. 29 with the Division of Oil and Gas for the long-term suspension of operations at the facilities.
Glacier’s plans, if approved, would formalize actions the company took earlier this year in response to once-collapsed oil markets. In early June, Division of Oil and Gas Director Tom Stokes approved Glacier’s plan to suspend production at both units and put the corresponding facilities into “warm-standby” status until oil markets improved.
At the time the price for Alaska North Slope crude had just returned to the $40 per barrel range that it has since stabilized around, but prices in April and May averaged less than $30 per barrel as coronavirus-induced travel restrictions and a price war between Saudi Arabia and Russia combined to briefly put prices in domestic oil markets into the negative.
The warm-standby status is currently approved through April 30, 2021, in line with the annual development plan periods for the units. The unit is operated by Glacier subsidiary Cook Inlet Energy LLC.
The long-term shutdowns would involve shutting in wells and disconnecting them process piping, in addition to draining all fluids from all of the pipelines and tanks in the facilities to eliminate the risk of spills. According to the application, Glacier would inspect the facilities monthly to make sure they remain in condition to meet state and federal requirements.
Glacier leaders could not be reached in time for comment in this story.
Stokes wrote in approving the initial warm-standby suspensions that while the state has an interest in seeing its oil and gas resources developed, production from the Osprey platform would be marginally economic at best and have a “significantly reduced royalty value for both the State and private mineral owners.”
According to Division of Oil and Gas figures, roughly 5.3 million barrels of oil and 2.6 billion cubic feet of gas have been produced over the nearly 20-year life of the Osprey platform, which has been shut-in before.
The Osprey platform was installed by Forest Oil in 2001 but reservoir production problems pushed the Pacific Energy, a subsequent owner, to suspend operations in 2009, according to Journal records. The platform was restarted in 2011 by now-bankrupt Miller Energy.
In April, prior to the warm shutdown oil production averaged 1,675 barrels per day from four wells on the Osprey Platform, according to Alaska Oil and Gas Conservation Commission Records.
More than 15.6 million barrels of oil have been produced from West MacArthur facilities over approximately 30 years, according to the division. Approximately 370 barrels of oil per day were produced from two West MacArthur wells in April, according to AOGCC production data.
Glacier subsidiary Savant Alaska LLC also suspended production at its small Badami North Slope oil field in June but restarted activity there in August, according to state records.
ConocoPhillips also curtailed production at its major North Slope fields by an average of 45,000 barrels per day in the second quarter.
Cosmo slowed
Across Cook Inlet, activity at BlueCrest Energy’s Cosmopolitan project on the Southern Kenai Peninsula is also in a holding pattern until oil markets strengthen.
The small Texas-based independent planned to drill what the company calls a Trident well — a long, angled main well with laterals extending out both sides of the wellbore — this year but paused the work early in the year as well, according to the Cosmopolitan Unit plan of development submitted to the Division of Oil and Gas Sept. 25.
Instead of drilling the extensive well, BlueCrest focused its resources on further evaluating the large Cosmo natural gas cap above the oil reserves held by the company. BlueCrest also commissioned what it has dubbed a “Mechanical Refrigeration Unit” to increase its processing capacity up 35 million cubic feet of gas per day to pipeline quality specifications, the POD states.
BlueCrest leaders are confident the shallow, near shore Hansen pool holds upwards of 500 million barrels of oil, which the company aims to extract with long reach wells from an onshore drilling pad near Anchor Point. The oil is also accompanied by a large gas accumulation, but it’s previously been presumed developing the gas resource would require an offshore platform that would challenge the economics of the project.
Drilling of the first Trident well will continue to be contingent upon improvement in oil market conditions, according to the POD.
BlueCrest produced just more than 1,000 barrels of oil per day from five wells, according to AOGCC production data.
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Cook Inlet oil activity slows in response to continuing low prices - Anchorage Daily News
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