Forest Oil Corp. struck oil with the first well drilled from the first platform installed on Cook Inlet since 1986.
"I saw a lot of people grinning," said Gary Carlson, Forest Oil senior vice president for Alaska operations.
Company officials say the new Osprey Platform near West Foreland could produce up to 25,000 barrels of oil per day -- nearly doubling the inlet's present production of 29,000 barrels per day. That also would be a big boost to Denver-based Forest, which projects 2001 production of 25,000 to 30,000 barrels per day, including 8,500 barrels from Cook Inlet and 160 from Prudhoe Bay.
Forest has permits to drill three more exploratory wells and a disposal well through which workers will inject oily drilling muds and cuttings deep underground. Forest's 2001 budget includes roughly $25 million for the wells, which will cost $5 million to $7 million each, Carlson said. It includes $25 million to build the pipelines and onshore facilities to put Osprey into production. The decision to build production facilities hinges on results from the exploratory wells.
"The thing that's going to tell us the most is the second well," he said.
Forest made three-dimensional seismic surveys of the Redoubt Shoal prospect in 1997 and mapped two fault blocks in the area, he said. The first well, drilled to a depth of 15,323 feet, struck a pool of oil 450 feet deep and tested at a stabilized flow of 1,010 barrels of oil per day. Using electric pumps to help lift oil could increase the flow to 2,500 barrels per day, Carlson said.
"The first well shows us that reserves in the area we drilled are good," he said.
The second will test the other fault block.
"If that's good, we'll proceed with our project," he said.
Bill Van Dyke, petroleum manager for the Alaska Division of Oil and Gas, said results of the first well are encouraging.
"Hopefully, their other delineation wells will be as successful, because given the cost of drilling offshore wells and putting production facilities in, one thousand-barrel-per-day well isn't going to pay the bills," he said.
Carlson was still awaiting the results of tests to tell how much natural gas is dissolved in the Redoubt Shoal oil. However, oil from the region typically contains 200 to 300 cubic feet of natural gas per barrel. If Redoubt Shoal contains 50 million barrels of oil, Carlson said, it could also hold 20 billion cubic feet of natural gas.
Permit applications say Redoubt Shoal could produce up to 4.3 million cubic feet of natural gas per day, a small addition to present Cook Inlet production of about 583 million cubic feet per day.
If the exploratory wells find sufficient reserves, Forest will build two undersea pipelines to carry the oil and gas roughly 1.5 miles to West Foreland on the inlet's west shore, and pipelines on land to cover the remaining two miles to Kustatan. There, it will build a power plant and facilities to remove the "produced water" that comes out of the ground with the oil and gas.
A third pipeline will carry produced water back to Osprey for disposal through the injection well.
Forest also plans two 7.8-mile pipelines to carry natural gas and crude oil from Kustatan to Trading Bay. From there, it could sell gas through existing Cook Inlet gas lines and oil through the existing pipeline to the tanker terminal at Drift River.
"I think we'll be ready to commit after the second well, at the end of April or in early May," Carlson said.
He said Forest expects to have the permits to build pipelines and production facilities by midsummer. Then, it can do the final engineering and design.
"We'd hope to lay the pipelines in September and October, then start work on the production facilities," he said. "If we could get into production early in 2002, we'd be pretty happy."
Carlson said additional wells will take 60 to 75 days apiece to drill. The third could be completed in July, the fourth in October and the fifth by the end of the year. One of those wells likely will be the disposal well.
If Redoubt Shoal holds 50 million barrels, producing the field could require a total of 10 to 14 wells, Carlson said. However, Forest is investigating whether it could use multilateral wells, in which workers drill more spurs from each main well. That technique could allow Forest to develop the field with fewer wells, but each well would be more expensive.
Forest also will have to install wells to inject water to improve oil production. The number depends on how the field is developed, Carlson said. In some fields, every second well is an injection well. In others, the injection wells circle the perimeter, and the water drives the oil to producing wells at the center.
Carlson said Amoco struck oil on Redoubt Shoal during the 1960s but decided not to produce its discovery. Unocal drilled a dry hole there in the 1970s. Forcenergy Inc. bought five Redoubt Shoal leases in 1996, conducted 3-D seismic surveys and ordered the $35 million Osprey Platform. Forcenergy installed Osprey last summer, and Forest bought Forcenergy in December.
Carlson said the 3-D seismic surveys "explained in our minds why Unocal's well was dry, why Amoco's well was good and how big the field could be." That gave Forcenergy and Forest the confidence to proceed, he said.
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