The next well likely will determine whether Denver-based Forest Oil Corp. proceeds with a project that potentially could double Cook Inlet oil production.
Forest announced results Feb. 21 from the first exploratory well at its $35 million Osprey Platform, installed last summer near West Foreland. The 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, said Gary Carlson, Forest Oil senior vice president for Alaska operations.
"The first well shows us that reserves in the area we drilled are good," he said.
However, that well tapped just one of two fault blocks Forest Oil mapped with three-dimensional seismic surveys of its Redoubt Shoal prospect. 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.
The second well, which Carlson expects to complete in late April or early May, will test the second fault block.
"The thing that's going to tell us the most is the second well," Carlson said. "If that's good, we'll proceed with our project."
Production in 2000:
3 million barrels from Cook Inlet
2001 capital expenditures:
Outlook for 2001:
Bulk of capital
spending involves drilling exploratory wells from new Osprey Platform to its Redoubt Shoal prospect in western Cook Inlet.
Company officials say the Osprey Platform could produce up to 25,000 barrels of oil per day -- nearly doubling the inlet's present production of 29,000 barrels per day. A find like that also would be a big boost to 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.
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.
Forest's 2001 budget includes roughly $25 million for the exploratory 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.
If those 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 2 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 mid-summer. 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."
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.
Forest plans a total of $85 million in Alaska capital spending this year. In addition to the work at Osprey and Kustatan, Carlson said, it has budgeted roughly $25 million for drilling and redrilling elsewhere around Cook Inlet. It already has started a new onshore well at its West McArthur River oil field. Carlson said site was suggested by the success of a well drilled last year. West McArthur produces about 3,500 barrels of oil per day, of which Forest's share is 2,600 barrels per day.
Meanwhile, Forest holds roughly a 46 percent interest in the McArthur River field, tapped through the Dolly Varden, King Salmon, Steelhead and Grayling platforms. Unocal, which holds a 54 percent interest, is the operator. Carlson said the companies plan to redrill several wells and to drill a new well to a target between the McArthur and West McArthur fields.
Forest also is working out the details of ownership of the well Phillips Alaska proposes to drill near Anchor Point. The project is still in the permitting process.
"We will have part of that," Carlson said. "We have a good acreage position there. It will be Phillips operated. There may be gas as well as oil found there."
Forest has budgeted roughly $10 million for Cook Inlet seismic surveys, purchase of existing Cook Inlet seismic information. The $10 million also will pay for geological and geophysical work in the Copper River basin near Glennallen, where Forest holds a license to explore on nearly 400,000 acres of state land.
In addition to Alaska spending, its tentative capital budget includes $50 million in Canada, $240 million in the Gulf of Mexico and $25 million overseas, for a world-wide total of $400 million.
Clarion reporter Steven Merritt contributed to this story.
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