Forest Oil Corp. estimates it can recover more than 50 million barrels of oil from its Redoubt Shoal prospect in Cook Inlet following completion of a second exploratory well from its Osprey Platform.
Gary Carlson, senior vice president for Alaska operations, said the recoverable total could be even higher. Forest plans to start a third well within 30 days to further delineate the field.
"Whether it's going to be 50 million barrels or 75 million barrels -- additional drilling is going to help us with that," he said.
He said Forest has now committed to developing Redoubt Shoal and plans to spend $150 million to $175 million over the next two years to put it into production. That includes about $58 million in this year's capital budget.
"We hope to be online before the end of 2002," he said. "The extent of the field, determined by further drilling, will determine whether we have to drill into 2003 to fully develop the field."
He said Redoubt Shoal could produce 15,000 barrels per day, a big addition to Cook Inlet's present production of about 30,000 barrels per day. Peak production could be even higher. Forest is designing production facilities to handle up to 20,000 barrels per day.
Carlson said he expects to spend about $70 million to drill additional wells. The next two wells will help determine how many production wells to drill and how many wells to drill for injecting water to pressurize the field and improve production.
Osprey has slots for 28 wells. One will be a disposal well through which Forest will inject drilling muds and produced water, the water that comes up with the oil, deep underground.
"The other 27 could be injectors and producers," Carlson said.
Forest plans to 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. 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 will ship oil through the existing pipeline to the tanker terminal at Drift River. Forest sells its current Cook Inlet oil production to the Tesoro Alaska refinery in Nikiski, and Tesoro is a likely market for future production from Osprey, Carlson said.
Forest will use most of the gas produced at Osprey to fuel facilities at Kustatan, West McArthur River and Trading Bay, he said. If the field produces 15,000 barrels of oil per day, the natural gas dissolved in the oil would amount to about 4 million cubic feet per day.
Forest mapped two fault blocks at Redoubt Shoal from three-dimensional seismic surveys it made in 1997. In January, it announced that its first exploratory 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.
That proved reserves in the first fault block.
On Tuesday, Forest announced results from a second well to test the other fault block. That well, drilled to a depth of 15,325 feel, struck a pool of oil 452 feet deep and tested at a stabilized flow of 1,170 barrels per day. Using electric pumps to help lift the oil could increase the flow to 3,000 barrels per day, the company said.
John Amundsen, Forest's health, environmental and safety manager, said Forest cannot start building production facilities at Kustatan until it receives state air quality permits.
"Our risk is that we're going to lose this summer's building season," he said. "We're still optimistic."
Carlson said Forest has been obtaining bids from contractors. However, he does not expect to have permits until August or September.
"So the contractors can't get a whole lot done other than order equipment," he said.
Some of the pieces take a year to obtain, he said.
So, while Forest may do civil engineering and start building foundations this year, the bulk of the construction probably will not take place until next year.
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