Pioneer begins drilling at Stariski

'Sidetrack' well operation could produce 30 to 50 million barrels of oil

Posted: Friday, September 07, 2007

Pioneer Natural Resources Alaska Inc. has begun drilling an appraisal well from an onshore location near Stariski to test the viability of an offshore oil resource first discovered by Pennzoil in 1967.

Using a modern and efficient drilling rig, the independent exploration and production company expects the drilling operation to last 60 to 70 days with an additional 60 days for testing, according to Tadd Owens, Pioneer Alaska's director of government and public affairs.

"The gross resource potential is 30 million to 50 million barrels of oil," he said. "Pending the success of our appraisal well, we expect approximately 12 horizontal directional wells for development."

Only onshore drilling is being considered at this time. The tentative site development schedule calls for permitting in 2008, facility construction in 2008-2009, and development drilling in 2009 and 2010. The first production oil would be surfaced around 2010, Owens said.

ConocoPhillips drilled a well at the site in 2003. Subsequently, Pioneer became the operator and 100-percent working-interest owner of the Cosmopolitan Unit, though ConocoPhillips retains a small royalty share, Owens said.

Drilling will involve a "sidetrack" well off the existing lateral bore drilled by ConocoPhillips and will test the known reservoir of oil. Pioneer is evaluating trucking and pipeline options for that oil.

"Initially, we will be trucking the oil to the Tesoro Refinery," Owens said. "We need an economy of scale for a pipeline and we won't know for some time whether we can justify building a pipeline."

The new source for Tesoro, however, should displace some tanker traffic in Cook Inlet, he said.

While oil is the prime target, there will be some residual gas produced as well, which Pioneer will pump into the Kenai-Kachemak Pipeline. However, the volumes won't be enough to materially affect the local gas market, Owens said.

About 50 workers will be employed at the site during the drilling operations, Owens said.

Pioneer Natural Resources Co. is a large U.S. company based in Dallas with operations in Alaska, the Lower 48, South Africa and Tunisia. The company launched Alaska operations in 2002 when it became operator and 70-percent working-interest owner in the Oooguruk Unit on the North Slope.

Owen said Pioneer had acquired more than 1 million acres on the North Slope and conducted an active exploration program there between 2003 and 2006.

The Oooguruk project will be the first North Slope field operated by an independent. Construction there is nearing completion, and development drilling is expected to begin later this fall. First production should occur during the first half of 2008, Owen said.

Pioneer Alaska is headquartered in Anchorage and employs 35 professional staff including many from Alaska, Owen said.

Hal Spence can be reached at

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