Alpine oil field starts production

Posted: Friday, November 17, 2000

ANCHORAGE (AP) -- Phillips Alaska Inc. announced Thursday that its new Alpine oil field on Alaska's North Slope -- North America's largest onshore oil discovery in a decade -- has started production.

The field is pumping up to 40,000 barrels per day and is expected to reach peak gross production of 80,000 barrels per day by the end of the year, said Ryan Lance, Phillips' vice president of the western North Slope.

''It's a huge day for us,'' Lance said.

The field could produce an estimated 429 million barrels of oil over its expected life of about 20 years.

Phillips officials said Alpine is expected to generate more than $1 billion for the state in tax and royalty payments over the life of the field. Dan Dickinson, director of the Division of Tax, said that will be true if wellhead prices stay above $20 per barrel. The field should increase the state's $2 billion annual oil earnings by 4 percent to 5 percent, Dickinson said.

Phillips officials are touting the field as the standard by which future Arctic developments will be measured. Lance said the 40,000-acre field was developed on just 94 acres.

New horizontal drilling techniques permit Phillips to reach oil pockets as far as a mile away, the company said, and drilling wastes will either be injected into waste wells or recycled and reused.

Lance said developing fewer surface facilities saved money in gravel costs for the company and also had less impact on Colville River area wildlife and fish important to residents of Nuiqsuit eight miles from the field.

The development was put in place without permanent roads. The company instead used ice roads and small aircraft to move in equipment.

Only two other fields on the North Slope -- Prudhoe Bay and Kuparuk -- produce more oil.

Alpine sits west of Phillips' Kuparak field and abuts the eastern edge of the undeveloped National Petroleum Reserve-Alaska. Arco Alaska Inc., purchased by Phillips this year, built a 35-mile pipeline to connect Alpine to the trans-Alaska oil pipeline.

Jim Mulva, Phillips' chairman and chief executive officer, said the company expects its production levels to remain the equivalent of between 375,000 and 400,000 barrels per day for the next several years.

Phillips operates the Alpine field and holds a 78 percent interest. Anadarko Petroleum Co. holds a 22 percent interest.

Alpine is the first significant commercial oil production on lands conveyed to an Alaska Native corporation in the Alaska Native Claims Settlement Act. Under terms of the law, Arctic Slope Regional Corp. will share 70 percent of its revenue from the field with other ANCSA corporations. Half of the receipts from the remaining 30 percent will be shared with Arctic Slope's village corporations and their at-large shareholders.

Lance said 30 wells have been completed at the first Alpine drill site. The entire development calls for two drill sites and more than 112 horizontal wells.

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