Exceeding expectations: Alpine expansion and satellite development gathers steam.

From its commercial start six years ago, the Alpine oil field has exceeded expectations of its developers, ConocoPhillips and Anadarko Petroleum, who continue to invest in the far-western North Slope reservoir by expanding processing facilities and developing nearby satellite fields.

Opportunities remain for Alaska contractors to land a portion of future multimillion-dollar construction projects to tap known oil accumulations in the National Petroleum Reserve-Alaska, as development plans have already been approved by federal land managers.

Originally designed to produce crude oil at an average rate of 70,000 barrels per day, Alpine's peak production performance was quickly revised upward in 2000 by its operator, then Phillips Petroleum.

With simple mechanical tweaks within the plant, production was boosted to 100,000 barrels of oil per day in 2001, according to company spokeswoman Dawn Patience.

The company considered additional improvements to the facility and in 2003, construction crews began the first of a three-phase capacity expansion project designed to increase oil production at Alpine by expanding the processing capacity.

THREE PHASES

In the first phase of development, oil production capacity was increased by expanding the water- and gas-handling capacities of the plant, according to a ConocoPhillips press release. The $60 million Phase 1 project initially increased daily oil production by 5,000 barrels per day, with its completion and start up in late 2004.

A second phase of expansion at Alpine was completed in mid-2005, according to a ConocoPhillips release. That $58 million project increased both the oil-handling and seawater injection capacities of the Alpine oil field facilities, yielding a daily rate of 140,000 barrels of crude per day.

"The two expansion projects are important for increasing oil production and maintaining reservoir pressure," the ConocoPhillips release said. "Alpine has been developed exclusively with horizontal well technology and employs enhanced oil recovery (EOR). The field's unique design and the use of EOR will help extract more oil from the reservoir."

The third phase of expansion of processing facilities was approved in early 2005, with work being completed during this past winter construction season. The Alpine Capacity Expansion Phase 3 involves installing a condensate stabilizer and associated equipment at the field's central facility.

"The purpose of the project is to optimize the miscible injectant composition by making it leaner, and to recover heavier condensate components that would otherwise be injected into the reservoir," a ConocoPhillips spokesperson said in an e-mail response to inquiries about the Alpine expansion project.

Modules were shipped to the site on this winter's ice road and work has been coordinated with satellite field construction, according to the company.

The stabilizer will add approximately 4,000 gross barrels of oil per day to the Alpine sales stream, beginning this summer, with a cost of more than $50 million. Total investment in Alpine expansion projects has been more than $160 million since 2003, according to ConocoPhillips.

"Large projects are done in a series of stages," a ConocoPhillips spokesperson said in the company's e-mail response. "In the case of Alpine, which is a roadless development, we must also consider the challenges of winter-only construction in the Arctic."

Once the third phase of expansion is complete, total production capacity will allow 140,000 barrels of seawater to be processed per day, 180 million standard cubic feet of natural gas per day and 140,000 barrels of crude oil to be produced each day.

EXTENDED LIFE

Alpine was originally developed with a 429-million-barrel gross recoverable reserve, according to a company statement released in 2000. At Alpine's original production rate of 70,000 barrels per day, the field's life would extend about 16 1/2 years.

Doubling the per-day production rate will more rapidly deplete the oil reserve, but the expansion projects and development of new satellite fields will actually extend the life of the field, a ConocoPhillips spokesperson said in an e-mail response to inquiries about the remaining life of Alpine.

"The performance of the Alpine field and its production facility continues to exceed expectations," said a ConocoPhillips spokesperson, who referred field life questions to the state of Alaska Division of Oil and Gas.

According to the state's preliminary 2005 annual report, historic oil production at Alpine by the end of 2004 was 137.6 million barrels of oil, almost one-third of the field's original estimated recoverable reserve.

SATELLITE FIELDS

With increased production capacity at Alpine, partners ConocoPhillips and Anadarko can and have chosen to pursue production opportunities from nearby oil accumulations.

At present, the partners are developing the Fiord and the Nanuq satellites, located near Alpine, with the potential for future development and production from three other accumulations located within the National Petroleum Reserve-Alaska.

CononcoPhillips and Anadarko announced in December 2004 that they had sanctioned development of Fiord and Nanuq, following regulatory approval of a development plan for the five potential satellites reviewed in an Environmental Impact Statement.

The Bureau of Land Management, in a Nov. 12 press release, announced their authorization of the two Alpine satellites as well as the first commercial oil development in NPR-A, part of the EIS review for three of the five satellites.

Fiord, located about five miles north of Alpine, is located on land owned by the state of Alaska, according to public testimony given by Sally Rothwell, environmental coordinator for ConocoPhillips. It is being developed as a roadless drill site, accessible by air for most of the year. Temporary ice roads were built to Fiord last winter and this.

Activities during this winter season included construction of pipelines and drillsite production facilities, which involves on-pad piping, including a test separator, heater and fuel gas conditioning skid. Pipeline bridges, supports and pipe have been installed, according to a ConocoPhillips spokesperson in an e-mail inquiry.

By the end of the ice road season, in May, ConocoPhillips expects to have completed six wells drilled at Fiord, work completed by Doyon Drilling.

Nanuq is located four miles south of Alpine on land owned by the Kuupik Corp., the Native corporation for the village of Nuiqsut. It is also being developed during this winter construction season, although it will be connected to Alpine via a four-mile gravel road.

Development plans for the two nearby satellite fields call for drilling of approximately 40 wells, with the first production scheduled for late 2006, according to a ConocoPhillips spokesperson in an e-mail.

Peak production from Fiord and Nanuq is expected in 2008 at 35,000 gross barrels of oil per day. The cost to develop the two satellites is about $450 million and that work will employ up to 550 people, according to a company press release.

CONTRACTORS

Project contractors include M-I Swanco, handling drilling fluids and waste management; Sperry Drilling Services, handling directional drilling and logging; Dowell Schlumberger, handling cementing and pumping; Arctic Slope Energy Services PPC, handling pipeline work; Swalling Construction, handling bridge work; Nanuq and Peak Oilfield Services, handling ice road construction; Conam Construction, handling facility work; VECO Alaska, handling communication and power work; and VECO Engineering, which provided all of the engineering for the projects.

ADDITIONAL SATELLITES

Although also included in the EIS, three additional satellites have not yet been sanctioned by ConocoPhillips and Anadarko. Those three additional satellites, all located within NPR-A, could provide opportunities for additional North Slope construction work, should they be approved.

Alpine West is located on land owned by Kuupik Corp. Lookout and Spark accumulations are located on federal land.

"ConocoPhillips also is pursuing or plans to pursue state, local and federal permits for the three remaining Alpine satellite developments within NPR-A," a company spokesperson said in an e-mail, inquiring about the satellites. "They are generally located five to 15 miles from the Alpine field."

BLM has already approved of a development plan, outlined in its Record of Decision, which was issued for the five satellites in November 2004.

"This plan is a model environmental approach for the Arctic region," said Rebecca Watson, assistant secretary for Land and Minerals Management at BLM, when signing the decision document. "It allows for the energy development our country needs, while protecting the land, water and wildlife. It shows that this, and future Arctic development, can and will be done in an environmentally sensitive way."

According to the BLM release, the five satellites could tap an additional 330 million barrels of oil, adding to the 429-million barrel Alpine field. The additional oil could produce 6.5 billion gallons of gasoline and 3.1 billion barrels of diesel or heating fuel, equating to a year's supply of gas for 15 million private vehicles and heating fuel for more than half the homes in the northeastern United States.

Whether ConocoPhillips and Anadarko will continue their westward movement on the North Slope with development of the first producing fields from NPR-A remains unknown.

UNANSWERED QUESTIONS

"There are still many unanswered questions about the remaining satellites right now, including the outstanding permits, and potentially increasing project cost," a ConocoPhillips spokesperson said in an e-mail response. "All of these issues must be considered when evaluating the economics of the project before moving it forward."

NPR-A represents significant opportunities for new oil and gas discoveries, according to geologists working for the U.S. Geological Survey. In a reassessment released in 2002, USGS estimates that between 1.3 and 5.6 billion barrels of oil are present in the reserve, deemed economically recoverable at market prices of $22 and $30 per barrel, respectively. Estimates of technically recoverable oil on federal lands are between 5.9 and 13.2 billion barrels of oil, the report said.

The reassessment included an economic analysis and "... shows that the federal part of NPR-A contains significant volumes of technically recoverable oil and gas resources spread over a vast area."

New estimates of technically recoverable undiscovered natural gas resources on federal lands in the NPR-A range between 39.1 and 83.2 trillion cubic feet. "The economic viability of the natural gas resources depends on the availability of a pipeline to transport the product to market in the Lower 48 states," the report said.