Savant Alaska, ASRC and BP Restart Badami Plant: two wells completed, flow testing begins.
Savant Alaska LLC and its local partner, Arctic Slope Regional Corp., may have cracked the code that has kept an estimated 120 million barrels of oil (MMBO)locked in Badami's sands. Locked so tight, the Arctic Energy Office revised its original estimate down to 60 MMBO.
But based on the success of an exploration well, B1-38, and a sidetrack well, B1-18A, Greg Vigil, executive vice president of Savant Alaska, said the company is optimistic.
A subsidiary of independent Denver-based Savant Resources, Savant Alaska, ASRC and BP have been working together to restart the Badami plant to resume some production and conduct flow testing.
"We're well on the way to beginning production in September," Vigil said.
The three companies announced a cooperative agreement in July 2008 to drill additional wells to bring Badami back to production, and possibly expand the field. The plan, they announced then, included several wells, including the two wells drilled to date. Savant has a 90 percent working interest in the wells and ASRC Exploration owns the other 10 percent.
Vigil said the venture's first exploratory well--B1-38, or Red Wolf--found enough oil to be completed for production. And the B1-18 sidetrack well looks very promising based on initial flow-backs, he said.
By drilling through the sands horizontally, Vigil said, each well could connect more of Badami's discontinuous sands.
"We wanted to apply different technology to Badami's sands," he said. "We were the first ones to try drilling in a horizontal manner."
TURBIDITE RESERVOIR PROVES PROBLEMATIC
When Conoco discovered the Badami pool on Mikkelsen Bay east of Prudhoe in 1990, it had an initial drill stem test in excess of 4,000 barrels of oil per day.
But producing the North Slope's first turbidite reservoir has proven problematic for BP. The formation is a series of channels, like fingers, and the puzzle has been how to get the oil and gas to travel from channel to channel.
BP acquired the field in 1994 and began production in August 1998. Back then, it anticipated production of 35,000 barrels a day from as many as 30 wells, but by that October, production from seven was only 4,000 to 5,000 bpd. By the time BP put the field into warm shutdown in 2003, it was producing just 1,350 bpd. In 2005, BP tried again to produce the field seasonally. It produced 851,355 barrels from 2005 to 2007 before production was halted for a second time.
Vigil said he is optimistic horizontal drilling techniques will finally unlock Badami's stubborn sands. "We're excited to exploit a known accumulation with new technology," he said.
Next, Vigil said, Savant plans to drill more sidetrack wells and new wells. Sidetrack wells use a vertical section of an old well, cut out a section of the pipe casing and continue drilling horizontally. And the vertical pipe in the original well is sealed below the new horizontal shaft, he said.
"Horizontal technology allows us to drill many more wells in the field," Vigil said. "We're really excited about the opportunity in front of us at Badami."
INDEPENDENTS PARTNER IN NORTH SLOPE MARKET
Savant came to Alaska in 2006 after acquiring leases in a North Slope sale. But it's far from the usual North Slope player. It's small--five to 10 North Slope employees at any time, Vigil said.
That's smaller than the kitchen staff at one of the giant camps ConocoPhillips and BP operate on the North Slope. By comparison, ConocoPhillips has about 1,200 employees working there.
"You're seeing more and more independents active on the North Slope," Vigil said.
In Savant's case, it liked both Badami's potential reserves and its existing infrastructure.
"The fact that there was already infrastructure in place was a huge competitive advantage for us," Vigil said.
Steve Rinehart, a spokesman for BP Alaska, said the company invested million in its Badami plant and pipeline assets and is glad to see them in operation.
Tax credits also played a role in Savant's decision to invest in Alaska, Vigil said.
Alaska's various exploration incentive credits, such as the Exploration Tax Credit in Alaska Statute 43.55.025, the Production Tax Credits in Alaska Statute 43.55.023(a), offer some of the best incentives in the world, according to Paul Decker, chief of the resource evaluation section of Alaska Department of Natural Resources, Division of Oil and Gas.
"We think the explorers especially are taking notice," Decker said.
"That was a big incentive for us to spend additional risk capital in the state," Vigil said.
Joe Balash, a special assistant to the governor, said Savant is just the type of company the State's production tax incentives are designed to attract.
"We are pleased to see Savant enjoy success in their pursuit of Badami," he said. "We hope their entrance, along with a handful of other newer smaller players, signals the movement toward development of a number of smaller opportunities on the North Slope."
Super-major companies need big fields to justify the dedication of staff and resources, but smaller companies can bring new energy and excitement to some of the smaller players and opportunities that have been passed over by the big guys, Balash said.
INITIAL RESULTS ARE PROMISING
To help restart Badami facilities, BP is shipping some 15 million cubic feet of natural gas from the nearby Endicott field on the Badami oil pipeline, according to Rinehart. The field and its facilities have been inactive since BP shut it down to recharge reservoir pressure in August 2007.
But in accordance with Savant's agreement with BP, Vigil said, the Badami plant was scheduled to resume operations in September to produce four pre-existing and two new wells.
Vigil said the company used Doyon Drilling company rig No. 15 to finish the Red Wolf exploration well and the B1-18 sidetrack well. He said initial results from the wells are promising.
The Red Wolf well also is significant because it was drilled deeper and accesses a different geological formation than previous wells, Vigil said.
"We've been glad to hear reports of Savant's success at Badami," Rinehart said in an e-mail.
Both Decker and Division of Oil and Gas Commercial Analyst Tim Ryherd said smaller companies, like Savant, are smart to cooperate with big companies, like BP.
"It's tough to swim upstream against the big guys," Ryherd said.
Rinehart said partnering with Savant is a good fit for BP, too.
"The exploration prospects near Badami don't meet our investment or strategic criteria," he said. "We are focused more in Alaska on new technologies with the potential to unlock large resources, such as natural gas and heavy oil, and the continued development of light oil."