The Burger J well in the Chukchi Sea offshore Alaska joined the Mukluk well in the Beaufort Sea as the two biggest disappointments in U.S. Arctic operations. The Mukluk well was plugged and abandoned (P&A) by a BP-led consortium Jan. 20, 1984. Thirty-one years later, the Burger J was P&A by Shell on Sept. 28, 2015.

The Burger J well was drilled about 241 km (150 miles) from Barrow, Alaska, in about 46 m (150 ft) of water, according to a Shell press release. The company safely drilled the well to a total depth of 2,073 m (6,800 ft). Shell said it found indications of oil and gas in the Burger J well, but these are not sufficient to warrant further exploration in the prospect.

Marvin Odum, director, Shell Upstream Americas, said, “Shell continues to see important exploration potential in the basin, and the area is likely to ultimately be of strategic importance to Alaska and the U.S. However, this is a clearly disappointing exploration outcome for this part of the basin.”

Shell holds 100% working interests in 275 Outer Continental Shelf blocks in the Chukchi Sea. The company will now cease further exploration activity in offshore Alaska for the foreseeable future. This decision reflects the Burger J well result, the high costs associated with the project, and the challenging and unpredictable federal regulatory environment in offshore Alaska, according to the company.

For an area equivalent to half the size of the Gulf of Mexico, this basin remains substantially underexplored. And that is what will have Shell return to the Arctic when oil prices rebound.

Statoil also withdraws from Alaskan Arctic
Citing the results from the Shell well, Statoil decided to exit Alaska. The decision means Statoil will leave 16 Statoil-operated leases and its stakes in 50 leases operated by ConocoPhillips, all in the Chukchi Sea. The leases were awarded in the 2008 lease sale in Alaska and will expire in 2020, the company said in a press release.

The company said it was optimizing its portfolio, strengthening financial performance and positioning for long-term value. The leases in the Chukchi Sea are no longer considered competitive within Statoil’s global portfolio, so the decision was made to exit the leases and close the office in Anchorage, Alaska.

Interior Department cancels lease sales
In mid-October 2015 the Department of Interior announced it was canceling Alaska Arctic lease sales for the remainder of the 2012 to 2017 period and wouldn’t extend offshore leases for Shell, Statoil and other companies in the Chukchi and Beaufort seas. Leases will expire in 2017 in the Beaufort Sea and in 2020 in the Chukchi Sea.

“In light of Shell’s announcement, the amount of acreage already under lease and current market conditions, it does not make sense to prepare for lease sales in the Arctic in the next year-and-a-half,” said Interior Secretary Sally Jewell in a statement Oct. 16, 2015.

There are seven companies with drilling rights in the region, but only Shell drilled a well to test the prospect. Statoil and ConocoPhillips also requested five-year extensions.

U.S. Sen. Lisa Murkowski (R-Alaska) issued the following statement on Oct. 16, 2015, after the Department of the Interior announced its rejection of Shell Alaska’s request to extend its leases and the cancellation of future lease sales in the region.

“This is a stunning, short-sighted move that betrays the Interior Department’s commitments to Alaska and the best interests of our nation’s long-term energy security. Instead of seeking to shut down Alaska, Interior should remember that the North Slope was nearly abandoned after 14 dry holes were drilled. The opportunity to keep going led to not only the discovery of Prudhoe Bay but also the production of more than 17 Bbbl of oil and a generation of opportunity for Alaska,” she said.

Liberty Field offshore development plan
Hilcorp Alaska LLC filed a development and production plan for the Liberty Field offshore after closing its deal to acquire 50% of the unit from BP. Hilcorp also acquired 100% of the Northstar and Endicott fields from BP and 50% of Milne Point.

The plan calls for construction of a self-contained gravel island connected to land by a subsea pipeline. The 9.3-acre manmade Liberty Island will take an estimated two years to construct. The island will have facilities for drilling, production, support, utilities, camp and relief-well area.

The field is about 24 km (15 miles) east of Prudhoe Bay in Foggy Island Bay. Liberty Island will be about 10 km (6 miles) offshore in 6 m (19 ft) of water. The area is protected from the polar icepack by a belt of barrier islands.

Partners in the project include Hilcorp Alaska, BP Exploration (Alaska) Inc. and ASRC Exploration LLC.

The environmental review already has begun. The field was originally discovered in the 1980s.

North Slope state lease sale
In a state lease sale on Nov. 18, 2015, about 2.2 million acres were offered across the central North Slope area. The winning bids were placed by three companies. Accumulate Energy Alaska Inc., a subsidiary of 88 Energy Ltd., Australia, and Burgundy Xploration LLC teamed up to win 121 tracts (174,240 acres) for a consideration of $4.7 million. In September 2015 these companies started drilling on their nearby Icewine project targeting shale oil.

A subsidiary of Armstrong Oil and Gas Inc., 70 & 148 LLC,picked up 10 leases in the area for about $4.7 million.

Greater Mooses Tooth development
On Oct. 22, 2015, ConocoPhillips received approval to build the first oil production facilities in the National Petroleum Reserve-Alaska (NPR-A). The Greater Mooses Tooth project would ultimately involve drilling 33 wells in the NPR-A.

The Bureau of Land Management (BLM) also held a lease sale at the same time as the state lease sale. ConocoPhillips spent $788,680 in the BLM lease sale for six tracts in the northeastern part of the NPR-A, which are next to the Greater Mooses Tooth and Bear Tooth units.

ConocoPhillips announced that it will spend about $900 million to develop the Greater Mooses Tooth Unit, with production expected to start in 2018. The company has plans to drill two or three NPR-A wells this winter.

Cook Inlet reserves updated
In the executive summary of the “Updated Engineering Evaluation of Remaining Cook Inlet Gas Reserves” published in September 2015, the authors noted the Cook Inlet Basin has produced 235 Bcm (8.3 Tcf) of gas and 1.35 Bbbl of oil as of Dec. 31, 2014, with about 33.9 Bcm (1.2 Tcf) of proved and probable remaining gas reserves.

There has been continued concern over whether the existing system of natural gas production and delivery in the Cook Inlet Basin can continue to meet the energy demands of south-central Alaska. This report addresses the remaining gas reserves in the Cook Inlet Basin from a reservoir engineering perspective.

All 34 currently or historically producing Cook Inlet gas fields, many of which contain multiple pools, were evaluated by applying both decline curve analysis and material balance engineering methods to the publicly available production and pressure data.

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