umiat plans

Linc Energy plans aggressive drilling program in Umiat, company says


By Tim Bradner
Alaska Journal of Commerce




Linc Energy, an Australian-based independent, plans an aggressive drilling program to delineate reserves at the small Umiat oil field in the National Petroleum Reserve-Alaska, the company's president said.

Linc Energy plans to begin drilling later this year with one rig and to bring in a second one later, most likely a company-owned rig to be permanently based in Umiat, Linc Energy CEO Peter Bond said. A search is under way now for suitable rigs for the test drilling, he said

"We want to be very aggressive in pursuing this. We like what we see at Umiat," Bond said.




Umiat is a long-known discovery that has previously been considered uneconomic.

Bond said the initial drilling will delineate the known shallow resource in Umiat and also test prospective deeper resources, he said. The two-rig drilling program will allow the field to be delineated more quickly.

Umiat development would be aided by a state of Alaska plan to build a 92-mile road from the Dalton Highway to Umiat. The project is being led by the state Department of Transportation and Public Facilities, and an $8 million environmental impact statement for the project is under way.

It is unclear how the road and related bridges would be paid for. One possibility is a state capital appropriation for the $250 million estimated cost of the road. Another is state financing similar to that done for the Red Dog Mine road and port in the late 1980s, which was done through the Alaska Industrial Development and Export Authority. If AIDEA financed the efforts, the users of the road, in this case oil and gas companies, likely would pay for the cost through some form of user fee.

Umiat has estimated recoverable reserves of 201 million barrels of oil within a shallow resource of about 1 billion barrels of oil-in-place. There are potential additional resources below the shallow reservoir that will be tested, Bond said.

Linc Energy announced June 16 it had acquired 84.5 percent of 19,358 acres of federal leases from Houston-based Renaissance Umiat LLC. Renaissance Umiat had developed a plan to produce the field with horizontal production wells.

Oil was first discovered in Umiat in the 1950s by the U.S. Navy during early exploration of what was then Naval Petroleum Reserve No. 4.

Although it has no road access, Umiat does have an airport with a 5,583-foot runway that the state owns and maintains year-round. There also are camp and power generation facilities, some dating back to the 1950s, when the Navy supported early exploration. The lack of infrastructure has been an impediment in exploration elsewhere in NPR-A.

Bond said Linc Energy is undergoing engineering studies for a 92-mile, 24-inch pipeline to connect Umiat to the Trans-Alaska Pipeline System. The pipeline could cost from $200 million to $250 million, Bond said, and is being designed to transport between 50,000 and 80,000 barrels per day.

Linc Energy spokeswoman Maria VanderKolk said the size of the pipeline is still being determined, but that a plan by Renaissance Umiat called for a 12-inch pipeline buried 6 inches to 8 inches deep in the gravel roadbed. That pipeline would be capable of transporting 50,000 barrels per day.

The state of Alaska is planning construction of a natural resources road to the area from the Dalton Highway, a state-owned road that parallels TAPS. Renaissance's plan was to bury the pipe in the roadbed, but VanderKolk said an elevated pipeline built on vertical supports, a conventional North Slope pipeline practice, also is being considered.

Linc Energy is considering whether the light 43-degree-plus API gravity Umiat crude can be transported to TAPS without heating, which would also reduce costs. Studies done for Renaissance Umiat by engineering consulting firm NANA WorleyParsons LLC confirmed the viability of a cold pipeline, but Linc Energy will do its own evaluation and estimate, the company said.

Alyeska Pipeline Service Co. may still require that the oil be heated before being injected into TAPS. The pipeline company is concerned about declining temperatures of the TAPS throughput and would look carefully at an addition of cold oil, an Alyeska spokeswoman said separately.