Northeast Milne Point

Off-shore, Western North Slope

  • Key Features
    • Project is adjacent to Beechey Point Unit (~100 MMBO) & Milne Point Unit (529 MMBO); is 7.5 miles west of the Northstar Unit (196 MMBO), and is 7 miles east of the Nikaitchuq Unit (180 MMBO).
    • Project lies 5 miles S.W. of Sandpiper Discovery (12 MMBO) and 4 miles S. of Shell/Eni/Repsol OCS Leasehold.
    • Jones Island #1 Well: oil shows in Sag River & Ivishak sands.
    • Milne Point Unit KR #18-1 Well: Kuparuk DST of 875 BOPD (21 API); Lisburne DST of gas-cut oil/mud/water.
  • Leases
    • ADL 392153, 392154, 392155, 392156  (?/?/2022)

Geologic Summary by: D. T. Gross (7/2/2012)

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The Donkel/Cade Northeast Milne Point Project is comprised of four tracts totaling approximately 10,240 acres, located in the Simpson Lagoon between the shoreline and the barrier islands of the Beaufort Sea. The acreage lies south of the eastern end of Pingok Island and both includes and surrounds Bertoncini Island and Jones Island in State of Alaska waters with depths up to 15’. The project area is adjacent to two units, the Milne Point Unit (529 MMBO) to the southwest and the Beechey Point Unit (~100 MMBO) to the south and east. The Nikaitchuq Unit (180 MMBO) is 5 miles to the northwest, the Sandpiper Discovery (12-47-150 MMBO) is 5 miles to the northeast, and the Northstar Unit (196 MMBO) is 8 miles to the east. The project acreage is only 3 1⁄2 miles south of the extensive 64-lease position held by Shell, ENI, and Repsol (40%, 40%, 20% respectively). Their leasehold encompasses the Federal OCS acreage closest to the northern borders of Alaska’s oil and gas units in the Colville River-Kuparuk River-Prudhoe Bay area. Devon Energy held five Alaska State leases adjacent to the Donkel/Cade acreage to the northeast, immediately southwest of the Sandpiper Discovery, but allowed them to expire on 6/30/12 without drilling any wells.

The Milne Point Unit was formed in 1979 based primarily on the discovery well drilled by Standard Oil of California (SoCal) in 1969. The Kavearak Point #1 was drilled to 9,799’ MD(TVD) with targets in the L. Cretaceous Kuparuk Formation, the U. Triassic Sag River Sand, and the L. Triassic Ivishak Formation (Sadlerochit Group). The Paleozoic carbonates of the Lisburne Group were not reached. The well cut 13 conventional cores, shot numerous sidewall cores, and ran several DST’s which indicated the presence of hydrocarbons in all three of the exploration targets as well as in the Upper Cretaceous Schrader Bluff Formation. Both the Sag River Sand and the Ivishak were found to have low permeability and the latter was determined to be salt water productive with some oil and gas. Tests in the Kuparuk Formation flowed at rates of 970-1,340 barrels per day of 23.6 degree API oil. The Milne Point Unit was delineated and developed by ARCO beginning in 1980 and the first production was in 1985. In 1994, BP became the unit operator and greatly expanded the field development. To date, the unit has had a cumulative production of over 303 MMBO primarily from the Kuparuk and Schrader Bluff Formations, 233 MMBO and 67 MMBO respectively. Despite being labeled as “tight” in the discovery well, the Sag River Sand has contributed 2.4 MMBO to the cumulative unit production. The Kuparuk was deposited as clastics upon the marine shelf and is divided into four units, the “A” and “C” being most productive. The reservoirs are thin sands with net pay of 5- 60’, 23% porosity, 20-40 md, 21-26 degree API, and 33% Swi. The Schrader Bluff was deposited as shallow marine distal deltaic sands on a muddy shelf. It is subdivided into the “O Sands” and the “N Sands” with net pay of 10-50’, 28% porosity, 171 md, 14-22 degree API, and 40% Swi. The trapping mechanism at Milne Point is down-to-the-northeast normal faulting that is crosscut by NE-SW trending faults that act as productive seals between adjacent fault blocks and result in different oil/water contacts. The regional dip in the area is 1 to 2 degrees to the northeast and the official description of the Kuparuk reservoir is that of a faulted anticline with production confined to the crest and northeast flank. However, the AOGCC’s Top Kuparuk River Formation structure map displays little to no structural development of the “southwest flank” of this anticline and the trapping mechanism appears to be almost entirely reliant upon the dominant NW-SE trending faults interrupting the gentle northeast regional dip of the strata.

The Beechey Point Unit was formed in 2009 with Brooks Range Petroleum Corporation (BRPC) as its operator. It contains 30 leases covering 52,879 acres that hold oil accumulations peripheral to the northern edge of the Prudhoe Bay Unit. According to the Alaska Division of Oil and Gas, the Beechey Point Unit “lies north of the northwest to southeast trending, down-to-the-north, Prudhoe fault that separates the Prudhoe Bay field from deeper, more complexly faulted structures to the north”. The primary targets are sandstones in the Lower Triassic Ivishak Formation of the Sadlerochit group and the Upper Triassic Sag River Formation, as well as the Lower Cretaceous Kuparuk River Formation. The unit was divided into five Exploration Blocks (EB), each of which is required to have been tested by an exploration well by 2019, (North Shore EB, West Shore EB, Northwest Shore EB, East Shore EB, and Offshore EB). Along with the undeveloped discoveries in the area going back to the 1969 Hamilton Brothers Storkersen #1 well (Dewline Unit), the Beechey Point Unit approval was based upon the 2007 BRPC North Shore #1 well being sidetracked in 2008 and encountering 70’ of oil in the Ivishak. A DST that flowed at a rate of 2,092 BOPD led to the well being certified Capable of Producing in Paying Quantities (CPPQ). In 2010, BRPC drilled within two of the Exploration Blocks and suspended both wells. In the North Shore EB, the North Shore #3 well (11,414’ MD; 10,601’ TVD) was drilled into a Sag River-Ivishak target that displayed 4-way closure and was reported to have 11 MMBO in reserves. Two miles to the northeast in the Offshore EB, the Sak River #1A well (12,716’ MD; 9,396’ TVD) proved up 4.5 MMBO in reserves in the Kuparuk. Presently the plan for the North Shore Development Project is to produce oil from several relatively small, isolated hydrocarbon accumulations within the 15,000-foot horizontal drilling radius of their drilling pad. The Ivishak and Sag River sands will be produced from each prospect using horizontal drilling technology and long-reach wells to recover between 5 and 10 million barrels of oil, (22% porosity, 39 degree API). In the West Shore EB (ADL 39509 lease), BRPC has proposed a well location that is just one mile southwest of the BPX West Gwyder #1 well, drilled in 2000 to a depth of 11,030’ MD (10,513’TVD) and which had poor to locally fair/good oil shows in the Tertiary, Kuparuk, Jurassic Sands, and Ivishak.

The now-dissolved Sandpiper Unit was less than a mile to the north of the North Beechey Point, West Northstar Project in Federal OCS waters of the Beaufort Sea. The unit was formed over a L. Triassic Ivishak Formation oil discovery that was found by two wells drilled by Shell and AMOCO in 1986and which had surface locations on an artificial island constructed in 49’ of water. The Sandpiper #1 well was drilled to 12,575’ MD and tested two zones below 11,910’ MD in the Sadlerochit Group (Ivishak Fm.) that flowed from 500 to 2,500 BOPD (40-52 degree API) and 18.5 MMCFGPD. Sandpiper #2 also encountered the oil pay and both wells were certified as being Capable of Producing in Paying Quantities, leading to the formation of the Sandpiper Unit in 1992. The OOIP was reported to be 450 MMBO and values for the recoverable reserves have ranged between 47-150 MMBO, though later assessments have been lower. The unit operatorship transferred from BP to Murphy Oil in 1999 and the predicted field production rate was changed from 12,000 BOPD down to 8,000 BOPD with expectations for the oil to be processed at the Northstar Unit facilities. Three delineation wells were planned for the 2000 drilling season but were never spudded. It is not certain why but it appears that the combined effects of oil prices in the mid $20’s, the necessity of constructing an island pad north of the barrier islands, and the expectation that the Northstar Unit would be capacity-constrained until 2005 led to the abandonment of the Sandpiper Unit and the relinquishment of its leases upon their expiration in April, 2001. However, Sandpiper was determined to be a “significant discovery” by the ADOG in 2000 and by the MMS in 2001. In 2003 at the first lease sale in the area since 1998, ConocoPhillips acquired three tracts over the Sandpiper discovery. In 2009, ConocoPhillips retained these three federal leases even as the company was in the process of dropping over 100,000 acres of leases as part of the shift of their exploration focus to the Chukchi Sea. At the time, the 15,000 gross acres of the Sandpiper prospect were estimated to hold between 20 million and 70 million barrels of oil. Though they spent $4 million on the lease bonus bids, ConocoPhillips did not do any drilling at Sandpiper and today the acreage remains unleased despite being surrounded by the Shell/ENI/Repsol lease position to the north and the Devon leases to the south. This situation may be related to a 2009 DOE North Slope report that stated that the development of the Sandpiper discovery would be dependent upon the development of discoveries nearer to shore at Gwyder Bay and areas north of the Kuparuk Field. It predicted that it would be 2015, at a minimum, before development would begin at Sandpiper with the construction of a production/drilling pad north of the barrier islands.

Aside from those previously discussed, there are five key wells related to the Northeast Milne Point Project. The Milne Point #18-1 well was drilled onshore in 1970 by the Hamilton Brothers Oil Company just 11⁄2 miles west of the present Donkel/Cade project area. The well was a straight hole that reached TD in the “Devonian” (11,067’ MD(TVD)) and was suspended after successful DST’s in the L. Cretaceous Kuparuk Formation flowed oil. DST #10 (perfs: 7,210- 20’) tested at 380 barrels per day of 23 degree API oil. DST #11 (perfs:7,210-16’) returned 760’ of clean oil before the tool sanded up and DST #12 over the same interval flowed 875 barrels per day of 21.4 degree API oil. An earlier and deeper test of the Kuparuk, DST #7 (perfs:7,284-6’), had yielded 600’ of oil and 1,700’ of saltwater. An openhole test in the L. Triassic “Sadlerochit Sand” showed it to be permeable but wet when it returned a 1,400’ net rise in saltwater over a 4 hour test. Four openhole tests were attempted in the Carboniferous Lisburne Formation, two of which were successful and had encouraging results. DST #3 (10,085-107’ MD(TVD)) proved that the Lisburne was very permeable with its flow rate of 1,470 barrels per day of saltwater. A slightly deeper test, DST #6 (10,179-270’ MD(TVD)), confirmed the presence of hydrocarbons when it returned 940’ of gas-cut oil and mud with 3,670’ of saltwater. Despite the successful tests in the Kuparuk, discussions were begun in 1972 to plug and abandon the well, which was carried out in 1980 one year after the formation of the Milne Point Unit. It is curious to note that an AOGCC structure map of the Top Kuparuk River Formation with the original Milne Point Unit boundaries on it clearly shows the #18-1 well to be over 100’ updip and nearly one mile southwest of the oil/water contact, very much within the oil pool. However, a 2010 AOGCC map of the Milne Point Unit with the Kuparuk River Oil Pool “approximate accumulation sketched using existing well control” shows the #18-1 well to be 1⁄2 mile northeast of the O/W contact, very much outside of the oil pool. It is important to note that a 1996 era map submitted by BP to the AOGCC shows the Milne Point Unit area to be much more densely and complexly faulted than the other two maps indicate.

Another early exploration well in the area is the Plaghm Beechey Point #1, drilled by Placid Oil in 1971 between the future Milne Point and the Northstar units at an onshore location 2 miles ESE of the present Donkel/Cade acreage. Despite having its planned total depth changed from 11,500’ to 13,000’ on 12/24/70, the well had reached a TD of only 11,922’ MD(TVD) on 1/12/71 when it was plugged and abandoned. Unfortunately, the well was not a success and neither sidewall cores nor conventional cores were taken. Cement plugs were set in the 8,911’ of openhole at the Top Kuparuk Formation (L. Cret.; 8,132-232’ MD), Top Sadlerochit Group (L. Triassic; 10,499-599’ MD), and Top Lisburne (Miss.; 11,158-258’ MD).

The third relevant well’s surface location lies within the Northeast Milne Point Project acreage. The Jones Island #1 well was drilled in 1993 by ARCO Alaska to a depth of 15,153’ MD (11,767’ TVD), the well having been deviated 11⁄2 miles to the NNE which placed its bottomhole location about a mile north of the project acreage. The well was drilled from an icepad surface location midway between Bertoncini Island and Jones Island in 21⁄2 feet of water. Texaco had permitted an earlier similar well just a mile to the west, but their permit for the Jones Island #1XX expired in 1986. Today, the Northeast Milne Point Project covers the southwestern quarter of the earlier Jones Island Unit. The ARCO well encountered “basement” at 15,000’ MD (11,614’ TVD) below the base of the Permo-Triassic Kavik Formation and thus the older Carboniferous Eschooka Formation, Lisburne Group, and Endicott Group were not encountered. The primary exploration target of the Jones Island #1 well was the L. Triassic Ivishak Formation, with a secondary target in the L. Cretaceous Kuparuk Formation. After drilling its section, it was decided not to stop and log the Kuparuk. No sidewall cores were taken in the Kuparuk (12,370’ MD; 9,065’ TVD) when the openhole was later logged, but the driller’s report does note that when drilling the deeper section it was “difficult reaming thru the Kuparuk sands and silts”, thus confirming their presence. The well’s sidewall cores in the underlying U. Triassic Sag River Sand had a good oil show (14,318’ MD; 10,933’ TVD) and the Triassic Shublik Formation (14,377’ MD; 11,007’ TVD) and L. Triassic Ivishak Formation (14,505’ MD; 11,130’ TVD) had numerous very poor to fair oil shows. Despite the oil shows, ARCO chose not to run porosity and permeability analyses on the cores, reported that the Jones Island #1 well encountered “no significant hydrocarbons”, and plugged and abandoned the well. This may have been because the attempts to take fluid samples in the Sag River failed due to low permeability and because the sandstones and conglomerates of the Ivishak often had either a kaolinite(?) or a carbonate matrix.

The final two wells of interest were drilled in 1996 by BPX (Alaska) from the same surface location on Pingok Island, approximately 3 miles northwest of the present Northeast Milne Point Project. These wells were drilled only down through the L. Cretaceous Kuparuk Formation. The North Milne Point #1 (9,101’ MD; 7,976’ TVD) and #2 (15,077’ MD; 8,265’ TVD) were drilled directionally west and east, respectively, with the bottomhole of the #2 well located 1 mile from the project acreage. The #1 was drilled as a delineation well in order to determine the presence of “oil downdip in a known faultblock” of the Kuparuk. Before drilling, BPX reported that they expected that the U. Cretaceous Schrader Bluff to be wet and that there were no plans for testing of the well. The #2 well appears to have been designed to test the Kuparuk on the northeast and downthrown side of a northwest to east trending fault. No wireline logs were run and no sidewall cores were taken in either well with BPX apparently relying on the MWD information. Both wells were plugged and abandoned upon the #2 well reaching TD.

In summary, the Northeast Milne Point Project lies in a densely faulted area. It is immediately northeast of a 529 million barrel oilfield which has its oil accumulations faultblock-controlled and favoring the northeast flank of its “anticline”. The Donkel/Cade acreage lies between the Milne Point #18-1 well to the southwest and the Jones Island #1 well to the northeast. The #18-1 well tested oil in the Kuparuk Formation at rates up to 875 BOPD (21-23 API), the Ivishak Formation was found to be wet but permeable (1,400’ of saltwater in 4 hrs.), and the Lisburne Formation had both great permeability (1,470 BWPD) and contained hydrocarbons (940’ gas-cut oil; 3,670’ saltwater). The Jones Island well found that the Lisburne was missing just north of the Donkel/Cade acreage and that the Kuparuk Formation, though not productive, did contain sands and silts. The deeper Sag River Formation (2.4 MMBO cum. at Milne Point Unit) had a good oil show while the Shublik and Ivishak formations had numerous oil shows, making them encouraging prospects over the project acreage. Even the Tertiary Schrader Bluff sands should not be dismissed due to the fact that they are productive within a northwest to southeast band from the Nikaitchuq Unit (2.7 MMBO cum.) to the Milne Point Unit (67 MMBO cum.) to the Prudhoe Bay Unit (25+ MMBO cum.). These sands were all deposited in a near-shore marine environment and were sourced from the southwest. The potential for them at the Northeast Milne Point Project would be in their mid-shelf/outer shelf/slope equivalent sands.