88 Energy makes second light oil discovery from Project Phoenix’s Hickory-1 well in Alaska

April 16, 2024

(WO) – 88 Energy Limited has made a second light oil discovery from its Hickory-1 well in Project Phoenix in Alaska’s North Slope.

Source: 88 Energy

SMD-B flow test results. A 20 ft perforated interval in the SMD-B reservoir was stimulated via a single fracture stage comprising 226,967 lbs of proppant volume. The well was cleaned-up and flowed for 84 hours in total, utilizing nitrogen lift throughout the entire test period. The average fluid flow rate over the duration of the flow back period was approximately 445 bpd, with choke sizes ranging from 8/64ths to 33/64ths.

The SMD-B test produced at a peak estimated flow rate of roughly 50 bopd. Oil cuts varied throughout the flow back period, reaching a maximum of 10% oil cut. The well produced at an average oil cut of 4% following initial oil to surface, with instantaneous rates observed during the 16hour period varying as the well cleaned up. Some 70% of stimulation fluid had been recovered at the conclusion of the test at which time water salinity measurements indicated that stimulation fluid was still being recovered and the well was still cleaning up. Oil cut would be expected to improve once stimulation fluid was fully recovered. 

Multiple oil samples were recovered, with measured oil gravities of between 38.5 to 39.5 API, representing a light crude oil.   

Importantly, the SMD-B zone flowed oil to surface with little to no measurable gas, representing a low GoR production rate.  Pressurized oil samples collected during both the USFS and SMD tests will be transported to laboratories for further analysis.

The SMD-B flow test was concluded with sufficient information for the next steps, and the data recorded will assist 88E in optimization and design processes in the next phase of advancement of Project Phoenix.

Hickory-1 flow test unlocks broader Project Phoenix potential. Two separate successful flow tests were conducted at Hickory-1, over the SMD-B and Upper SFS reservoirs.

A 20 ft interval was perforated in the Upper SFS reservoir which was then stimulated via a single fracture stage of 241,611 lbs proppant volume. The zone flowed at a peak flow rate of over 70 bopd.

Oil cuts increased throughout the flow back period as the well cleaned up, reaching a maximum of 15% oil cut. Once oil cut was established during the natural flow back period the well produced at an average oil flow rate of approximately 42 bopd during the natural flow back period.  

The USFS zone flowed oil to surface under natural flow, with flow back from other reservoirs in adjacent offset wells only producing under nitrogen lift. Multiple oil samples were recovered with measured oil gravities of between 39.9 to 41.4 API (a light crude oil).

Additionally, some NGLs were produced during the USFS test, as was anticipated in the planning phase. The presence of NGLs was demonstrated by samples from the flare line and by visible black smoke in the flare. 

The company anticipates NGLs produced to be at a similar rate to those observed during flow tests on adjacent acreage given the consistency of results observed between the USFS test and tests conducted on adjacent wells.

It may be possible to estimate the amount of NGLs that were not measured in these tests, once fluid characterization studies are completed in laboratory. Historically, NGLs prices on the North Slope of Alaska have been similar to, or slightly below, light oil prices and are therefore considered highly valuable.  

Forward plan. The Joint Venture will P&A the Hickory-1 well with any future appraisal and/or development activities at this location being via a long horizontal production well. The rig and associated services are expected to be off location within the next ten days. It is anticipated that the flow test will be concluded at an estimated cost of circa U14.5 million gross, due to the additional length of operations.

88 Energy now plans to undertake post-test studies, including fluid testing to characterize reservoir fluids, and downhole pressure and temperature data analysis to determine reservoir properties, at distances beyond the depth of investigation of the wireline logs.

These studies will then be integrated into existing data sets and models to refine appraisal and development plans for each reservoir, with pre-FEED studies expected to commence during 2H 2024.

Development of these reservoirs is anticipated to be via horizontal production wells, with numerous production analogues elsewhere demonstrating many multiple times the flow rates achieved from vertical wells. Additionally, horizontal developments are common practice on the North Slope of Alaska, with Conoco Philips’s Alpine and Kuparuk fields both utilizing this technique.

Production rates in long horizontal production wells are typically multiples of 6 to 12 times higher than tested in vertical wells, as evidenced in many Lower 48 analogues. Project Phoenix also benefits from the ability to produce from multiple reservoirs concurrently in a development.

Commercialization options for Project Phoenix are to be advanced in parallel, including farm-out to a strategic development partner and/or early, capital-lite production given proximate infrastructure advantages (Hickory-1 is located right next to the Dalton Highway and TAPS).

In addition, the company plans to work with independent geological consultants to secure a Contingent Resource estimate over the SMD and SFS reservoirs (complementing the previously announced Contingent Resource estimate over the BFF reservoir; refer 88E ASX release dated 6 November 2023). Completion of these estimates is expected during Q2 2024.

Additional information related to Hickory-1. Hickory-1 is in State lands on the North Slope of Alaska, adjacent to the Dalton Highway and Trans Alaska Pipeline, within Alaskan Oil and Gas lease ADL 392314.

88 Energy holds a ~75% working interest in the well and is operator. The well spudded in March 2023 and was drilled to a Total Depth of 10,650 ft. Multiple prospective pay zones in sandstone reservoir between depths 7,700 and 10,500 were identified. 

88 Energy reported a maiden, independently certified Contingent Resource estimate of 136 MMbbl of hydrocarbon liquids (gross best estimate (2C)) and 628 BCF of gas, for the Basin Floor Fan (BFF) reservoir in Project Phoenix in Nov. 2023.

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