Alaska – toiling for black gold under the midnight sun

There are strange things done in the midnight sun
By the men who moil for gold;
The Arctic trails have their secret tales
That would make your blood run cold;
The Northern Lights have seen queer sights,
But the queerest they ever did see
Was that night on the marge of Lake Lebarge
I cremated Sam McGee.

From The Cremation of Sam McGee by Robert Service

Alaska, the land of the midnight sun, has seen many strange sites since gold was first discovered on Aug. 16, 1896 by the Skookum party in the Bonanza Creek in the Yukon Territory of Alaska, sparking what became known as the Yukon Gold Rush. The rush for riches in the frozen north was memorialized in literature, like the epic poem The Cremation of Sam McGee by Robert Service and several books by author Jack London. These and other literary illustrations helped shape the image of hardy men and women braving the harsh weather and environment to seek their fortune. This literary image is still present in those who seek to recover the new wealth of Alaska—the vast reserves of oil, or black gold.

The first oil claims were made on the Iniskin Peninsula on the west shore of the Cook Inlet in southern Alaska around the same time as the Yukon Gold Rush but it was not until Mar. 12, 1968 that the first oil fields were discovered in Prudhoe Bay, on the northern coast of the state, by the Atlantic Richfield Company (ARCO) and Exxon. By 1974, Alaska’s Division of Geological and Geophysical Surveys estimated the field held 10 billion barrels of oil and 26 trillion cubic feet of natural gas. Production began in June 1977 after the construction of the Trans-Alaska Pipeline System (TAPS), which runs 800 mi (1,287 km) from Prudhoe Bay to Valdez, was completed. The first barrel of oil traveled through the pipeline that same year.

Oil production peaked in Prudhoe Bay in 1988 with production averaging 2 million barrels per day. The current production hovers at 650,000 barrels per day, bringing the total produced oil from the discovery to 11 billion barrels since first oil in 1977.

Prudhoe Bay sits about 800 mi (1,290 km) north of Anchorage and 250 mi (400 km)  north of the Arctic Circle, covering an area of 88,000 sq mi (227,918 sq km), from the foothills of the Brooks Mountain Range to the Arctic Ocean. It is a region of extremes where winter temperatures routinely drop to -40° F (-40° C) but summer temperatures can rise to 80° F (27° C). During the long winters, winds rip off the Arctic Ocean at 30 to 40 mph (48 to 65 kph), adding severe wind chill to the already frigid temperatures. In winter the sun never rises and during the short summer months, the sun never sets, giving Alaska its nickname of the Land of the Midnight Sun.

Prudhoe Bay also sits near the Alaska Arctic National Wildlife Refuge (ANWR) and is itself part of a fragile ecosystem that includes tundra and a wide variety of wildlife including caribou, musk ox, wolves, rabbits and the occasional polar bear. The sensitivity of the region combined with the long, cold and dark winters present numerous challenges to operators and suppliers.

“There is a very close integration between the Environmental Solutions group and the Drilling Solutions Group,” said Tim Johnson, ES Alaska operations manager. “It is about the total integration package to benefit the customer. And that is top driven from Erin Brayer, Alaska regional manager, to the top project managers. It is across the board; we are all trying to solve problems. The entire Alaska group has a broad scope of what we can do.”

M-I SWACO Alaska provides support for the North Slope directly from the base in Deadhorse, which is an unincorporated community attached to Prudhoe Bay where companies like M-I SWACO support the region’s oil and gas industry. The Deadhorse facility hosts four plants, including the newest plant, #4, which will be dedicated to mixing the oil-base fluids for North Slope projects. The plant went on line in July and it began mixing mud for the Doyon 14 well in December.

Plant #4 has two 300 bbl and one 200 bbl mixing pits, along with eight 1,000 bbl storage tanks. Plant #3 has 12 500 bbl storage tanks, two 400 bbl and two 250 bbl mixing pits. Plant #2, which is connected to Plant #3, has six 600 bbl brine storage tanks and a 450 bbl mixing pit. Plant #1 is the largest with one 120 bbl, one 320 bbl and two 360 bbl mixing pits. It has four 3,000 cf silos, two 1,000 bbl and one 500 bbl tanks for LVT-200, the mineral oil used as the base oil in the Rheliant M system, along with two 500 bbl tanks for untreated OBM before it goes to the onsite centrifuge for treatment. The plan also has six 600 bbl tanks for OBM, six 600 bbl tanks for WBM and two 600 bbl water tanks. Next to the office is warm storage, for products that cannot handle the cold. Outside the warm storage is a weather-proof tent that houses the ES equipment like screens.

What makes the Deadhorse facility unique is that the storage tanks and the pipes that carry the product to the mixing tanks or to trucks for transport to the rigs are all enclosed inside insulated buildings. Due to the extremely cold temperatures during the long winters, it is necessary to prevent the tanks and conduits from freezing.

The close knit team of hands who work the Deadhorse plant rotate on a two week on/two week off schedule and live in a 36-man camp when on duty. The camp, at the back edge of the site, provides the men with nearly all the comforts of home, including onsite laundry and an exercise room with brand new weight machines, which the crew designed and put together themselves. The camp also has a small kitchen.

“We can cook things like frozen pizzas,” said James Overland, Deadhorse warehouse facility manager, “but we usually go over to one of the other camps for our meals.”

Not far from Deadhorse, a short 20 minute flight over the frozen tundra, is the Alpine facility. Alpine is operated by ConocoPhillips, the largest oil and gas producer in Alaska, with approximately 1.8 million undeveloped acres of leases. The Alpine facility is located within the Kuparuk region, about 40 mi (64 km) west of the town of Kuparuk and 53 mi (85 km) west of Deadhorse. The Kuparuk oil field is, according to the ConocoPhillips website, the largest onshore oilfield discovery in North America in the past 20 years. Oil was discovered in 1996 and Alpine currently produces about 100,000 bbl (15,900 m³) of oil daily.

The field covers approximately 40,000 acres but the main Alpine processing facilities and the two original drill pads occupies only 97 acres, less than 2% of the total area. ConocoPhillips recognizes the extreme sensitivity of the ecology in the Colville River delta, including the need to minimize impact on the wildlife and the fragile tundra.

To minimize its environmental impact, the main facility and the two satellite pads added in 2006 were designed to be small. To access the oil reserves in the entire field from the four pads, ConocoPhillips utilizes the latest drilling technologies including directional drilling, which allows them to drill numerous wells from each pad. On the pads, the rigs alternate between production wells and injection wells. Most wells are drilled off 20 ft (6 m) centers.

“Due to the limited pad space,” said David Heriard, senior engineering manager based in Anchorage, “operators try to get as much out of that one pad. That means a lot of high angle wells, with extended or ultra-extended reach.”

The remoteness of the site creates a number of logistical challenges for ConocoPhillips and for its suppliers. No permanent road was built, leaving Alpine effectively cut off from the towns of Kuparuk and Nuiqsut during the summer months. The only way in or out during the summer is by air. Alpine has a 5,000 (1,524 m) private gravel-surface runway for transporting crews and limited supplies to and from the site. Major resupply must take place during the winter months when the ice roads from the nearby towns are built. The 30 mi (48 km) long seasonal ice road connects Alpine with Kuparuk and Nuiqsut.

Ice roads are built each year when the top layer of the tundra freezes and enough snow and ice accumulates to provide a protective surface. It is typically mid-January before there is enough ice to begin building the ice roads and they only last until mid-April. Surprisingly, many of the ice roads in Northern Alaska are not built over rivers or the ocean. Some, including a 25 mi (40 km) road from Oliktok Point to a rig on a gravel island in the Beaufort Sea, are built over water but the majority of the ice roads in this region are built above the tundra.

M-I SWACO has worked with ConocoPhillips as a contractor since the oil company began development drilling operations at Alpine in 1999. Squeezed into a small corner of the main Alpine site, M-I SWACO operates a warehouse with mud tanks and an injection skid. On the rig pads, a short drive over connecting roads, M-I SWACO also operates a ball mill system, which cycles through the cuttings and smashes them up to a small enough size that they can be reinjected into the disposal wells.

“The Alpine work helped put M-I SWACO on the map as the premier mud company on the slope,” said John Murphy, project engineering manager. “It was the first large-scale Integrated Fluid Engineering (IFE) project in the area. Alpine had specific IFE-related requirements and we worked closely with Tech Services in Houston to give them what they needed.”

The warehouse area has nine 600 bbl upright tanks for water and other liquid products. The site has over 3 million pounds (1,700 tons) of bulk storage capacity including bulk gel and carbonate. The injection skid, since beginning operations 11 years ago, has processed over 1 million barrels of waste. The ball mill, in that same period, has processed over 2 million barrels of cuttings. Despite the challenges of working in the extreme environment of Alaska’s North Slope, the M-I SWACO team has achieved 10 years with no loss time incidents (LTI).

Unlike even the most remote offshore rig, which can receive new shipments of nearly any product needed for a drilling or reinjection operation any time, supplies at the Alpine facility must be planned as much as a year in advance. During the short few months when the ice roads connect Alpine to the outside world, M-I SWACO must ship every possible product and spare part into the facility. Hundreds of crates of supplies, brought in during the short resupply season, line the edges of the site.

“There are a lot of logistical challenges because the North Slope is a very environmentally sensitive area,” said Heriard. “The exploration work is done during the winter months. They have to wait for the tundra to freeze and it is usually mid-January before there is enough ice to begin. And it begins melting by mid-April. Everything has to do with the ice.”

The small M-I SWACO team at Alpine, only 16 hands per two-week shift, has learned to plan for any contingency so that no matter what types of formation the drilling operations may encounter, they are prepared. In 11 years of operating on the site, there have only been a handful of occasions when resupply by air has been necessary.

“A few times,” said Chris Ornt, M-I SWACO Alpine IFE coordinator, “we have had to fly in supplies. We had to rent C-130 transport aircraft to bring in supplies we needed. That got very expensive, very quickly.”

A relative new comer to the North Slope is Italian company Eni. Following their acquisition of 103 leases in 2005, Eni began developing the Oliktok Point facility, about 45 mi (72 km) northwest of Deadhorse. The site is still under construction but will house a treatment plant and the M-I SWACO Waste Injection Facility (WIF). The WIF utilizes the CleanCut Blower* (CCB*) system for moving cuttings from the rig to the WIF for processing and injecting cuttings waste.

“The CCB system at the Oliktok Point facility is the first full-scale arctic CCB system to go online,” said Kemp Webb, M-I SWACO ENI account manager. “It is also the longest land run for the system, with pipes running 593 ft (181 m) from the rig to the WIF.”

A total of 34 M-I SWACO employees, including drilling fluid engineers, CCB hands and WIF operators, work at Oliktok Point on rotating two week on/two week off schedules. Sixteen are onsite at any given time.

“The challenge,” said Project Manager Mike Whitlatch, “is how to use standard CRI systems in the arctic.”

Although CRI, and related systems like the CCB, have been used in cold climates before, the specific challenges of operating in a region where temperatures routinely drop below -40 F (-40 C), is that these temperatures stay.

“It’s the difference between reaching -40° F and staying at -40° F,” Whitlatch said. “The CRI system we’re using at Oliktok Point resembles a standard CRI system, but it must be winterized.”

The pipes that run from the CleanCut system to the WIF are insulated to ensure the slurry inside does not freeze. The WIF facilities themselves must be kept at suitable temperatures, not only for the continual operation of the systems but for the men operating them. Oliktok Point is a small peninsula surrounded on three sides by the Beaufort Sea. Winds off the Beaufort Sea frequently reach 30 knots (35 mph), adding significant wind chill. The sea itself, only about 7 ft (2 m) deep in most places freezes over. Anything not provided with supplemental heat will also freeze.

Spy Island Drilling, an artificial gravel island built in the Beaufort Sea three miles offshore from Oliktok Point is a second phase of the development drilling project by Eni that is also supported by M-I SWACO. The project was started in 2007 but was put on hold. The project is in the design-and-build stage and is expected to begin operations in 2011.

“Oliktok was a restart project in 2010,” said Webb. “Spy Island Drilling is new phase of the   development with the initial drilling program is scheduled to commence September 2011.”

In addition to the CleanCut and CRI systems, M-I SWACO is providing 10 liquid tanks and 14 bulk silos for Spy Island. They are also building a drilling support complex to provide the necessary fluids, like the proposed Fazepro* and Faze-AWAY* systems, to Eni at Spy Island.

Whether at Spy Island, Oliktok Point, Deadhorse, Endicott Island or the Alpine facility, M-I SWACO Alaska faces the unique challenges that operating on the North Slope brings. The locations are remote. The environment is at once sensitive and harsh. The winters are long and cold while the summers bring mosquitoes and other wildlife, like wandering polar bears that must be monitored if they venture too close to a work site. It is also a region that represents the best practices in safety and environmental regulation compliance while facing daunting technical challenges of drilling multiple wells from small pads that push the boundaries of extended reach drilling.

But with the proper equipment and systems in place to manage these challenges, M-I SWACO is supporting the work that continues despite, or perhaps because of, the inherent challenges. Like the men who rushed to Alaska in the late 1800s in search of gold to the hearty men and women who still make up the state’s population, the oil and gas industry represents amazing opportunity for those who are prepared “ … to moil for [black] gold” beneath the midnight sun.

This article was originally written for the Momentum, the magazine of the employees, customers and key suppliers of M-I SWACO. This is my main job.

Revised on December 31, 2010