Satellite fields increase North Slope production: these smaller fields share infrastructure with larger fields, and have some tax advantages.

• Author: Bradner, Mike

Satellites, those pools of oil and gas near large producing fields, are increasingly being relied on to sustain Alaska's oil production near the million-barrels-a day total. Today satellites to the large North Slope fields are producing oil and playing an important part in keeping pipelines and other infrastructure on the Slope efficiently utilized.

A satellite field, by definition, is a pool of oil and gas near a bigger field that can be developed using the infrastructure of the larger field. In most cases the pool is too small to be a standalone project, to bear the cost of its own surface processing facilities and pipelines. To be economically viable it needs to be able to share the cost of the pipelines and facilities on the surface with oil production from the larger field.

The satellite fields are, however, be coming a focus of debate within state government and the Legislature. Some legislators are asking whether state petroleum tax laws that encourage development of small, economically marginal oil prospects are too liberal. Some of the new satellites are very profitable, they argue, and aren't paying their proper share of state tax.

A KNOWN RESOURCE

The satellites aren't new discoveries, for the most part. North Slope operating companies that developed the large oil fields on the Slope, BP Exploration Alaska Inc. and Arco Alaska Inc. (now ConocoPhillips Alaska Inc.), have always known that satellite pools existed around the large Prudhoe Bay and Kuparuk fields.

Many were detected in the early years of North Slope development when exploration wells were being drilled. In the 1970s and early 1980s, wells were drilled right through shallow accumulations of oil on the way to deeper, larger targets. The companies were focused on developing the larger discoveries, and left the smaller oil zones for later investigation.

In any event, there wasn't any room for new oil in the surface facilities that process the produced petroleum. The facilities were designed to handle large volumes of oil and gas produced by the Prudhoe Bay and Kuparuk fields, and they were at capacity. It wasn't until the late 1980s and early 1990s, when the large fields began to decline, that capacity in the surface facilities became available. There was room for new oil then and the operating companies turned their attention to the undeveloped pockets of oil, the satellites.

A TAX ADVANTAGE

A satellite is also generally defined as a pool geologically distinct from the nearby large field, in that there is no communication between the two or evidence that hydrocarbon fluids flow back and forth. This is important because the production tax rate...