Pantheon prepares for extended testing at Alkaid 2 well

Alaska North Slope-focussed oil and gas company Pantheon Resources said in an update on Monday that that the completion and stimulation phase at Alkaid 2 was complete, and a production packer set.

The AIM-traded firm said completion equipment was being “demobilised”, and preparations were underway for flow testing.

It said it would soon start commissioning its facilities, which were recently increased in capacity to handle potential additional production.

A workover rig was expected to arrive over the next week-to-ten days, to install production tubing before the start of flow testing operations.

“A significant amount of fluid was introduced into the well during stimulation procedures which will return first during the 'clean-up phase', prior to the subsequent commencement of oil production later in October, if successful,” the board said in its statement.

In preparation for flow testing, Pantheon said it had applied to the Alaska Oil and Gas Conservation Commission (AOGCC) for a long-term pilot production test, with a hearing set for 27 October to consider gas flaring at the Alkaid 2 well.

“This hearing is part of the normal process for a long-term pilot production test as the AOGCC must determine when the project is considered to transition from testing a new formation to entering regular production.

“AOGCC regulations state that gas flaring is permitted during testing, but must be limited during regular production operations.

“The hearing is not anticipated to delay or curtail planned testing operations.”

Pantheon said the long-term pilot production test of the Alkaid interval was intended to gather the data necessary to understand the characteristics of production from the reservoir, including determining the initial production rate, the production decline curve, and the gas-to-oil ratio.

“This information will then be used to model the potential commerciality of the project, optimise design of production facilities for long-term production, determine the amount of associated gas produced with the oil and identify the most efficient uses for that gas,” the board explained.

“The hearing will allow the AOGCC commissioners to gather information about the project to determine the length of the testing programme and thus when the project should be considered to be in regular production.”

Elsewhere, Pantheon said it had contracted Schlumberger to complete a detailed dynamic 3D subsurface visualisation of its various Alaska North Slope projects.

It said the work, underway for several months, was advancing well.

The information would be used for its own analysis, and would also be included in the data room which Pantheon intended to reopen after the completion of flow tests, to consider possible farm-out partners for future project advancement.

“This is the second of two very important milestones for Pantheon this year and a significant step toward potential commercialization of our discoveries on the North Slope,” said chief executive officer Jay Cheatham.

“Pantheon has now drilled a horizontal well exceeding 5,000 feet through our target formation from a gravel pad along the Dalton Highway and successfully executed 30 stimulation treatments over that horizontal length.

“Our intention with the long-term pilot production test is to maximise our data collection which, coupled with the upcoming Schlumberger report, will be invaluable to our understanding of the Alkaid interval as well as our wider portfolio of projects.”

At 1056 BST, shares in Pantheon Resources were down 2.96% at 93.3p.

Reporting by Josh White at Sharecast.com.