Pioneer holds a 70% working interest in the Oooguruk field. Eni Petroleum has a 30% working interest and is expected to make its participation election for the project during the first quarter of 2006. Pursuant to the farmout agreement concluded in January 2004, ConocoPhillips retains the right to elect to participate in the project.
Following construction of the gravel drilling and production site this winter, a subsea flowline and facilities will be installed during 2007 to carry produced liquids to existing onshore processing facilities at the Kuparuk River Unit. Pioneer plans to drill approximately 40 horizontal wells to develop 50 million to 90 million barrels of estimated gross oil resources. Depending on weather conditions and facilities completion and accessibility, development drilling could begin as early as the fall of 2007. Total gross capital invested, including projected drilling and facility costs, is expected to range from $450 million to $525 million. The wells are expected to be brought on production as drilling progresses, with peak rates of approximately 15,000 to 20,000 barrels of oil per day expected by 2010. Using current oil prices, the field is expected to produce for at least 25 years before reaching its economic limit.
"The Oooguruk field development is the first of what I believe will be many successful projects for Pioneer in Alaska and adds a new long-lived asset to our strong U.S. base. We have established positions in a number of other Alaskan opportunities, including projects to appraise and develop previously discovered resources near existing infrastructure as well as exploration projects in close proximity to existing infrastructure and in more remote areas. We look forward to continuing what has been a successful partnership with the other producers and the state and local governments in Alaska," stated Scott D. Sheffield, Chairman and CEO.
Ken Sheffield, President of Pioneer's Alaska subsidiary, added, "We appreciate the cooperative spirit demonstrated by the State of Alaska, the North Slope Borough and the federal regulatory agencies in working with Pioneer to produce a project plan that minimizes environmental impacts while also allowing us to maintain our project schedule. Our experience with this project has convinced us that Alaska is truly open for responsible development."
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