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The Associated Press April 29, 2011, 2:54PM ET

BP heavy oil pilot project well starts production

A trickle of new oil into the trans-Alaska pipeline has BP Alaska officials optimistic about a $100 million investment.

For more than a week, the company has produced about 350 barrels per day of new heavy crude oil -- petroleum with the viscosity of molasses or cold honey -- from a test well in the Ugnu Formation in the Milne Point lease area on Alaska's North Slope.

The output from the first of four test wells in the company's Milne Point S-Pad Pilot project is less important than what the company is learning, said Eric West, its heavy-oil project director.

The project is in its third year, and its success has more to do with evidence of the reservoir physics working and with sustainability, West said.

BP PLC spokesman Steve Rinehart said the biggest known oil reserves left on the North Slope are heavy and viscous oil, so finding ways to produce those reservoirs is an important part of company strategy.

Heavy oil has multiple challenges, starting with getting the low viscosity material out of the ground and then down the pipeline.

BP's solution to moving the oil to tidewater is to dilute it with light oil produced nearby, meaning heavy oil must be extracted while there's enough light oil around to create a mixture.

The pilot project is about extracting the oil that has molecules that tend to stick together and do not naturally move easily from rock formations into a wellbore.

BP has two kinds of test wells in the project. Two are modified horizontal wells: shafts sent down vertically and then horizontally. In the business, it's described in anatomical terms a kin to a human leg and foot.

"We put a pump at the heel," West said. "Then we perforate the well between the heel and the toe. And so oil is flowing into that horizontal section. It's being motivated to move up to the surface by the pump, which is at the heel."

The pump creates suction in what would be the foot. The well also contains a device to propel the heavy oil upward.

The other test-well type in the pilot project is a CHOPS well, which stands for "cold heavy oil production with sand." That well includes a lift system to auger up heavy oil and significant quantities of sand -- up to 50 percent of the mix.

The process creates "wormholes," channels that radiate horizontally from the borehole and feed sand and oil into the well. On the well pad, a mix of sand and heavy oil is inserted into tanks and heated to 180 degrees, which causes sand to fall out.

The well that began producing oil April 22 is a horizontal well. The 350 barrels per day it has produced is not an indication of its full potential, West said.

"In fact, the pump is at about half speed and there's hardly any drawdown, or pressure on the reservoir, which is all good news," he said. ""What it means is that the formation wants to flow. It has a high potential. We're very enthusiastic about the implications."

BP planned to slowly lower pressure in the wellbore and keep an eye on the well.

"In about two week's time, if all goes smoothly, as it has so far, we'll probably bring on one of the first CHOPS wells," he said. "That should be a little bit of a rougher ride."

By the end of the year, West said, BP hopes to have all four wells producing.

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