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A speculative play
Company bid on oil & gas leases in North Slope area that has sparse data
Alan Bailey Petroleum News
While taking a conventional route to success may be safe, adopting a contrarian strategy can sometimes pay handsome dividends. These two approaches appear to lie behind much of the bidding in the state of Alaska’s recent North Slope lease sale. While Repsol, ASRC Exploration and Caracol Petroleum competed for remaining unleased acreage in the area of recent major oil finds associated with the Nanushuk formation, near the Colville River delta, Lagniappe AK bid on a large swathe of 120 tracts in the more eastern part of the Slope, to the south of the Badami and Point Thomson fields. Lagniappe’s move is reminiscent of wildcatter Bill Armstrong’s contrarian push to test the Nanushuk a few years ago, a venture that ultimately led to those major oil discoveries that have transformed the outlook for North Slope oil development.
But what is the potential for the area where Lagniappe is acquiring its exploration acreage? This more easterly area, some distance inland from the Beaufort Sea coast, has seen little exploration in the past.
Geology changes to the east No one doubts that there is significant oil and gas potential in the more easterly part of the North Slope. But the geology in the subsurface changes to the east, with uncertain consequences for the discovery and development of oil and gas resources. A major factor in the geology is a stratigraphic discontinuity called the lower Cretaceous unconformity. This break in the deposition of sedimentary strata resulted in the erosion out of older rocks in the stratigraphic sequence, with these older rocks, including the source and reservoir rocks for the Prudhoe Bay and Kuparuk River fields, tending to disappear towards the east. In the coastal plain of the Arctic National Wildlife Refuge, to the east of Lagniappe’s acreage, the major oil source horizons from the central North Slope appear to be largely missing, although there are known to be excellent younger potential oil sources.
In the east there is a thick succession of strata from the Brookian sequence, the youngest and shallowest of the petroleum bearing North Slope rock sequences. This is the rock sequence that includes the Nanushuk and Torok formations that have been the focus of recent major oil discoveries in the west. But the Nanushuk and Torok do not extend to the east, much beyond the Pikka/Narwhal trend that has been a focus of recent oil discovery and development excitement. To the east, the Brookian strata are younger. However, these younger strata were laid down in a similar setting to the Nanushuk/Torok, with the infilling of an ancient marine basin with vast quantities of sand and mud. The sand can form oil reservoirs, with the oil trapped in place by less permeable muddy sediment layers.
Reservoir challenges The challenge, as BP discovered years ago at Badami, is the possible compartmentalization of reservoir units, with oil being trapped in a multitude of distinct, relatively thin, disconnected sand layers. However, modern drilling and reservoir fracturing techniques can presumably help open up this type of oil accumulation. And there is the possibility of finding major reservoir sand lobes, deposited in similar settings to that of the Nanushuk oil reservoirs discovered to the west. Furthermore, modern seismic surveying could presumably help locate the subtle so-called stratigraphic hydrocarbon traps that are characteristic of the Brookian.
Sparse drilling There has been very little drilling around the area where Lagniappe bid for its leases.
The most recent exploration well, to the northwest of the Lagniappe acreage, is a lease owned by Caelus Natural Resources Alaska but being transferred to Eni US Operating Co., is Jacob’s Ladder, drilled to a vertical depth of 13,306 feet by Anadarko Petroleum in 2007 and 2008. This well targeted a possible oil pool in carbonate rocks of the Lisburne group, equivalent to the reservoir of the Lisburne field to the west. There was also the possibility of oil in the Ivishak formation, the main reservoir for the Prudhoe Bay field. The Lisburne and Ivishak are in the Ellesmerian sequence, the oldest and deepest of the main North Slope petroleum bearing rock sequences.
The Jacob’s Ladder well did not encounter an oil pool. The well penetrated the lower Cretaceous unconformity at a depth of 10,500 feet. Above the unconformity was the HRZ, a major North Slope oil source. Above that lay more than 5,000 feet of Brookian strata of the Canning, Schrader Bluff and Prince Creek formations. Immediately below the unconformity came the Ivishak, and below that the Kavik, Echooka and Lisburne. Strata of the Beaufortian sequence, the sequence that lies between the Ellesmerian and Brookian and hosts the Kuparuk River and Alpine fields, are absent at Jacob’s Ladder.
Older wells There are two much older wells near Jacob’s Ladder: the Lake 79 Fed 1, drilled by Shell in 1969, and the Kad Riv 1, drilled by Texaco in 1969. Shell reported that the Lake 79 Fed 1, drilled to a depth of 15,444 feet, encountered Cretaceous sandstone, presumably of the Brookian Sequence, above “Permo-Triassic sandstone,” presumably of the Ellesmerian. Below that lay Lisburne limestone, with older metamorphic rocks at the bottom of the well. The Kad Riv 1 documentation ignores the Brookian but notes that the Sadlerochit, the rock group containing the Ivishak, was encountered at a vertical depth of 10,495 feet, and the Lisburne at 10,885 feet.
To the east of the Lagniappe leases is the Leffingwell 1 well, a dry hole drilled to a vertical depth of 14,826 feet by Unocal in 1984. Perhaps predictably, given the well’s more easterly location, the documentation for this well suggests a much truncated Ellesmerian section below several thousand feet of Brookian rocks. The only rock unit noted for the Ellesmerian is the Endicott group, the rock group at the base of the Ellesmerian, below the Lisburne. The Endicott group includes the reservoir for the Endicott field, offshore the central North Slope, and for the Liberty field, being developed under the Beaufort Sea by Hilcorp Alaska.
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