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Alaska Shale: Duncan: Our timing was fortuitous Great Bear carefully selected shale oil acreage won in 2010 North Slope areawide lease sale; prize was three of richest source rocks in world Kay Cashman Petroleum News
According to Great Bear Petroleum’s top executive, Alaska has three of the most prolific, world class, source rocks in the world. Individually, Ed Duncan says, “as source rocks, they are superior to the Eagle Ford shale play in Texas, currently considered the hottest conventional oil play in the world.”
As for Eagle Ford being the hottest shale oil play, he says, “We believe that is about to change.”
Great Bear entered Alaska in October by placing winning bids on more than 500,000 acres in the State of Alaska’s annual North Slope lease sale, acreage Duncan says contains a chunk of the geologic “kitchen” that generated the 100 billion barrels of oil that millions of years ago migrated north into traps along northern Alaska’s coast. Those traps include the giant reservoirs of Prudhoe Bay, the largest producing oil field in North America, and Kuparuk, the second largest onshore oil field.
If production begins in 2013 as planned, in a conservatively scaled project of 200 wells a year, Great Bear shows oil production from its acreage alone at 200,000 barrels per day by 2020; 350,000 bpd by 2035; 450,000 bpd by 2041; peaking at 600,000 bpd in 2056, with a sustained long-term production of 450,000 barrels per day out as far as 2074.
That’s from exploiting just two of three stacked shale plays in a measured drillout program of 45 years.
When Alaska lawmakers recently asked him if Great Bear could bump the number of wells up to 1,000 a year in order to get a million barrels of oil into the trans-Alaska oil pipeline, Duncan said yes, if he had the support of all the stakeholders in such an accelerated program.
So, why is Duncan certain that his company’s acreage holds billions of barrels of recoverable oil?
A careful, informed selection; not a land grab The geology of the North Slope is well known and understood, documented by seismic, numerous field studies and well data, Duncan said. So when his company bid on 537,600 acres in last year’s North Slope lease sale, it was not making a “blind land grab,” a statement confirmed by one of the State of Alaska’s leading geologists, Paul Decker, in February testimony before the Alaska Senate Resources Committee, and in an interview with Petroleum News.
Decker said it appeared Great Bear had “very carefully selected” its acreage position.
“They are pretty well positioned, I would say, to pick up the appropriate thermal mature zone for the Triassic and lower Jurassic Kingak.”
The same, he said, was true for the youngest and shallowest source rock, the Cretaceous-age Hue shale, also called the GRZ, HRZ and Pebble shale: “Great Bear again is well positioned … for this zone as well.”
Indeed, the use of a major basin model that traced the source of the oil in the giant Prudhoe Bay field, and others, was of great help to Duncan.
The report was created by the U.S. Geological Survey. Ken Peters, a former USGS geochemist who worked closely with USGS geologist Ken Bird to create the model.
“The model illustrated the oil in reservoirs along the Barrow Arch, including Prudhoe and Kuparuk was generated 75 to 78 percent in the Shublik and Kingak, and the balance was from sources HRZ and Hue shales,” Duncan said.
“Based on their model, and on a lot of our work over the year (preceding the October lease sale), the kitchen area where the source rock is mature … is the area we have leased. …
“There are massive amounts of very, very good technical information and studies on this basin. I kept reviewing everything, looking for critical problems, talking to the best geoscientists that I knew of. … We knew where the source rocks were, we knew their thermal maturity. I went over all of it several times alone and with colleagues,” Duncan said.
“I am quietly confident … had we not made our move in this lease sale we would have been locked out of it by next. Our timing was fortuitous,” Duncan said, echoing the sentiments of the early leaseholders in the Bakken, Eagle Ford and other shale plays in the Lower 48.
Matching geology with technology for BP Considering the job Duncan did for Sohio (now BP) in Alaska, from 1982 to the late 1980s, it’s not surprising that Great Bear was first to pick up leases targeting an oil shale play in Alaska’s Brookian Foredeep, also known as the Colville basin, which lies north of the Brooks Range.
A project supervisor and geologist with the Sohio exploration group, Duncan was in charge of everything on and offshore between the Colville River and the MacKenzie Delta in Canada, tasked with matching the geology of an area or prospect with advances in technology that might make it economically viable.
So not only was he well versed in the North Slope’s petroleum systems, but he was trained to watch for the convergence of technology and geology, which he saw initially with Petrohawk Energy’s advances in well design at Eagle Ford, involving everything from increased lateral lengths to less restrictive choke sizes, tighter perforation cluster spacing, increased proppant and the use of new vegetable based fracking gels to overcome concerns about the use of toxic chemicals in hydraulic fracking operations.
Geology, technology surmountable challenges Duncan asserts the challenge of producing oil and gas from North Slope source rocks in Great Bear’s leases has little to do with the area’s geology.
“The challenge is not the geology; it’s well understood here. The challenge for the play is: Is it operationally doable on the slope,” he said in a recent interview with Petroleum News.
The answer, Duncan said, is yes.
“We got past that issue pretty quickly,” he said.
“There’s always a chance the rocks just won’t perform the way we want them to. We don’t expect that. That’s way outside our prediction range of outcomes. Also, there’s a chance the rocks will perform well beyond what we might imagine from an analog perspective,” Duncan said.
He maintains the technology and the geology are a perfect match — or will be as soon as his associates have tweaked their well design.
“We have some technical uncertainties to address — that’s one of the reasons we want to do our core holes soon,” Duncan said, referring to the holes Great Bear has tentatively scheduled for late fall.
“We need to design our fracs. Our first four planned full production test wells have large R&D research element in them. We’ll perfect a method very quickly in the first few wells, then we go into factory drilling, and the costs go down at that point.
“That’s the operational model that has been developed in the Lower 48,” he said, explaining that he expects the wells to be roughly 9,000 to 11,000 feet deep with 4,000 to 6,000 foot laterals.
“We’ll drill down to the source rock and then run the laterals along the source rock strata and using state-of-the-art rock fracturing techniques to cause oil to flow direct from the sources,” Duncan said in the interview, repeating much of the same to legislators in his Feb. 26 presentation.
The Shublik, then the Shublik again In phases one and two, Great Bear will target the deepest and oldest of the three source rocks, the Triassic-age Shublik formation. In the process the company will drill past the Jurassic-age Kingak shale and the Cretaceous-age Hue shale.
“They are co-located meaning more or less on top of one another,” Duncan said. “From a drilling depth perspective we will drill down through the HRZ on the way down to the Kingak, on the way down to the Shublik.”
In phase one, the spacing between the wells (about four to a pad) will be 160 acres. In phases two and three, the company will use the same one-acre pads it used for phase one, but it will likely reduce spacing between wells to 80 acres (resulting in about 8 wells per pad), Duncan said..
In phase three, sometime in the first 30 years from when development drilling gets under way — in 2013, if Duncan has his way — Great Bear will target one of the other two source rocks.
“The richest source rock on the North Slope and one of the richest source rocks in North America — in fact, one of the richest source rocks in the world — is the Shublik formation,” Duncan told legislators. “Its regional extent, its quality, is extraordinary. And that is our primary target.
“But, again, I can’t emphasize enough; we believe that the Kingak and the Hue individually could supply an unconventional resource development on their own. The fact that we have three on the North Slope provides … an extraordinary opportunity. You don’t get that in south Texas, you don’t get this in the Bakken and you really don’t get that in the Marcellus.”
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