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40 Years at Prudhoe Bay: A whole different ballgame If 21st century technology had been available in the 1960s, would discovery, development of Prudhoe Bay have been different? Ken Boyd For Petroleum News
The discovery of the Prudhoe Bay oil field has a long and colorful history as detailed elsewhere in this publication.
But what if Prudhoe had not been discovered using only the technology available 40 years ago? What if we were able to transport today’s oilfield technology back to the mid-1960s? How would the exploration and development of the largest oil field in North America have changed using modern technology and what might Prudhoe look like today?
In order to think this proposition through, we need to make some assumptions. Let’s assume that the early exploration took place as it did; much of this exploration was done by the United States Geological Survey and a lot of that work focused on the Naval Petroleum Reserve No. 4 (now NPR-A).
Let’s further assume that Tom Marshall read the same article in Fortune magazine in 1957 and came to Alaska the following year. Thus Tom, despite overwhelming opposition, selected the lands that contain the Prudhoe Bay field for the brand-new State of Alaska. This selection was made in 1961 and was based predominantly on regional geology. The selection, after a lot of stressful debate, became final in 1964.
Primitive seismic Let’s look at the early seismic work as it was done in the mid-1960s. Compared to seismic technology today, the early North Slope explorers were working with the equivalent of stone tools.
The single-fold data (where each point in the subsurface is only sampled once) they acquired was primitive even by the standards of the time. Common Depth Point seismic (where a point in the subsurface is sampled multiple times) was being widely used in other areas, but not on the North Slope. Because of this limitation, it was nearly impossible to separate the seismic signal from the background noise. In addition, it was difficult to account for the sound-altering permafrost, and accurately locating the position of geologic faults was hopeless.
Despite these obstacles, the early subsurface maps of the area did provide a reasonably accurate picture of the Prudhoe Bay structure.
Not only were there no computers in the field, there also were no electronic hand-held calculators. The computing power on our desks today far exceeds that available to the most sophisticated company of that era. Of course there were no cell phones or satellite communications. There were no global positioning systems and no accurate maps. There were no roads and a very limited amount of access by airplane.
Now the stage is set.
Lease sales a question Rather than move Prudhoe Bay (in the mid-1960s) into the future, let’s move today’s technology into the past.
At that time, all the information available consisted of some primitive maps and a vague notion of the regional geology. Oil had been discovered in Cook Inlet and companies were excited about moving forward with exploration on the North Slope. Even with the limited knowledge available (and virtually no infrastructure), it was time for the State to lease some land on the North Slope.
Alaska’s state oil and gas lease sales 13 and 14 were held in 1964 and 1965. Most of the (future) producing lands at Prudhoe Bay were picked up by a few companies as partners, notably British Petroleum, Richfield Co. (now ConocoPhillips), and Humble Oil & Refining Co. (now ExxonMobil). The agreement between Richfield and Humble was finalized late in the fall of 1964, not long before the first North Slope sale No. 13.
State Lease Sale 18, held in 1967, drew limited interest because of the repeated exploration failures that plagued the North Slope during those years. These were the last lease sales prior to the discovery of the Prudhoe Bay field in 1968 by Richfield and Humble. Bonus payments for these three lease sales totaled less than $15 million.
Of course none of these companies knew exactly what they were leasing, or that they were getting one of the best deals of all time. The subsurface maps they were using as a guide look, today, like scribbles on a cocktail napkin. Partners Richfield and Humble appeared to have won the best tracts on the top of the structure, while BP was relegated to the flanks. Nobody knew about the huge gas cap and the fact that over half of the oil was actually on the BP acreage.
The exploration of the mid-1960s, which resulted in at least 10 dry holes being drilled, led many companies to simply give up the search. The producers at Prudhoe Bay today are there because they persevered through unrelenting disappointment and hardship. They took enormous risks. The list of companies that walked away is long.
Impact on industry decisions What would have been the outcome of these sales if the exploration technology we have today had been available then? Again, I will assume that companies had done some primitive seismic and had made some preliminary maps. They knew, roughly, that there was some kind of big structure near Prudhoe Bay. But they had drilled a lot of dry holes and patience was wearing thin in the company boardrooms. Money for further exploration was drying up.
But what if, prior to Lease Sale 13, companies were able to obtain modern 3-D seismic data along with the computing power to process those data. Let’s assume all the companies that were working on the North Slope had access to these data. What would the effect on those three lease sales have been?
Up to this point companies had to rely on single-fold 2-D data. They could not correct for near-surface “statics” (like permafrost) that distorted the seismic signal. The sections were full of noise that could not be eliminated. The faults were all poorly known, or were mapped in the wrong place in the subsurface. Modern 3-D seismic (and the computer wizardry that goes along with it) eliminates or reduces all these problems. A simplistic analogy would be to compare an out-of-focus X-ray with a CAT-Scan. Suddenly, a lot more subsurface detail was available to the explorer.
With modern 3-D seismic available, the structure at Prudhoe Bay becomes pretty clear; the big geologic features are exposed and even the details of the fault patterns can be understood. But 3-D seismic, as good as it is, still has one shortcoming that has yet to be undone: it cannot directly discern liquid or gas in the subsurface. There are hints to be sure; things like “bright spots”, “dim spots” and “flat spots” all provide tantalizing clues. Sophisticated modeling helps predict the presence of liquids and gas, but drilling is still the only true test.
Different outcome likely My guess is the bidding would have been more comprehensive at the first sale and perhaps the two subsequent sales would not have been needed. I wonder if the partnership of Richfield and Humble would have happened. Perhaps there would have been other partnerships given that the additional information might have emboldened management from other companies to participate. On the other hand, the new seismic would have shown the real complexity of Prudhoe; it would now be clear that it is much more than a simple, big anticline. The fault patterns and stratigraphy, now seen clearly, may have given some companies pause for concern. So far the only wells drilled were dry holes, and there were no wells in the Prudhoe structure itself.
Even if the same players prevailed, we are left to wonder if the gas cap could have been discerned prior to the sale. Had the Richfield-Humble partnership known about the gas cap prior to the sale, I presume there would have been more spirited bidding on the flank acreage and less interest on top of the structure. The oil-rim/gas cap ownership remained a divisive issue until the merger in the late 1990s. Only then did common equity (an equal division of interest in oil and gas) come to the Prudhoe Bay field. Had the companies understood the Prudhoe Bay structure with more certainty, perhaps this important milestone could have taken place earlier.
Effects of drilling advances In addition to the new seismic techniques, we are also transporting our 21st century drilling technology back to 1967. Now that the lease sales are over, it is time to drill the first well. Atlantic Richfield (Atlantic and Richfield merged after the lease sales) and Humble might drill the discovery well in a different location, but that is probably of little consequence. The discovery well, wherever it was drilled, would not likely have been a single straight hole (which was all that could be accomplished back then).
In 1967 the drill bit on the end of the drill pipe had one basic purpose: to make a hole in the ground. Today, sophisticated Measurement While Drilling tools are available to go along with the bit. While drilling, well information regarding the various rock formations is transmitted in real-time to the explorationist. And, of course, we have provided our 1960s explorer with all the computer firepower we have today to analyze these data.
It is also likely that the initial well would have delivered more than merely a single hole in the ground. Using multilateral drilling perhaps four or five well-bores could be drilled from the initial location. A confirmation well would still be drilled, but the most advantageous location for that well would be more certain. Extended reach wells could be drilled from the same pad. In sum, a lot more would be known about Prudhoe early in the drilling program.
Using the results of the early wells, in conjunction with the subsurface mapping derived from the 3-D seismic data, relatively accurate predictions could be made about the entire field. Rock types and reservoir quality would be able to be discerned with some certainty. Additional productive formations, which would not be known for years using “old” technology, would be discovered earlier. The Kuparuk formation would likely have been identified, understood (and developed) earlier and other parts of Prudhoe (Point McIntyre, Niakuk, and others) also would have gotten earlier scrutiny. Heavy oil development might have gotten an earlier start.
More accurate recovery estimate All this new technology would have played an important role in the early days of the Prudhoe Bay field. More would have been known sooner. The size of the field might be better known. Originally thought to contain 9 billion recoverable barrels, the field’s crude recovery number would have become larger earlier in the game. This might have had some effect on the missing piece in 1968: a way to get the oil to market. There was no pipeline.
The building of the pipeline certainly would have benefited from new technology and better materials, etc. Whether the pipeline would have been built earlier or better, I will leave as an exercise for the reader. I presume that, one way or another, the pipeline gets built.
More responsive to environment Naturally, along with all this marvelous 21st century technical equipment and technology, we also would expect an increased awareness of the environment and a need to decrease the impacts of drilling and associated activities.
The availability of 3-D seismic technology means fewer wells need to be drilled since these data provide so much additional subsurface information. There are fewer dry holes drilled and the wells that are drilled will evaluate more of the subsurface and will provide much more geologic information.
Of course all the seismic data is acquired in the winter and thus has virtually no impact on the underlying tundra. Vibroseis, a seismic technique that uses a specialized vehicle to transmit sound waves into the ground without any disturbance, is used exclusively. No more seismic surveys use dynamite as a sound source and bulldozers no longer tear up the tundra. All support vehicles have very low-pressure tires specially designed to leave no remnant footprint.
Better drilling rigs The drilling rigs themselves are lighter, stronger and more easily transportable. They are safer as a result of years of Arctic drilling experience. All are equipped with at least one blowout preventer. The mud systems are more sophisticated and the real-time monitoring of subsurface pressure has advanced to a point that blowouts are virtually unknown. The mud itself, an important drilling component needed for lubrication and pressure control, now has a benign chemical composition.
Reserve pits have been eliminated. Once a staple of North Slope exploration drilling, these big pits were used to dispose of the mud and cuttings from the well. Now these well-wastes are ground into a paste and re-injected back down the well bore. This decreases the size of the drilling “footprint” dramatically and eliminates any future contamination problems due to leakage from the reserve pits. Exploration drilling is done entirely from ice pads which are accessed by ice roads. At the end of the drilling season, there is no trace of the winter drilling operation.
Infrastructure and well spacing Prudhoe Bay is the largest oil field in North America and one of the largest in the world. Developing a field of this size requires a certain amount of infrastructure including wells, well pads, pipelines, gathering centers and employee housing. These requirements would not change simply because new technology was available, but technology would certainly reduce the amount of infrastructure needed.
A visitor to Prudhoe today sees row after row of wells, all spaced fairly far apart. This is because most early wells at Prudhoe were drilled as straight holes, and it took a lot of wells to delineate the field and develop the oil.
Done with technology available today, the picture would be much different. I would envision a series of small development “islands”, each with a few wells. The wells would be very close together on a gravel pad perhaps covering 15 percent of the surface of pads using earlier technology. Because of multilateral, horizontal and extended reach drilling techniques available today, much more oil could be produced with a much smaller surface footprint.
Alpine, the ConocoPhillips-Anadarko field near the Colville River west of Prudhoe, is an example of the application of this technology. At Alpine, 500 million barrels of oil is being produced from a gravel pad that covers less than 100 acres. This is only possible using technology that has evolved in the last 15 years.
Smaller, less-intrusive oil fields The discovery of oil in Cook Inlet in 1957 certainly helped Alaska achieve statehood. Just as certainly, the discovery of the giant Prudhoe Bay field shaped, and continues to shape, Alaska’s future. Prudhoe Bay remains a testimony to the ingenuity and determination of those who brought this field into production despite overwhelming obstacles. But there will be no more Prudhoe Bays. New technology and a heightened awareness of the environment means that future fields on the North Slope will be smaller, environmentally sound and safer.
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