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Vol. 11, No. 47 Week of November 19, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

Drilling CI Jurassic?

Chevron considering testing pre-Tertiary under known Cook Inlet oil pools

Kay Cashman

Petroleum News

In John Zager’s speech at the Resource Development Council’s 27th annual conference in Anchorage on Nov. 15, he said Chevron is planning a multi-year investment program to stabilize and increase production from its Cook Inlet basin oil fields. Zager, Chevron’s general manager for Alaska, said he expects the program will greatly extend the life of the company’s inlet fields.

The company’s plans include in-fills, waterflood optimization, step-outs, extended reach horizontal drilling and Jurassic interval tests.

Chevron, which took over Unocal’s Alaska oil and gas assets in 2005 as part of a parent company merger, also plans a significant gas program, including exploration at Granite Point and south Kenai and development at Beluga River, McArthur River, West Side, Ninilchik and Happy Valley.

Regarding gas storage, Zager said Chevron plans to expand on the west side and at Swanson River.

Some of what Zager said had been mentioned or hinted at before, and will be covered in part two of this article.

What hasn’t been said before is that Chevron is considering drilling deep to test the pre-Tertiary Jurassic in Cook Inlet.

As recently as May 2006, Chevron told the state it had no absolutely no plans to test the Jurassic because of the high costs involved in doing so.

But Zager’s presentation materials indicated that might have decision changed.

Drilling another 5,000 feet

Current Cook Inlet production is from Tertiary formations: dry gas from Sterling, Beluga and upper Tyonek; oil from the lower Tyonek and Hemlock. There is no production from the older Cretaceous and Jurassic strata in the upper Cook Inlet basin.

The middle Jurassic Tuxedni has been identified by the U.S. Geological Survey as the main source rock for almost all of the oil present in the Hemlock and Tyonek. It lies below a major break in the rock sequence at the base of the Tertiary strata.

What’s in the pre-Tertiary strata is largely unknown, although a number of geologists have speculated the older Cretaceous and Jurassic rocks might hold some of the Cook Inlet’s missing giants.

In fact, USGS believes only 4 percent (1.3 billion barrels of oil through March 2006) of the oil that theoretically generated from Cook Inlet source rock has been identified — a theory that has increased interest in, among other things, the deeper rocks where few drill bits have ventured.

The deepest vertical depth of a Cook Inlet basin oil well is approximately 12,000 feet, a Division of Oil and Gas geologist told Petroleum News. According to Dan Seamount, a commissioner with the Alaska Oil and Gas Conservation Commission, companies will have to drill another 5,000 feet below known reservoirs to test the deeper sands.

Untested prospects

In early 2005, Seamount talked to a joint legislative committee about what can be done to continue to extend the life of Cook Inlet’s aging offshore oil platforms, some of which have been shut-in.

He described some possible ways to continue use of the platforms to maximize the amount of oil and gas extracted from the Cook Inlet basin, notorious for the complexity of its reservoirs, which often consist of multiple, thin sandstone layers that are difficult to find and trace.

Nonetheless, Seamount pointed out that there has been relatively little exploration drilling in the Cook Inlet compared with oil regions elsewhere in the United States. So the potential for large quantities of undiscovered oil under the inlet should cause people to hesitate before tearing down costly platforms that could play a useful role in future oil development.

“There’s still a good chance that a lot of that 96 percent is still under the drill bit,” Seamount said.

“We’d like to see the platforms used as exploration structures,” he said.

Seamount said that there are many known, untested Tertiary prospects accessible from the platforms. He particularly emphasized the existence of fault blocks, some of which lie right under the platforms — these blocks form fault traps that could contain what is known as “attic oil.”

“There are other fault blocks out there that can be accessed from the platforms,” Seamount said. “We could explore untested fault blocks and now, with new technologies and extended reach drilling, there are a lot of other identified prospects within reach.”

Oil in the Jurassic

Seamount also thinks that there is oil in the Jurassic strata under the platforms, below the Tertiary rocks that form the reservoirs for all of the Cook Inlet oil and gas fields. Geologists have established that rocks of the middle Jurassic Tuxedni group sourced all the oil in the Cook Inlet fields. That oil must have migrated through or alongside potential reservoir sandstones that are late Jurassic in age and that are known to exist under the Cook Inlet.

“There are very thick sands in the Jurassic,” Seamount said. “The oil would have had to have touched the sandstone within the Jurassic before it got up into the Tertiary reservoirs that have been exploited so far.”

So, there is a high-risk but potentially high-reward play for oil in the Jurassic sandstones, Seamount said. But few wells in the Cook Inlet have penetrated the Mesozoic strata below the Tertiary oil and gas fields. Of these wells, which were drilled by Unocal, only a handful drilled into the Mesozoic for more than a few hundred feet.

“I would recommend we use a non-utilized well bore under every single platform and drill another 5,000 feet below the known reservoir to see what’s down there,” Seamount said, noting that higher oil prices would help alleviate the economic risk.

XTO considered it

XTO, which purchased platforms A and C at the Middle Ground Shoal field from Shell Oil in 1998, has also looked at testing the Jurassic, but the idea has not resurfaced since 2002 when the oil price picture was significantly less optimistic than it is today.

In late 2002, XTO Senior Vice President Doug Schultze talked to Petroleum News about the Jurassic’s potentials and economic limitations — when oil prices were significantly lower than they are today.

“There actually is a formation below the Hemlock called the Jurassic that has been drilled in the inlet once or twice before,” but not commercially produced, he said.

A well was drilled into the Jurassic in the McArthur River field, but while it came on with very high production it dropped off very quickly, Schultze said.

“And we believe that with some different techniques, different completion methods, that maybe you can get something that will produce long term,” he said.

“But we’re having a little trouble justifying that project — going into Jurassic — but we’re still hopeful we can do it at some point,” Schultze said.

Chevron not committed

So, how serious is Chevron?

In a Nov. 16 email to Petroleum News, Chevron spokeswoman Roxanne Sinz clarified the company’s intentions, noting that there had been a small amount of Jurassic production at the offshore Trading Bay unit in the past.

Testing the Jurassic from one or more of the unit’s platforms is an “option is being considered along with a wide spectrum of oil development opportunities in Cook Inlet, including Jurassic. However, significant additional technical work must be completed before we can rank, prioritize and schedule any specific drilling activity to further evaluate these types of targets,” Sinz said.

Other companies talking

Unocal may not be the only company taking a look at the pre-Tertiary.

According to Bill Popp, oil, gas and mining liaison for Kenai Peninsula Borough, “several companies have expressed their interest in going deeper down into the Jurassic layers in Cook Inlet basin — pushing the 20,000-foot depth barrier in an aggressive way.”

“If those companies go forward with what they have told us about, this could be anywhere from $300 million to $500 million worth of capital investment in the Cook Inlet basin over the next four years,” Popp told a World Trade Center Alaska audience on Aug. 16.



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