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Vol. 15, No. 46 Week of November 14, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

The Explorers 2010: Alaska Peninsula & North Aleutian basin

Alan Bailey

Petroleum News Senior Staff Writer

The North Aleutian basin, also known as the Bristol Bay basin, extends more than 200 miles along the north side of the Alaska Peninsula and out into the southern Bering Sea shelf. The southeastern portion of the basin underlies state land and nearshore waters along the northwest side of the Alaska Peninsula, from north of Egegik to the southwest side of Herendeen Bay. The deepest part of the basin lies in the federal outer continental shelf, offshore Port Moller, on the southeastern side of the Bering Sea.

There are two distinct rock sequences with petroleum potential in the Bristol Bay and Alaska Peninsula region. The first, a sequence of Mesozoic strata, is well exposed along the southeastern coast of the peninsula, is associated with some well known oil seeps and was the target of early oil exploration in the region. The second sequence consists of younger Tertiary rocks that form the fill of the North Aleutian basin itself and that are well exposed onshore the peninsula near Port Moller.

People generally consider that biogenic gas, gas resulting from the bacterial decomposition of organic material, is likely to prove the most significant hydrocarbon resource in the region. This type of gas could occur in virtually any part of the basin that hasn’t become hot enough to kill the gas-generating bacteria. But an analysis of natural gas from a well known seep in Mesozoic rocks between Port Moller and Herendeen Bay provided evidence for the possibility of plays involving thermogenic gas that has formed from the heating of organic material. Furthermore, some of the gas sampled from Tertiary sandstones in the most recently drilled onshore well, the Becharof No. 1 well from 1985, also yielded a clear thermogenic signature.

The strip of state waters along the northwest lowlands of the peninsula includes subsided fault blocks with thermally mature, organic-rich Tertiary rocks. These rocks show some potential to generate thermogenic hydrocarbons. If such Tertiary petroleum kitchens exist, the most likely hydrocarbon product would be natural gas, perhaps along with condensate or lesser high-gravity paraffinic oils.

Hydrocarbon potential long known

People have known about the oil and gas potential of the Alaska Peninsula region since the mid-1800s — at that time the Russians discovered oil and gas seeps around the Iniskin Peninsula area on the west side of Cook Inlet. Fourteen oil seeps and four gas seeps are now known to exist between the Iniskin Peninsula and the area around Sand Point toward the southwestern end of the peninsula. Geologists have found at least two outcrops of oil-bearing rocks.

This evidence of an active petroleum system in the area has spurred exploration activity at various times since the early 20th century. Much of this exploration has focused on the Cook Inlet and Shelikof Strait side of the Alaska Peninsula and the onshore portion of the North Aleutian basin on the northwest side of the peninsula.

Two phases of early exploration drilling occurred in the early 1900s and in the 1920s.This drilling targeted relatively shallow rock formations near oil seeps along the southeast side of the Alaska Peninsula. None of the wells found commercial quantities of oil. A deeper well drilled on the peninsula by a major oil company in 1940 also failed to find commercial quantities of oil.

Between 1955 and 1974 a flurry of exploration activity in the Bristol Bay area resulted in some seismic surveys and 16 exploration wells, 10 of which penetrated the North Aleutian basin. In 1977 Phillips drilled an exploration well on the south side of the Alaska Peninsula, southeast of Port Moller. In 1982 and 1983 more than 20 companies participated in the drilling of a stratigraphic test well, the North Aleutian Shelf COST No. 1 well, in the deepest part of the basin offshore Port Moller. In 1985 Amoco drilled, plugged and abandoned an onshore well near Becharof Lake.

Among the 26 wells drilled on the Alaska Peninsula and the offshore North Aleutian Shelf COST No. 1 well, 19 wells encountered oil shows and 13 encountered gas shows. Three of the oil shows were very poor or minor and one consisted of oil residue. Data from three wells measured modest to moderate gas flows, with flow rates of 5,000 to 9,000 cubic feet per day, 10,000 to 90,000 cubic feet per day and 450,000 to 700,000 cubic feet per day.

Exploration in the Bristol Bay area has resulted in many thousands of line-miles of seismic data, much of it offshore. However, the North Aleutian Shelf COST No. 1 remains the only offshore well in the North Aleutian basin and no wells have been drilled in the Bristol Bay area since the 1985 Amoco well.

Modern lease sales, current interest

Although there has been continuing oil industry interest in the Bristol Bay region, federal prohibitions on oil and gas leasing in the North Aleutian basin have prevented new offshore exploration in the region and have dampened interest in onshore exploration on the Alaska Peninsula.

Between 1989 and 2007, following the Exxon Valdez oil spill in Prince William Sound, the federal government prohibited oil and gas leasing in the outer continental shelf waters of the Bristol Bay area, the location of several major fisheries, including world-class pollock and salmon fisheries. In January 2007 President Bush lifted the federal moratorium, thus enabling the U.S. Minerals Management Service to include one North Aleutian basin lease sale in its 2007 to 2012 outer continental shelf leasing program. The lease sale would have only included an area of about 5.6 million acres west of Port Moller and north of King Cove, rather than the entire MMS North Aleutian Planning Area.

MMS said the area is believed to be gas-prone, with perhaps 8.6 trillion cubic feet of technically recoverable natural gas and 753 million barrels of technically recoverable oil and condensate in the federal offshore part of the basin.

As work progressed on a lease sale environmental impact statement, a proposed lease sale, scheduled for 2011, triggered controversy around the potential impact of oil and gas development on the fisheries and on subsistence hunting in the region. While some local communities said that offshore oil and gas activities posed too high a risk of long-term harm to fishing, others expressed support for oil and gas development as a means of improving a local economy dogged by escalating fuel costs, a depressed fishing industry and a lack of employment opportunities.

At a North Aleutian basin Energy-Fisheries Workshop held in March 2008, a Shell executive described a possible scenario for future natural gas production, in which perhaps three to six steel or concrete platforms a few miles offshore in the Bering Sea would connect by pipeline to a liquefied natural gas plant on the south side of the Alaska Peninsula near Port Moller. Shell has made no secret of its interest in the North Aleutian basin as a possible area for future gas development.

The inauguration of President Obama in 2009 brought in a new U.S. administration with a new environmental agenda and in April 2010, as part of a new U.S. policy for oil and gas leasing on the outer continental shelf, the Department of the Interior announced that it was withdrawing the Bristol Bay area from future oil and gas leasing.

The 2007 to 2012 OCS lease sale program had also become the subject of legal action. In April 2009 the United States Court of Appeals for the District of Columbia upheld an appeal by the Native Village of Point Hope and several environmental organizations against the program, with the court ordering Interior to withdraw the program because, the court said, Interior had not done an adequate analysis of the environmental sensitivity of areas impacted by planned lease sales.

The court later clarified its ruling by saying that its order only related to planned Alaska lease sales in the Beaufort Sea, the Chukchi Sea and the North Aleutian basin, and that the court was delaying its decision on the Alaska lease sale program while DOI reworked its environmental analysis of the Alaska sales. DOI has yet to deliver a final version of its revised EIS to the court, although the federal withdrawal of the Bristol Bay region from oil and gas leasing presumably renders the court case moot with respect to the North Aleutian basin.

State of Alaska lease sales

Meantime the State of Alaska, seeing the Bristol Bay area as a potential new oil and gas province, has been encouraging oil and gas exploration onshore and along the coast through a program of areawide lease sales for state lands and adjacent state waters. The area of potentially leasable acreage extends along the northwestern lowlands of the Alaska Peninsula from the east end of Bristol Bay to a point southwest of Port Moller.

In parallel with the lease sales, a team led by Alaska’s Division of Geological and Geophysical Surveys conducted a three-year research program on the Alaska Peninsula, doing field work to fill in detail about the petroleum potential of the rock sequences of the region, and placing data from earlier exploration programs into a modern petroleum geology context.

The DGGS-led research has included many subprojects, including the analysis of measured sections in exposed rock strata; geologic mapping and evaluation of potential structural traps across the region; new interpretations of the structural and sedimentary history of the Alaska Peninsula; and geochemical analyses to document the source and reservoir characteristics of various rock formations.

At the first of the state areawide lease sales in October 2005 Shell Offshore Inc. purchased leases on about 190,000 acres onshore and offshore around Herendeen Bay and Port Moller. Shell appeared to be targeting the southern edge of the North Aleutian basin and the northern edge of large geologic structures immediately to the south of the basin — the leases appeared to offer both Mesozoic and Tertiary plays in an area with significant potential for structural traps.

At the same sale Hewitt Mineral Corp. purchased four tracts straddling the margin of the basin, on the southwest side of Herendeen Bay. Hewitt targeted a major anticline in the Mesozoic but also saw potential Tertiary plays below a major fault that has pushed the Mesozoic strata over Tertiary rocks of the basin.

The second state areawide lease sale in February 2007 only resulted in the sale of one lease, an extension to Hewitt’s Herendeen Bay holdings. The subsequent sales in 2008, 2009 and 2010 drew no bids.

Interest mainly in offshore

Lack of interest in the state sales held to date suggests that exploration interest lies offshore in the deepest and most prospective part of the North Aleutian basin.

In February 2009 Shell relinquished all of its leases from the 2007 lease sale, saying that these leases no longer fitted into the company’s exploration plans, although the company was still considering the possibility of offshore exploration in the region.

Hewitt conducted some geologic research in association with its Alaska Peninsula leases, eventually determining that a well 14,000 to 15,000 feet deep would be required to test all the stratigraphy with exploration potential in the geologic structure it had leased. And, presumably needing another investment partner or two to share the cost and risk of such a major drilling project, the company has not yet done any further work to explore its acreage.

Geology of Alaska Peninsula

The geological history of the Alaska Peninsula and the North Aleutian basin relates closely to that of the Cook Inlet basin to the northeast — both basins formed along zones where the Earth’s crust warped downward during the Tertiary period. More than 20,000 feet of Tertiary sediments have accumulated in the deepest part of the basin. These sediments lie in juxtaposition with a 25,000- to 30,000-foot sequence of older Mesozoic sediments.

Mesozoic seas

In the Mesozoic era, prior to the late Cretaceous, a wide area of southern Alaska, including the Bristol Bay, Cook Inlet and North Aleutian basins, lay under seas bordered by volcanic arcs. As a result, a sequence of broadly similar Mesozoic rocks extends under or alongside all of these basins.

But in the Alaska Peninsula these Mesozoic rocks form two very distinct sets: a broad area of thermally altered rocks to the west of a major fault, the Bruin Bay fault, that marks the west side of the Cook Inlet basin, and a sequence of Permian to late-Cretaceous sedimentary rocks on the east side of the fault. The rocks on the west side of the fault have no petroleum potential, while the rocks on the east side of the fault include the oil source rocks of the Cook Inlet basin oil fields, as well as several other potential source rock horizons and potential oil and gas reservoirs.

The surface manifestation of the Bruin Bay fault disappears at Becharof Lake, toward the northeast end of the Alaska Peninsula, and the absence of surface evidence for what happens south of the lake has led to speculation about where the boundary between the two sets of Mesozoic rocks runs under the peninsula and the offshore. The location of the boundary is of great significance in assessing the petroleum potential of some parts of the region.

Evidence from the Great Basins No. 1 well on the Alaska Peninsula has been interpreted by some geologists to suggest that the boundary may run east-west somewhere north of Pilot Point near the northeastern end of Bristol Bay. Granite like igneous rocks of Jurassic age under the northeastern part of the North Aleutian basin have also cut through the older Mesozoic strata in that area.

And, unfortunately, since no wells have penetrated the base of the offshore component of the North Aleutian basin, no one knows for sure whether Mesozoic strata with petroleum potential lie under the Tertiary rocks in the basin, as happens under the Tertiary fill of the Cook Inlet basin.

An MMS assessment of the North Aleutian basin published in 2006 postulated that the boundary passes east to west offshore from a point northeast of Port Moller. This interpretation of the boundary location leads to the conclusion that the petroliferous Mesozoic sediments are absent from most of the outer continental shelf section of the basin. The interpretation is based on patterns of magnetic anomalies and the absence of evident stratification in the Mesozoic basement, as seen in offshore seismic sections.

A DGGS-led team researching the Alaska Peninsula geology used primarily aeromagnetic data to identify a major structural dislocation called the Becharof discontinuity, trending northwest from the known southern limit of the Bruin Bay fault. Southwest of the discontinuity lies a newly described segment of the North Aleutian basin, termed the Ugashik subbasin. And to the east of the Ugashik subbasin a system of faults known as the Ugashik Lakes fault system, runs southwest from the Bruin Bay fault down the peninsula to the southern boundary of the North Aleutian basin in the Port Moller area.

If the Ugashik Lakes fault system represents the southern continuation of the Bruin Bay fault, that might suggest that petroleum bearing Mesozoic rocks are indeed absent under the deep part of the North Aleutian basin.

On the other hand, well data from the Black Hills area, on the Alaska Peninsula south of Port Moller, show a substantial thickness of Mesozoic sedimentary strata on the immediate southwest side of the steep southern flank of the basin. And a seep of thermogenic gas from lower Cretaceous rocks between Port Moller and Herendeen Bay points to the existence of hydrocarbon-bearing Mesozoic rocks under that location.

Emerging land

The onset of the Tertiary period in the North Aleutian basin area marked a change of sedimentary environment from a marine shelf to an environment that oscillated between terrestrial and shallow marine settings. Rivers deposited huge volumes of silt, sand and pebbles into the subsiding basin. The resulting Tertiary stratigraphy, observed on land near Port Moller and extrapolated into the depths of the North Aleutian basin, includes sandstones, organic-rich mudstones and coal.

And the strata both onshore and offshore contain an abundance of large folds, faults and other features that could provide structural traps for oil and gas.

Mesozoic hydrocarbon potential

At least two formations within the Mesozoic rocks appear to contain good potential source rocks for hydrocarbons. Both potential sources are oil prone.

The age and composition of the first of these sources, the late Triassic Kamishak formation, resemble the Shublik formation, a major source rock on the North Slope. The Kamishak formation also resembles an oil shale, the Glenn shale, which is associated with the Yukon Flats and Kandik basins in east central Alaska. Well samples have demonstrated that the Kamishak formation is thermally mature at depth.

The other potential source rock is in the middle Jurassic Kialagvik formation that is equivalent to the Tuxedni formation, the main source of oil in the upper Cook Inlet basin. Analysis of rocks of the Kialagvik formation has shown carbon and hydrogen content that could support oil formation; hydrocarbon samples contain similar isotope compositions to the oil seeps and oils of the Cook Inlet oil fields.

Coal beds in the late Cretaceous Chisik formation could also support the generation of dry gas.

Reservoir potential

Several formations within the Mesozoic include sandstones and conglomerates that could form oil and gas reservoirs. These potential reservoirs attain thicknesses up to several thousands of feet. Compaction and alteration of the sediments at great burial depths may limit reservoir quality, although extensive fracturing could also have turned the rocks into effective gas reservoirs. The prevalence of volcanic material in the rocks gives rise to chemistry that is conducive to the formation of pore-clogging minerals. More fieldwork might determine whether some of the Mesozoic units transition laterally into better quality reservoirs.

Some 2006 fieldwork and subsurface analysis by Hewitt Mineral Corp. has also found reservoir potential in what appears to be hydrothermal dolomite in a thick carbonate sequence of the Triassic Kamishak formation, in close proximity to potential Kamishak source rocks.

However, although extensive folding and faulting of Mesozoic rock strata across the region has given rise to many potential oil and gas traps, the migration of the hydrocarbons into a younger and shallower Tertiary reservoir, as has happened in the oil fields of upper Cook Inlet, may be the most promising scenario for an oil or gas field, given the likely degradation of the Mesozoic reservoirs.

Tertiary hydrocarbon potential

All of the Tertiary formations in the Bristol Bay area contain organic material and most contain coal. Thermal maturities in many areas appear to be low or marginal for thermogenic hydrocarbon generation, but these organic-rich sediments could certainly have generated significant volumes of biogenic gas — 90 percent of the more than 9 trillion cubic feet of natural gas extracted from equivalent rocks in the upper Cook Inlet has proved biogenic in origin.

However, recent analysis of geochemical data from the North Aleutian Shelf COST No. 1 well offshore in the North Aleutian basin has shown thermal maturities within the oil window in Tertiary rocks at depths below 12,300 feet and the existence of material that could generate at least minor amounts of oil in addition to thermogenic gas.

The east-west structural grain in the deep, southern part of the basin coupled with the steep basin flank on the southeastern side suggest that the deeper, more thermally mature parts of the basin could extend under the lowlands of the Alaska Peninsula, north of Port Moller. However, there is no seismic or well data to either support or disprove that theory.

There is seismic evidence for possible gas chimneys in Tertiary strata offshore the Black Hills area, west of Port Moller.

Potential reservoirs

Several formations within the Tertiary include candidate reservoir rocks. Reservoir quality seems variable and depends on the extent to which the rocks have undergone chemical alteration. However, two of the formations, the Oligocene Unga-equivalent and Miocene Bear Lake formations, contain substantial thicknesses of good reservoir sandstones and conglomerates. The Pliocene Milky River formation exhibits good reservoir properties but lies at such shallow depths that overlying seals capable of holding hydrocarbons in the reservoir are probably lacking.

The lack of a thick, regionally blanketing shale seal unit in the shallow section above the best reservoir-quality sands is a source of concern to some geologists. Others point to the stacked nature of Cook Inlet reservoirs, where hydrocarbons are contained in multiple sand layers, each capped by fairly thin nonmarine mudstones of only local extent. Any one mudstone horizon may only seal one pay zone and only on that one structure, but several stacked pay zones can add up to large reserves. Recent fieldwork on the Alaska Peninsula has revealed locally thick mudstones with good seal characteristics that appear to extend over at least prospect-sized areas.

The prevalence of folding and faulting in the area has given rise to many potential structural traps. And the geological setting supports the formation of stratigraphic or combination traps in the Tertiary sequence — the close interleaving of fine-grained and coarse-grained rocks together with lateral changes in the sediments has given rise to sedimentary packages that likely include well sealed reservoirs. Overall, there is a very good chance of finding gas in the Tertiary strata of the basin, in a very similar setting to the gas fields of Cook Inlet. Also there is a possibility of finding oil that has migrated from source rocks in the Mesozoic in areas where Tertiary reservoirs overlie Mesozoic strata.

In its most recent assessment of the North Aleutian basin, MMS thinks that on the outer continental shelf the most prolific petroleum plays are likely to involve thermogenic gas bubbling upward from Tertiary strata deep in the basin into sandstone reservoirs of the Tolstoi, Stepovak and Bear Lake formations, where these formations have draped into domes over raised faulted blocks.

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