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Vol. 16, No. 5 Week of January 30, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

New oil in 2012?

Great Bear Petroleum wants to drill later this year to test source rocks

Alan Bailey

Petroleum News

Great Bear Petroleum is chomping at the bit, ready to embark on its program of unconventional oil development on Alaska’s North Slope.

“We’re not watching the grass grow,” Ed Duncan, the company’s president and chief operating officer, told Petroleum News Jan. 25. “We’re about getting wells drilled and oil produced and into TAPS (the trans-Alaska oil pipeline).”

The state anticipates issuing the company’s oil and gas leases in May and the company now hopes to start drilling some test wells in November or December of this year, Duncan said.

Vertical test wells

Great Bear’s concept is to drill vertically through North Slope oil source rocks, and then drill lateral wells from those vertical well bores, running the laterals along the source rock strata and using state-of-the-art rock fracturing, or fracking, techniques to cause oil to flow direct from the sources. If all goes well, it could be possible to complete a lateral well, conduct a fracking operation and have first oil in production somewhere in the second quarter of 2012, Duncan said. Initially the company would use on-site production equipment at the wellhead and then truck the oil to a point on the North Slope oil infrastructure, he said.

Duncan said that his company wants to start with at least four vertical test wells, probably using some old gravel well pads and probably using ice roads for access — the company has already discussed potential sites with the state and plans to test the gravel pads during the summer, to see what condition they are in.

Calibrate the depths

Characterizing these initial wells as narrow diameter “core-holes,” Duncan said that the objective would be to determine the precise depths of the oil source strata and to retrieve rock samples for mechanical testing. Testing of the rock samples would enable Great Bear to design the appropriate techniques for fracking and production stimulation, and would enable an evaluation of the oil production characteristics of the rock.

A successful test could result in the subsequent drilling of the first lateral well from one of the test well bores, with the completion of the lateral then leading to oil production.

One critical factor that needs to be verified from the test samples is the thermal maturity of the source rock at a prospective production site: The maturity needs to be high enough to cook organic material into oil, but not so high as to generate natural gas rather than oil. Great Bear selected with some care the leases that it has acquired, picking a broad swath of territory where appropriate source rock maturities exist to the south of the Prudhoe Bay field. Oil in the existing North Slope oil fields formed some time ago, and flowed north into the fields from the general area in which Great Bear plans to drill. In fact the source rocks near the crest of the geologic structure called the Barrow Arch, where the major oil fields are located, are too immature to currently produce oil.

“The kitchen, if you will, or the charge for Prudhoe Bay and Kuparuk, is what we’ve leased,” Duncan said.

The positioning of the test wells does not require a regional 3-D seismic survey, thus allowing Great Bear to proceed straight to test drilling without first doing a seismic survey in its leases, Duncan said. However, Great Bear is considering cosponsoring a “fairly significant” 3-D shoot at some stage, with the eventual aim of identifying any conventional drilling targets in its leases, he said.

Plenty of water

The fracking techniques that Great Bear plans to use require the injection of large volumes of water, mixed with chemicals, to stimulate the oil-bearing rocks. Duncan said that there is plenty of water on the North Slope that could be used for this but that people are now developing techniques for recycling the fracking water. And with Great Bear’s drilling targets lying 9,000 to 11,000 feet below the surface in a remote area of the North Slope, with no aquifers holding potable water in the area, Duncan does not envisage the company’s fracking program running into some of the environmental concerns that have arisen with unconventional oil and gas development elsewhere in North America.

Duncan also commented that people are developing new vegetable based fracking gels, to overcome concerns about the use of toxic chemicals in fracking operations. The oil-shale technologies are very new and are still evolving on a monthly basis, he said.

Both Ed Duncan and Karen Bryant Duncan, Great Bear Petroleum’s corporate general counsel and secretary, said that they are committed to environmentally responsible development.

“We are both very passionate environmentalists. We want to do it the right way,” Karen Duncan said.

Has the funding

In response to a question about whether Great Bear has adequate funding for its North Slope program, Ed Duncan said “That’s a definite yes.”

Karen Duncan said that the company’s investors are confident in the company’s program and are excited about what the company plans to do. The techniques that the company plans to use have already been proven to work in plays such as the Eagle Ford shale in Texas, she said.

“There is no reason why this play should not work (in Alaska),” Karen Duncan said.

Karen Duncan also said Gov. Parnell’s proposed changes to the state ACES production tax would help Great Bear’s business model.

Ed Duncan said that Great Bear is in the process of discussing its plans with state agencies and with various service companies, including “the larger service providers in oil,” and that everybody that the company had spoken to has been supportive of the company’s proposed work program.

“Everybody’s in line behind us,” he said, adding that he and Karen Duncan would soon be meeting with people from the North Slope Borough and from Arctic Slope Regional Corp.

Moving ahead

The company anticipates retaining a permitting consultant and has already conducted several meetings with permitting agencies.

“We’re going to come back next month and basically give them the same presentation we’ve given our investors,” Karen Duncan said. “We’ve no hidden agendas.”

And the Duncans are in the process of arranging to move to Alaska, with plans to open a company office in Anchorage.

This is a win-win situation for everyone, with the eventual prospect of thousands of new production wells, new jobs for Alaskans and more oil to sustain the trans-Alaska oil pipeline, Ed Duncan said.

“We are happy to be here,” he said. “We believe in the plan. We think we are executing our work program in the most efficient way.”

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