NOW READ OUR ARTICLES IN 40 DIFFERENT LANGUAGES.
HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PETROLEUM NEWS BAKKEN MINING NEWS

SEARCH our ARCHIVE of over 14,000 articles
Week of August 26, 2012
Providing coverage of Alaska and northern Canada's oil and gas industry

Fortune Hunt Alaska 2012: Billions left in North Slope

Kay Cashman

Petroleum News

There’s a common misconception that, with production from major oil fields in northern Alaska declining, the North Slope has become a mature oil and gas province.

While it’s true that most of the larger and easier structural plays, particularly onshore, have been drilled, it’s also true that many stratigraphic, and some structural, plays have yet to be discovered or tapped, as evidenced by the arrival of Repsol on the North Slope and by stepped up exploration in the winter of 2011-12, especially close to existing infrastructure.

Success in the Tarn and Alpine fields in the late 1990s moved exploration attention away from the big Prudhoe Bay-style structures toward stratigraphic traps on-and near-shore the North Slope.

At the same time, the Northstar field, largely in state waters and the first Arctic project with a subsea oil pipeline, demonstrated continued success with structural reservoirs.

In general terms, people widely recognize the petroleum systems of northern Alaska as hydrocarbon-rich but reservoir-poor. So, with an abundance of excellent source rocks and a relative shortage of reservoir-quality rock formations, any isolated stratigraphic trap — a hydrocarbon trap formed by the juxtaposition of reservoir and seal rocks in the rock strata —stands a good chance of containing oil or gas.

Thanks to sustained high oil prices, new found capabilities of high-end 3-D seismic techniques to find stratigraphic traps, the use of horizontal drilling, including the latest advancements in hydraulic fracturing, improved the ability to produce from low permeability reservoirs, so more North Slope accumulation became economic to produce.

Classic North Slope plays

The classic North Slope oil and gas plays occur along a structural high known as the Barrow Arch under the Beaufort Sea coast of the North Slope. These plays originated from the discoveries of oil fields like Prudhoe Bay and Kuparuk River many years ago.

The Prudhoe Bay field consists of a giant combined structural and stratigraphic trap involving Triassic sandstone reservoirs in a Mississippian to lower Cretaceous sequence of sediments known as the Ellesmerian sequence.

Companies are still looking for opportunities in the Ellesmerian, especially near existing oil and gas infrastructure, where there are numerous such structural plays.

The reservoirs for the Kuparuk River field involve sandstones in what’s called the Beaufortian or Rift sequence of Jurassic or lower Cretaceous age — the deposition of the sandstones is associated with rifting or pulling apart of the Earth’s crust that occurred during the opening of the Canada basin of the Arctic Ocean.

Although some of the Beaufortian sands can be thin and discontinuous, other areas of more continuous sands give rise to large reservoirs.

Basically, you get a huge range of potential sizes in the same rift breakup sequence but there are a lot of plays in the 20 million to 70 million or 80 million barrels size.

“There are still plays in the 300 million, 400 million or 500 million to a billion-plus size — they’re still out there, but they’re almost all stratigraphic,” Mark Myers, former director of Alaska’s Division of Oil and Gas and the U.S. Geological Survey, told Petroleum News in 2011.

Success with Alpine, the main field in the Colville River unit that came online in 2001, and its Beaufortian Jurassic sandstone reservoir, spurred interest in similar Jurassic plays. There is a series of upper Jurassic sands just below the Alpine sands: “There’s at least a billion barrels in place, we think, in that trend,” Myers said.

Brookian stratigraphic plays

There is a major Cretaceous and Tertiary sequence of petroleum bearing sedimentary rocks above the Ellesmerian and Beaufortian sequences in northern Alaska. Known as the Brookian sequence, this younger rock sequence extends all the way from the northern edge of the Brooks Range out over the North Slope and across the continental shelves of the Beaufort and Chukchi seas.

Stratigraphic plays involving topset or turbidite strata in submarine fans typify this Brookian sequence.

“Some of the … submarine fans are very large,” Myers said: “If you had reservoir quality and if you had closure you could approach the billion-barrel mark in some these if you had structural fill.”

Then there are other situations where you may find smaller fans with as little as 20 million barrels of oil and where several smaller fans stack together the combined volume of oil could reach around 100 million barrels.

National Petroleum Reserve-Alaska

ConocoPhillips with its partner Anadarko Petroleum has been spearheading exploration and development west from the Colville River Delta, at the western extremity of existing North Slope oil infrastructure, into the northeastern part of NPR-A.

A series of wells drilled in the area by the partners since the renewal of leasing in NPR-A in 1999 have tested Alpine-equivalent prospects and have yielded discoveries of light oil, condensate and gas in stratigraphic traps, overlooked before the advent of 3-D seismic imaging.

The accumulations can be viably developed by extending the oil pipeline infrastructure west from their Colville River unit, which contains the first North Slope fields developed exclusively with horizontal well technology.

The unexpectedly prolific sands at Alpine, discovered in 1994 and put online in 2000, opened the door to extending a new Beaufortian play beyond the Prudhoe-Kuparuk infrastructure. The concept is to progressively move farther and farther west into NPR-A, opening up new oil pools as access to the pipeline infrastructure becomes available.

ConocoPhillips, Anadarko and others have also explored much farther west in NPR-A, but viable oil and gas development at such large distances from existing oil infrastructure would require a major oil find of at least 1 billion barrels.

If Shell, ConocoPhillips, Statoil and others develop their Chukchi Sea leases 100 miles offshore NPR-A, a pipeline across the reserve would open it, making it economically viable to drill a number of the larger structures there.

Armstrong latest coup

In October 2001, Armstrong Oil and Gas, a Denver independent, bought its first leases in the state’s areawide North Slope and Beaufort Sea lease sales, leading to the development of the Pioneer Natural Resources-Oooguruk near-shore field and the Eni Petroleum-operated

Nikaitchuq near-shore field

Armstrong sold its northern Alaska assets to Eni, and turned to developing a gas field on the Kenai Peninsula.

But it returned to the North Slope and recently brought in Spanish mega-major Repsol in as a 70 percent partner to help it explore and develop nearly 500,000 acres on state leases on- and near-shore. Repsol, which paid $768 million for the privilege, immediately initiated an aggressive multi-year exploration program.

Lots of room

There is still lots of room for newcomers, per Kevin Banks, the former director of the Division of Oil and Gas — and some incredible exploration and development credits available. (Bill Barron, with 35 years of experience in the industry, took over as director in mid-2011.)

“The State of Alaska takes seriously our responsibilities to our leaseholders. We encourage exploration through innovative new programs, paying as much as 40 percent of exploration costs for qualified applicants, and we share our insight into how state and federal agencies interact to help companies navigate smoothly through exploration and development activities. Alaska is a resource development state. We view the people and companies exploring and developing our natural resources as our partners,” Banks said in an editorial aimed at oil and gas companies interested in entering Alaska, or investing in those that are already here.

Governor’s goal

Industry thinks the state’s progressive production tax regime has some problems, as does Alaska’s current governor, who wants to see the state’s oil production increase to 1 million barrels from the 600,000 range.

The tax, commonly referred to as ACES, takes a lion’s share of net profits when oil prices are high, in the $100-plus range. It’s very competitive, however, when prices are low, which is where they were when the new production tax was established in 2007.

Optimistic about long term

Myers feels optimistic about the long-term future of the oil industry in northern Alaska.

“I think we’ll see just a tremendous amount more oil produced, especially from the stratigraphic plays over time,” he said. “I think someone will stumble into that 500 million to a billion barrel field size.”

And where is that next big find on state acreage?

In 2005, Myers said, “In the long term if I were to bet on a big prospect, the Brookian stratigraphic plays are where I’d put my money.”

In 2011, he also included shale oil (see source reservoired oil section).



Did you find this article interesting?
Tweet it
TwitThis
Digg it
Digg
Print this story | Email it to an associate.

Click here to subscribe to Petroleum News for as low as $69 per year.


Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
circulation@PetroleumNews.com --- http://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)©2013 All rights reserved. The content of this article and web site may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law subject to criminal and civil penalties.