Accumulate Energy Alaska Inc. is exploring for unconventional resources in Alaska at a time when lower oil prices are adding risk to traditional conventional plays in the state.
And like Great Bear and Royale, which arrived before it, Accumulate Energy is targeting both conventional and unconventional plays to improve the economics of its efforts.
The local subsidiary of Australia-based 88 Energy Inc. completed the Icewine No. 1 exploration well in the Franklin Bluffs region of the central North Slope in late 2015 and commissioned a 2-D seismic survey over its leases west of the haul road in early 2016.
Accumulate Energy drilled the 11,600-foot vertical well from the Franklin Bluffs pad, adjacent to the Dalton Highway some 30 miles south of Deadhorse. The well targeted source rocks, particularly the HRZ shale, in addition to some conventional oil targets.
The approximately $3 million seismic survey covered some 420 linear miles using wireless recording nodes and geophones. A chief goal of the survey was to inform a second Icewine well. The company is considering a horizontal well with multi-stage fracturing, which would provide points of comparison to the vertical Icewine No. 1 well.
As drilling was underway in December 2015, 88 Energy described the project as an attempt to “better quantify risk so that a farm-out can be achieved in 2016.” In early presentations, the company estimated a gross mean unrisked prospective resource of 492 million barrels of unconventional oil to be discovered within the Icewine project.
According to the company, early analysis of the well suggested that a large portion of HRZ shale in the Icewine acreage was within the sweet spot of thermal maturity, which measures how underground temperature and pressure influences hydrocarbons production. Greater heat will “cook” oil into wet natural gas and then dry natural gas.
“The high recovery factor in all three cores taken, including the primary HRZ target and across the bottom seal for the HRZ (Pebble Shale), means that we have excellent data to use in the evaluation of the potentially huge unconventional prize on the Project Icewine acreage,” 88 Energy Managing Director Dave Wall said in a Dec. 28 drilling update.
As far as conventional targets, Icewine No. 1 encountered elevated natural gas readings over a 58-foot (gross) interval of Kuparuk sands and “excellent reservoir quality and hydrocarbon shows” in a shallow Brookian sequence, according to the company.
After securing a $50 million financing deal with Bank of America, 88 Energy outlined a four-to-five-well program in the region, starting with Icewine No. 1 in late 2015 and continuing with three to four additional wells in early 2016 to target conventional plays.
Several smaller independents
The independent Burgundy Xploration acquired the initial Icewine acreage in 2012 and sold a majority interest in the prospect to Accumulate Energy Alaska in late 2014.
The two companies greatly increased their holdings in a November 2015 lease sale.
As of early March 2016, the two companies were leasing nearly 100,000 acres from the state of Alaska, with some 85,909 acres to Accumulate and some 12,272 to Burgundy.
Instead of looking directly for oil, the companies are chasing vapor. The idea is to use an increasing understanding of thermal maturity to understanding this particular resource.
The well was designed so that “you get a little bit deeper and where the oil is no longer oil in the reservoir, it’s actually a gas. But when you get it to the surface it becomes rich in liquids,” Paul Basinski, president and founder of Burgundy, said in November 2015.
The concept is similar to exploration in the Eagle Ford shale of Texas, he said, but the geology is different. The Alaska prospect is highly porous. Rather than traditional shale, “it’s a volcanic rock and there’s not a productive play like this in the world yet,” he said.
The goal of the well was to determine the geologic properties of the acreage and technical possibility of development. “The question is can it be drilled? Can it be fracked?” he said, adding that any Alaska prospect would need to be large to justify the increased costs for operating in the Arctic. The project is helped by its proximity to the haul road, which not only allows for some year-round work but is also close to the trans-Alaska oil pipeline.
Like other ongoing efforts to explore and potentially develop Alaska source rock, the 88 Energy project would operate on a scale much larger than current developments.
In a September 2015 presentation, the company proposed 80-acre spacing for a future development, which would mean approximately 1,200 wells across the entire leasehold.
