Reviewing resultsCaelus geoscientists describe exciting findings from company’s Smith Bay wells ALAN BAILEY Petroleum News
Following Caelus Energy Alaska’s October announcement of a major oil find at Smith Bay, towards the western end of the North Slope, there has been intense interest in the nature of that find and what the find might mean for the future of the Alaska oil and gas industry. The company indicated the existence of a new oil field of a similar scale to that of the aging Kuparuk River field, with perhaps 6 billion barrels of oil in place, some 2 billion barrels of recoverable oil and potential production rates of about 200,000 barrels per day.
On Dec. 13 at a joint meeting of the Alaska Geological Society and the Geophysical Society of Alaska Caelus geoscientists described what the company had found during its exploration drilling at Smith Bay earlier this year. Based on data from a 3-D seismic data shoot by FEX L.P. in 2008, Caelus drilled two exploration wells, the CT-1 and CT-2 wells, offshore in state waters. The wells encountered light oil in sands of the Cretaceous-age Torok formation.
Vernon Orange, Caelus geophysics advisor, showed an image, derived from the seismic data, of an ancient submarine fan structure in the Torok under the bay. The good quality seismic data made it easy to identify the structure and figure out where to place the exploration wells, Orange said. In fact there are two fan structures, one above the other, he said.
Known oil seeps And there is ample evidence of an active petroleum system in the region. A natural oil seep nearby at Cape Simpson has been long known; there are other oil seeps to the west; and some exploration wells previously drilled in the region had encountered oil shows, Orange commented.
Craig Knutson, Caelus geoscience adviser, also commented on evidence for natural oil seeps under the waters of Smith Bay. Richard Garrard, exploration director for Nordaq Energy Inc., told the meeting that the FEX seismic had detected bathymetric highs, suggestive of active oil seeps, on the sea floor of the bay. Ice cores obtained from above one of those highs had contained some light oil, with characteristics suggesting that the oil originated from the HRZ, one of the major oil source rocks in Arctic Alaska, Garrard said. HRZ oil? Knutson said that the light quality of the oil encountered by the Smith Bay wells had actually made the oil tricky to detect in the wells - the oil turned out to have an API value of around 41 or 42. There were also good natural gas shows, he said. The geochemistry of the oil suggested an origin from a marine shale, probably the HRZ, although an origin from the Kingak, another North Slope oil source, cannot be ruled out. The Cape Simpson seep has been tied geochemically to the HRZ, Knutson said.
In fact, the HRZ lies immediately below the Torok at Smith Bay, with the Torok sands possibly sitting right on the HRZ in places. However, the thermal maturity of the HRZ at Smith Bay, the maximum temperature that the rocks would have reached, is insufficient to have generated the light oil detected in the Caelus wells, Knutson said. This indicates that the oil has migrated into the Torok from elsewhere.
There has been speculation over the years regarding the source of oil observed in the Smith Bay region. Although it is widely understood that oil found in the major oil fields of the central North Slope migrated into the fields from the south, there has been mounting evidence for a northerly origin for oil found in relatively shallow formations such as the Torok along the Beaufort Sea coast.
Knutson said that the accumulated evidence, including the findings from the Caelus wells, very much confirms that the Smith Bay oil has flowed from a deep “oil kitchen” in the north, under the Beaufort Sea. Knutson also commented on intriguing similarities in both rock qualities and oil qualities between what Caelus found at Smith Bay and the results from the Cassin No. 1 well, drilled by ConocoPhillips in the north-eastern National Petroleum Reserve-Alaska in 2013.
“All in all we feel that there’s a lot of good evidence that we have quite a bit of sand with oil, and a high-quality oil,” Knutson said.
200-feet net pay The Caelus wells encountered about 200 feet of net oil pay, packaged into six different sand lobes, in 1,500 to 1,800 gross feet of oil reservoir, Knutson said. The oil trap is stratigraphic in nature, with shales forming a seal. The reservoir porosity averages at below 15 percent, and the permeability averages below 1 millidarcy. The low permeability presents a challenge for oil production, although Caelus thinks that the light, low-viscosity nature of the oil offsets this disadvantage - modeling suggests that production with a combination of production and injections wells would work.
However, the company will need to conduct some flow testing to verify the production capabilities of the reservoir and hopes to drill an appraisal well in early 2018. Caelus is still evaluating the optimum location for this well, with the various possibilities including drilling into the largest volume of sand, drilling down-dip to test for a water interface, or perhaps minimizing costs by drilling from onshore, Knutson said.
Compartmentalization of the sand bodies that form the oil reservoir can be an issue in the Torok. Knutson said that the seismic data indicates continuous sands, especially in the lower sand body, at Smith Bay, but that the resolution of the seismic is too low to determine the extent of any compartmentalization.
The lateral extent of the discovery, and hence the estimated scale of the oil resource, is assessed from the seismic data. In fact, the northern boundary of the discovery is set by the boundary of the seismic coverage, and not by the geology, Knutson commented. Presumably further drilling would be needed to confirm the lateral extent and continuity of the oil pool.
Benefits for Alaska David Hart, Caelus senior manager, operations and production, commented that, if brought on line, the Smith Bay oil field could help trigger a major reversal to the current decline in oil throughput in the trans-Alaska pipeline, with commensurate economic benefits to the state. Hart argued for maintaining state incentives, to encourage field development. He commented that construction of a road along the coast between Barrow and the central North Slope would significantly reduce the cost of a Smith Bay development. Caelus has yet to determine an optimum route for a pipeline to deliver Smith Bay oil to the central North Slope. But construction of a pipeline by a third party, perhaps with state assistance, as a piece of oil transportation infrastructure, would also knock a major dent in Smith Bay development costs, he suggested.
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