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Vol. 18, No. 13 Week of March 31, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Undiscovered oil-field potential drew Apache to Cook Inlet basin

Apache Corp., the company forging ahead with an aggressive exploration program in Alaska’s Cook Inlet basin, was attracted to the basin by the potential for large volumes of as-yet undiscovered oil, and by the likely existence of many undiscovered geologic structures that could have trapped that oil, David Allard, new ventures exploration manager for Apache Corp., told the Alaska Geological Society on March 21.

Apache sees high-resolution 3-D seismic data as the key to finding those elusive structures that may hold oil and natural gas — so far the company has completed about 320 square miles of a multi-year seismic program in the basin, Allard said. Seismic surveys completed so far cover a swathe of onshore territory on the west side of the inlet and a fairway across the inlet that provides a linkage between seismic coverage of the west and east sides of the basin.

Nodal seismic

The company is using state-of-the-art wireless nodal technology for making the seismic recordings, a technology that enables the placement and recovery of seismic recorders with minimum environmental disturbance.

With the nodal technology being relatively unproven, having only just come available on the market, Apache ran a test 2-D line before committing to its full-scale 3-D program. However, the technology has proved very successful, with the company managing to push some initial high data acquisition costs down to acceptable levels, Allard said. And the seismic data acquisition proceeded with no health or safety incidents, and with no encounters with Cook Inlet beluga whales, animals that are protected under the Endangered Species Act, Allard said.

But because of issues with federal permits, in particular a National Marine Fisheries Service authorization for the minor disturbance of marine mammals in the more southerly part of the upper Cook Inlet, Apache suspended its seismic program in the fall of 2012. The Fisheries Service has since issued the authorization, but Apache has not yet decided on a continuation of the seismic program this year — the company has more projects on its books than it can finance, and the Cook Inlet seismic has to compete for funds, Allard said.

“Like most independents, you live within your cash flow,” he said.

Apache also needs a land use permit from the U.S. Fish and Wildlife Service for access to surface land in the Kenai National Wildlife Refuge, to be able to shoot seismic over subsurface land belonging to Cook Inlet Region Inc., or CIRI, the Native regional corporation for Southcentral Alaska — Apache has an agreement with CIRI for exploration in the corporation’s land.

Allard said that Apache hopes to secure the permit for the refuge this year, thus enabling onshore seismic surveying to start in the fall and winter.

Large offsets

Allard said that Apache’s approach to seismic surveying includes the recording of data from land offset by five miles or more from the target rocks within the company’s leases. The large offsets are needed to achieve the high resolution that Apache is looking for in its seismic imaging, a high resolution that the company thinks will be needed to find those elusive, undiscovered hydrocarbon traps. The high offsets will also help in imaging the complex fold structures and faults that are characteristic of the Cook Inlet basin, Allard said.

Allard said that Apache also sees a need to obtain seismic data from a relatively wide area of the basin, tying together data between different parts of the basin and connecting data with known field areas.

“We think it’s really important not to just go shoot a postage stamp,” Allard said.

However, it may not prove possible to shoot seismic across the entire million or so acres to which the company has acquired exploration rights: Apache is using existing studies of the basin to “high-grade” locations for its seismic work, while phasing in an exploration drilling program, Allard said.

First well

The company has obtained some preliminary processed data from last year’s onshore seismic survey on the west side of the inlet and is the process of drilling its first well, the Kaldachabuna No. 2 on the west side, in CIRI land near the village of Tyonek.

The drill bit in the Kaldachabuna well became stuck in coal seams a couple of times. However, the drilling is now nearing completion, with rock cores having been taken from the Hemlock formation, Allard said.

Apache has previously said that, although the company would like to produce oil from the well, the well is primarily a test well that will help evaluate geology depicted in seismic images and that can provide an opportunity to test the use of hydraulic fracturing for Cook Inlet oil production.

Analysis of the rock core from the well will provide insights into the porosity and permeability characteristics of potential reservoir rocks — in the Cook Inlet basin these characteristics vary quite a bit over short distances within single reservoir rock units, Allard said. The potential reservoir rocks typically contain quite a variety of rock and mineral fragments, with a high quartz content appearing particularly important to satisfactory reservoir quality, he said.

Meantime, processing continues of the seismic data that Apache has already collected.

“We expect to drill a number of wells onshore next year and possibly offshore the following year,” Allard said.

Fieldwork

Allard said that Apache has carried out a couple of summers of geologic fieldwork, looking at surface outcrops of some rocks and geologic structures, of types anticipated underground in the areas where the company is exploring. Fold systems seen in the strata exposed on the Alaska Peninsula, for example, provide dramatic examples of the styles of structures expected underground further north, Allard said.

And the likely existence of a wide variety of underground structures, any of which might trap oil and gas, particularly attracted Apache to the Cook Inlet basin, Allard said.

Primary exploration targets would lie in the thick sequence of relatively young Tertiary strata in the upper Cook Inlet region. The existing Cook Inlet oil and gas fields have reservoir rocks in these strata, which primarily consist of sand packages and shales laid down on land in an ancient river system.

Because the sands which form field reservoirs tend to have been deposited in ancient river channels, the sands tend to be discontinuous — Apache hopes that its high-resolution seismic will make it possible to track the sand bodies but the company will not know whether that will be possible until the seismic has been processed, Allard said.

Jurassic source

The Tertiary rock sequence lies over a thick sequence of older Mesozoic strata. The Tuxedni group, of Jurassic age, within the Mesozoic sequence is thought to have sourced the Cook Inlet oil, although another rock unit within the Triassic sequence has also been proposed as a possible oil source. However, Apache’s work to date, characterizing the Cook Inlet hydrocarbons, has not verified that Triassic source, Allard said.

Apache’s modeling of the evolution of the Cook Inlet basin indicates that the weight of a very thick sequence of sediments deposited in the basin depressed the older Mesozoic rocks downwards, pushing the Jurassic source rocks into depths with subsurface temperatures high enough to cause oil to form, Allard said.

And there is a major unconformity — a break in the rock sequence — at the base of the Tertiary, placing a variety of rocks of different ages under the Tertiary, with a sequence of various ages of Jurassic strata juxtaposed against the underside of the Tertiary in the deep center of the basin.

An understanding of the these elements of the basin, deep underground, is critical to elucidating the locations of source rocks and the evaluation of possible migration paths of hydrocarbons into reservoir rocks, Allard said.

More oil fields

And, with known existing oil fields being fairly large but occupying a relatively small area of the basin, there appears to be strong possibility that other fields, perhaps of more modest size, remain undiscovered in what is a relatively underexplored basin.

“We see that field-size distribution as immature,” Allard said. “The expectation is that we should be able to find a 50 million to 100 million barrel field size, if you’re willing to shoot large 3-D (seismic) and really work the basin top to bottom like we’re trying to do.”

Allard said that Apache has also looked at the potential of the lower Cook Inlet, the region of the Cook Inlet basin south of the Kenai Peninsula and extending into the Shelikof Strait, where the Tertiary sequence is thin but where there is a thick sequence of Mesozoic strata. This part of the basin lies mainly under the federal outer continental shelf — unfortunately the next federal oil and gas lease sale for the lower Cook Inlet has been delayed to 2016, Allard said.

Asked if Apache, rather than just seeking oil trapped in geologic structures, is interested in exploring for other types of trap, such as so-called “stratigraphic traps,” where the sequence of sediment deposition has juxtaposed porous sands against impermeable rocks that can prevent hydrocarbons escaping, Allard said that Apache is interesting in seeking all possible exploration targets. The company may even be interested in drilling for oil in the Mesozoic at some point, rather than just exploring the Tertiary.

“Longer term we would like to penetrate an exploration well into the Mesozoic section,” Allard said.

And Allard emphasized that Apache has entered the Cook Inlet basin as a pure exploration play.

“We’ve not purchased producing assets,” Allard said. “We’ve stayed focused on exploration.”

One billion barrels?

Allard said that Apache’s analysis of cumulative oil volumes discovered from past exploration suggests that there could be as much as 1.4 billion barrels of oil remaining to be found in the basin. That’s a higher number than the 600 million barrels that the U.S. Geological Survey has estimated. But, given the lack of high-resolution seismic data, nobody really knows how many oil traps there might be in the basin — perhaps 1 billion barrels of oil might be a number to work with, Allard said.

“There’s room to run there as far as we’re concerned,” he said.

—Alan Bailey



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