Updated 9 a.m., April 14, 2020: Independent 88 Energy said April 7 the Charlie 1 appraisal well in its North Slope Icewine project found mobile hydrocarbons in the form of condensate gas in the Torok formation, the well’s primary target.
Operated by 88 Energy’s 100% owned subsidiary Accumulate Energy Alaska Inc., on March 30 Charlie 1 reached a total vertical depth of 11,112 feet in the Kuparuk formation, penetrating sandstones in seven stacked Brookian targets and HRZ shale in one target. No flow tests were done but gas condensate samples were retrieved to surface from two targets in the Torok formation at 10,506 feet and 10,656 feet using a downhole sampling tool run during the wireline operation.
Because of its possible high natural gas content, an economic review is underway by the company to determine whether the condensate discovery can be commercially developed on the North Slope.
The Charlie well is on state lease ADL 393380, in which 88 Energy had a 30% interest prior to drilling. Its partners in the well were Premier Oil Plc, 60%, and Burgundy LLC, 10%.
In a Feb. 23 presentation to investors, 88 Energy said Charlie 1 was targeting “multiple stacked drillable prospects identified on Icewine 3D interpretation” that totaled 480 million barrels of oil net to the company.
Torok fan/channel plays
Charlie 1’s primary target in the Torok formation involved three stacked horizons that 88 Energy dubbed the Stellar prospect. The upper Stellar prospect was a fan play and the middle and lower Stellar fan/channel plays.
The company told investors in February that the lower Stellar was “highly likely to be oil bearing based on elevated resistivity logs” from the nearby Malguk 1 well drilled by BP in 1991, but never flow tested.
The gross mean prospective oil resource in these three stacked horizons was 639 million barrels of oil with a net mean to 88 Energy of 192 million barrels, the company said.
The well was designed as a step out of Malguk 1, which like Charlie 1 encountered oil shows with elevated resistivity and mud gas readings over stacked horizons during drilling.
Schrader, Seabee younger and shallower
Charlie 1’s secondary targets were in the Schrader Bluff and Seabee formations, younger and shallower than the Torok.
There were two Schrader Bluff topset plays; one in what 88 Energy named the Indigo prospect with a gross mean potential of 374 million barrels of oil (net mean of 112 million barrels to the company) and the other in the Charlie prospect with a gross mean of 210 million barrels (net mean 63 million barrels), the company said in the February presentation prior to the well’s March 2 spud date.
Sampling was successfully completed in the Indigo, which was found to be water bearing. The Charlie target was poorly developed and was not sampled. Oil shows in this interval were deemed to be related to residual oil that was not trapped in the system, 88 Energy said.
Seabee not intersected optimally
In the Seabee formation (apron/fan play) an unsuccessful attempt was made to take a sample from what 88 Energy named the lower Lima prospect, being the better of the two Lima targets, but there was insufficient reservoir quality, the company said.
However, given that the Seabee was not intersected optimally, there still may be potential for higher quality reservoir at a different location, 88 Energy reported April 7. Also, the company said, a 220-foot interval had been encountered in Malguk 1 in the lower Lima, with up to 60% oil saturation and an average porosity of 11%.
Prior to drilling 88 Energy told investors the stacked Seabee targets in the Lima prospects were considered tertiary due to higher risk associated with reservoir quality at the Charlie 1 location. In well planning the company had been most interested in getting a better intersect on the primary Torok targets.
88 Energy had estimated the mean prospective oil resource in the Seabee Lima targets was 376 million barrels of oil gross mean (113 million barrels net mean to the company).
Mud gas seen while drilling in the Seabee “indicated that the hydrocarbons at this horizon were heavier than those in the Torok and this was the horizon where ‘live oil’ was observed across the shakers” in the nearby Malguk 1 well.
“Excellent vertical seismic profile, or VSP, data was obtained in the well, which will now be used in conjunction with other log data and the existing 3D seismic, to remap the targets. Sidewall core analysis will also help determine where improved reservoir is likely to exist,” 88 Energy said.
Premier withdraws from JV
Premier decided to exit the project because well results did not meet its expectations, but 88 Energy said the $23 million that Premier paid to farm into the project was in the joint venture’s bank account, noting well costs remained within the expected budget, so no additional costs will be incurred.
With Premier’s withdrawal 88 Energy’s working interest will increase to 75% in Area A of the Icewine project, including the gas condensate discovery, Charlie 1, and Malguk 1.
Charlie 1 plugged and abandoned
The well was plugged and abandoned rather than suspended because further analysis was needed to determine whether such a high gas content discovery could be commercialized on the North Slope, the company said, noting stimulation and testing was not possible because of “the different phase of hydrocarbons encountered along with the lack of time in the remaining winter drilling season.”
Other factors included uncertain access to some of the people required in the event of “unforeseen circumstances/emergency situations in light of the COVID-19 pandemic” and the potential of early break-up, which could strand the drilling rig, Nordic Rig 3, on the wrong side of the Kuparuk River at significant cost to the JV.
88 Energy was also reluctant to create a “potential future liability if analysis determines that the well should be P&A’d in a subsequent season, at substantially higher cost.”
Seabee, HRZ remain viable
David Wall, managing director of 88 Energy, described the results of Charlie 1 as mixed.
“The risks related to the shallower targets have unfortunately been borne out, with one found to be water bearing and the other to have no sand development. The (Seabee) Lima targets both remain valid and, using the VSP, logs and cores from Charlie 1, we hope to be able to enhance the prospectivity of the Seabee formation on our acreage. We also hope to glean valuable information in regard to the HRZ potential in this area of Project Icewine and analysis will take place over the next few months,” Wall said April 7.
The company’s Project Icewine unconventional acreage totaled some 482,000 acres at end of first quarter (64% net), 88 Energy said in its April 9 first quarter report, the objective being the “shale complex that sourced the 13 billion barrel Prudhoe Bay oil field.”
Detailed logs and sidewall cores were acquired in the HRZ formation during drilling of Charlie 1, which will be analyzed over the coming months.
The joint venture plans to conduct a formal farmout process to fund further HRZ appraisal, 88 Energy said.
In a mid-2019 interview with Petroleum News, a company executive said advanced analysis using state-of-the-art technology had “confirmed that the HRZ is an excellent source rock with good potential as an economic shale play. The nature of the dominant kerogen in the HRZ has been demonstrated to be prone to more rapid transformation into hydrocarbons than other shales initially used for comparison. This means that the thermal maturity window for volatile oil in the HRZ is at lower temperature than that typically seen in other plays.”
