Great Bear Petroleum, the company that starred in the State of Alaska’s Oct. 27 North Slope lease sale by picking up more than 500,000 acres south of Kuparuk and Prudhoe Bay, sees itself as a game changer in the North Slope oil and gas industry, Ed Duncan, the company’s president and chief operating officer, told Petroleum News on Oct. 28. Rather than drilling for hydrocarbons in porous reservoir rocks, the company plans to go straight for the jugular, drilling right into oil and gas source rocks, and then using horizontal drilling techniques and intense fracturing, or fracing, of the rocks to entice oil and gas to the surface.
This approach to oil and gas development has become commonplace in the Lower 48 in recent years, in plays such as the Eagle Ford shale and the Barnett shale, but has yet to make its way to Alaska, Duncan said.
“It’s new to Alaska but it’s not new to resource play exploitation in the Lower 48,” he said.
A new directionOver the past 50 years the production of oil from traditional reservoir rocks has driven oil development in fields such as Prudhoe Bay and Kuparuk — Great Bear Petroleum believes that source rock plays will drive development for the next 50 years or more, said Bob Rosenthal, the company’s vice president for new ventures.
Both Duncan and Rosenthal have previously worked in the Alaska oil industry and are very familiar with the petroleum geology of northern Alaska.
And Northern Alaska’s regionally extensive, world-class source rocks are what have motivated the partners in Great Bear Petroleum to form the company and to purchase North Slope leases, Duncan said. Source rocks like this are fundamental to oil and gas plays that are now being developed worldwide — the North Slope of Alaska is a very source-rich region, he said.
In its new lease position, the company anticipates seeking both oil and gas development opportunities close to the existing North Slope oil infrastructure, Duncan said. Success in the company’s strategy will result in more oil flowing down the trans-Alaska pipeline, more revenues for the State of Alaska and more business for Alaska Native corporations, he said.
But the company has not discounted the possibility of encountering oil and gas in conventional reservoirs in its leases.
“It’s going to be unlucky if we don’t have conventional potential in that lease position, but that’s not why we’re here,” Duncan said. “We’re not here exploring for these conventional resources.”
No new seismic neededDuncan said that, with the subsurface depths of the company’s target source rocks already known from existing seismic and well data, Great Bear Petroleum will not need to shoot any new prospect-specific 3-D seismic before embarking on a drilling program. Instead, the drilling plans will incorporate the flexibility to adjust to any discrepancies between rock depths inferred from the data and actual rock depths encountered by the drill bit.
“Our work program is designed to address any uncertainties we have as to where the source rocks are actually located,” Duncan said.
The company is anxious to move ahead as soon as possible with its drilling program, being extremely well funded and having adequate financing for its planned activities, he said.
And the state has been extremely supportive and helpful, he said.
Duncan told Petroleum News Nov. 2 that his company hopes to drill two test wells on the North Slope during the winter of 2010-11. The company is going to select well locations and start the permitting of the wells in parallel with the state’s efforts to finalize the leases from the lease sale.
“We’ll begin the permitting process almost immediately,” Duncan said. “We’ll let that run in parallel with the lease review. … As soon as the leasehold is cleared we would be in a position to drill, if the clearance occurs early enough.”
The proximity of Great Bear Petroleum’s leases to the North Slope road system will simplify the logistics of carrying out the drilling, although there is a risk that the drilling might have to be deferred into the next winter if the leases are not cleared in time, Duncan said.
Environmentally responsibleKaren Bryant Duncan, Great Bear Petroleum’s corporate general counsel and secretary, will manage the company’s regulatory interface with the state — she emphasized that the company is committed to environmental protection and is anxious to conduct its business in an environmentally responsible manner.
Ed Duncan said that the company wants to work with Native corporations as strategic partnerships and that the company will introduce itself to the corporations in due course.
“It’s a real pleasure to be back in Alaska. … We’re really looking forward to building the business here,” Duncan said. “… If this play works the way we believe it will, it’s transformative. It truly is a transformative event in the history of the state.”