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Week of October 31, 2010
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NPR-A oil slashed

USGS cuts estimated oil volumes following analysis of recent well data

Alan Bailey

Petroleum News

In a revised resource assessment for the National Petroleum Reserve-Alaska, released Oct. 25, the U.S. Geological Survey has slashed its estimate of undiscovered, technically recoverable oil in the reserve from 10.5 billion barrels to just 896 million barrels. The agency’s estimate of undiscovered, technically recoverable natural gas has dropped slightly from 61 trillion cubic feet to just under 53 trillion cubic feet.

New well data

The revised estimates, coming as an update to an NPR-A assessment done in 2002, result from data now available from exploration wells drilled in the past decade. The data indicate an abrupt change from oil prone to more gas prone resources, just 15 to 20 miles west of the Alpine oil field in the Colville River Delta, USGS scientists think. Consequently, oil plays analogous to the Alpine field in NPR-A likely contain very little oil west of the area that ConocoPhillips and Anadarko Petroleum have been exploring around their Lookout and Alpine West prospects, USGS now says.

“Recent activities in NPR-A, including extensive 3-D seismic surveys, six federal lease sales totaling more than $250 million in bonus bids and completion of more than 30 exploration wells on federal and Native lands, indicate in key formations more gas than oil and poorer reservoir quality than anticipated,” a USGS fact sheet for the new assessment says. “In the absence of a gas pipeline from northern Alaska, exploration has waned and several petroleum companies have relinquished assets in the NPR-A.”

USGS now thinks that the best bet for finding new oil in NPR-A is in a relatively young and shallow sequence of rocks known as the Brookian. There is also some potential for finding oil in older strata in northeastern NPR-A.

The greatest oil potential exists near Teshekpuk Lake and the adjacent coastal plain, a region largely inaccessible because of environmental concerns, USGS says.

High expectations

When the discovery of light oil in Jurassic sands in the highly successful Alpine field triggered the restart of leasing in the adjacent NPR-A in 1999, there were high expectations of finding more Alpine-style oil pools in the northeast corner of the reserve. And ConocoPhillips, with its partner Anadarko, has met with some success in finding modest-sized oil accumulations along a fairway west from the Colville River Delta.

In 2002 USGS added to the enthusiasm about hunting for oil in NPR-A when the agency published a resource assessment suggesting that there might be significantly more oil in the reserve than previously thought, upping to 10.5 billion barrels a previous estimate of 300 million to 5.4 billion barrels.

USGS geologist Dave Houseknecht told Petroleum News Oct. 26 that when USGS prepared its 2002 assessment, the existence of good quality Alpine-equivalent sands in the 1981 Kuyanak well, towards the western end of the coastal plain, suggested the likelihood of similar Alpine sands extending west across NPR-A from the Alpine field. And with the only known hydrocarbon pool in the sands being the light oil of the Alpine field itself, and with the field not having an associated gas pool, the USGS geologists inferred the possible existence of much Alpine-style oil across much of northern NPR-A.

Two-thirds of the USGS estimated oil for NPR-A in 2002 was in the Alpine play, with most of the rest being in the Brookian, Houseknecht said.

By 2004, however, USGS scientists had noted that exploration wells were starting to indicate significant gas potential in the Alpine-equivalent sands of northeast NPR-A, with the oil tending to become lighter and the amount of gas increasing from east to west in the reserve.

“Is the big play, or plays, in NPR-A really going to be predominantly oil or will there be a very substantial gas resource that has perhaps already been discovered, or is waiting to be discovered, along the Alpine play fairway that industry has been treating primarily as an oil play?” Houseknecht asked at the time.

Confirmed

More recent work has apparently confirmed Houseknecht’s suspicions, suggesting that the USGS evaluation of oil-field reservoir geology in the 2002 assessment was correct, but that the assessment of the hydrocarbon content of the reservoir rocks in the Alpine play was wrong.

Of five oil discoveries in northeast NPR-A, the two more westerly discoveries — Mitre and Spark-Rendezvous — contain predominantly gas, USGS now says. Mitre contains mostly gas, with an oil leg in the south, while Spark-Rendezvous contains gas and condensate at shallower depths in the north, and oil at greater depths in the south.

“Significantly, the Spark-Rendezvous accumulation represents an abrupt transition of the hydrocarbon phase within the Alpine sandstone — from oil on the east to gas on the west,” the USGS fact sheet says. “Most known or inferred hydrocarbon accumulations west of Spark-Rendezvous are gas.”

The three more easterly discoveries — Alpine West, Lookout and Pioneer — are oil accumulations, the fact sheet says.

And information relating to wells drilled by Talisman Energy subsidiary, FEX, and by ConocoPhillips, far to the west in an area south of Smith Bay, appears to confirm the dominance of gas in that region, Houseknecht said. Moreover, ConocoPhillips’ dropping of leases close to its well in that area, FEX’s moves to plug and abandon its NPR-A wells, and FEX’s stated intent sell all of its NPR-A leases all suggest disappointment in the search for oil in this region, he said.

Uplift

USGS attributes the apparent prevalence of gas in the Alpine play to the pushing upward of the Jurassic rock strata between 60 million and 15 million years ago, as forces within the Earth’s crust elevated the Brooks Range foothills. Well log data provide evidence for the uplift of the rocks, USGS says.

It appears that the generation of oil and most generation of gas in NPR-A happened by about 90 million years ago, before the uplift occurred, the agency says. Then, with rocks deep underground moving upwards and with rocks being eroded away after reaching the surface, the pressure in the subsurface rocks would drop, causing degassing from oil deposits and an expansion of gas pools. Houseknecht said that there is evidence that some gas may have flushed north from the foothills into northern NPR-A, as the uplift progressed.

Gas expanding and flowing into existing oil reservoirs would have pushed the oil out, either to be lost or to be displaced into poor quality reservoir rocks, USGS thinks.

However, oil saturation in the Brookian strata provides evidence that these strata were shielded from the degassing process, thus giving rise to some optimism about finding oil in Brookian plays.

Disappointing reservoir quality

Recent insights into the reservoir quality of the Alpine play have also proved disappointing, deflating some of the early optimism generated from the findings in the Kuyanak well, Houseknecht said. In particular, the permeability — the capacity of the rock to flow oil — degrades significantly with depth in the Alpine sands.

Mounting evidence for poor reservoir quality in some Brookian sands has also caused USGS to reduce slightly its estimates for recoverable oil from the Brookian, Houseknecht said, citing the disappointing production history from the Brookian reservoir of the Nanuq Alpine satellite and the poor permeability found in Brookian sands penetrated by the two Kokoda wells in NPR-A, as examples.

USGS has also slightly dropped its already low expectations for large NPR-A oil finds in the older and deeper strata of what geologists refer to as the Ellesmerian, the sequence of rocks that include the reservoirs for the Prudhoe Bay field.

A little less gas

Although the USGS scientists have indicated NPR-A as being more gas prone than previously thought, they have actually reduced their estimate of how much gas might exist in the reserve. That is in part because recent drilling has shown inadequate reservoir quality in four of the Beaufortian gas plays used in the 2002 assessment, and in part because of a small drop in the USGS estimates for gas in the Brookian, following the agency’s reevaluation of this rock sequence.

However, the USGS analysis of the southern and southeastern NPR-A, where Anadarko and its partners have been drilling some gas prospects in recent years, remains unchanged, given the lack of publicly available data from the foothills wells.

“These wells drilled in the Brooks Range foothills add no information to indicate the need for updating the 2002 USGS assessment of plays in southern NPRA,” the USGS fact sheet says.

And USGS has only assessed volumes of gas recoverable from conventional gas fields, where free gas would potentially flow into production wells through permeable reservoir rocks. The additional of unconventional gas, such as gas in relatively impermeable “tight gas sands,” could add the Beaufortian plays with poor reservoir quality back into the assessment, thus substantially increasing the estimated gas volumes, Houseknecht said.

USGS has already started to collect data for a future evaluation of unconventional gas resources in northern Alaska, he said.



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The pitfalls of oil and gas assessments

The dramatic drop from 10.5 billion to 896 million barrels in the U.S. Geological Survey’s assessment of undiscovered oil in the National Petroleum Reserve-Alaska underlines a sometimes overlooked aspect of any resource assessment: An assessment is an estimate of how much oil and gas may exist in a region, not a definitive specification of how much oil and gas is actually there.

An assessment applies statistical techniques to whatever relevant information is available about an oil and gas province, to estimate the probabilities of ranges of possible resource volumes, and to calculate average or mean volumes within those ranges. And the results of the statistical analysis entirely depend on the assumptions behind the data used for the statistics. Assumptions typically include theories about how a particular petroleum system operates.

Unfortunately, people sometimes tend to refer to the single, mean volume estimates as if they are specifications of actual oil in place. Instead, they are perhaps better viewed as general indications of how prospective a particular region may be.

In fact, no one will ever know exactly how much undiscovered oil or gas remains in any oil and gas province. But, as more seismic data are acquired and more wells are drilled, more and more information becomes available, so that estimates of undiscovered resources can be refined. Often as new information becomes available, estimates of oil and gas resources rise. Unfortunately, in the case of NPR-A, the new information has pointed to the likelihood of less oil rather than more oil in the reserve.

—Alan Bailey