Vol. 26, No.18 Week of May 02, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Still on the trail

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88 Energy, Pantheon continue analyzing Merlin 1, Talitha A exploration well data

Kay Cashman

Petroleum News

The latest information from the North Slope’s two 2020-21 winter exploration wells points to potential significant oil discoveries in the Nanushuk and Kuparuk formations, and more. 88 Energy and Pantheon Resources, parent oil companies to the two Alaska-based operators of Merlin 1 and Talitha A wells, said they will have to return for another winter season to complete well testing.

Signed by outgoing Managing Director Dave Wall, 88 Energy’s April 27 operations update said that several “additional prospective zones” were encountered in the Nanushuk formation in the Project Peregrine Merlin 1 well that “had previously been unmapped” versus the single additional unmapped zone noted in the company’s previous update.

The April 27 report said these zones “exhibited good shows with potential for pay, subject to results from the testing” it is doing over the next 10 weeks.

“An initial mapping exercise has indicated that these zones may be of similar magnitude in terms of volumetric range as the originally targeted primary zones,” 88 Energy added. “Further work is required to confirm this; however, the early work is encouraging.”

Testing has begun on sidewall cores, cuttings, mud gas and fluid samples from Merlin 1, with results expected over the next 2-10 weeks.

The operations update also reported that Pantheon’s Talitha A well results on leases adjacent to another 88 Energy North Slope acreage block - Project Icewine - have “positive implications” for Icewine.

‘Rough’ timing for results

Sidewall cores, mud gas and fluid samples taken from Merlin 1 are currently undergoing testing to determine oil saturation, oil typing, PVT characteristics, porosity, permeability and rock mechanics the company said. (PVT is shorthand for pressure, volume, temperature, a term used in fluid properties evaluations.)

Cuttings will also go through a Volatiles Analysis Service, or VAS, 88 Energy said, to assist with the interpretation of the results from the well.

The “rough schedule” of testing and results provided by the company and its contractors was as follows:

* Core photography (white and UV light) and geological descriptions, 2-3 weeks.

* Isotope analysis of mud gas, 2-4 weeks.

* VAS on cuttings, 2-4 weeks.

* Results from centrifugal spin out of oil samples from select cores, 3-4 weeks.

* Routine core analysis including saturations from Dean Stark, 4-8 weeks (Dean Stark is a method for the measurement of fluid saturations in a core sample).

*Fluid analysis with oil geochemistry, 5-10 weeks.

These results will then be integrated into a final petrophysical interpretation.

The Merlin 1 well is on 195,000 acres of leased land in the National Petroleum Reserve-Alaska that 88 Energy acquired on Aug. 17 via a takeover of XCD Energy. The acreage, Project Peregrine, contained two Nanushuk prospects, Harrier and Merlin. 88 Energy subsidiary Accumulate Energy Alaska was the operator of this past winter’s drilling program at Merlin 1.

Project Icewine near Talitha

88 Energy said it has been closely monitoring activity “nearby to the northern border of its Project Icewine acreage, where a flow of light oil from the Kuparuk has been reported from the Talitha A well.”

“Additional insights” into the “wettability” of the Kuparuk formation may have positive ramifications for 88 Energy’s previous interpretation of the horizon, the company said, noting that all three wells drilled by 88 Energy at Project Icewine have “encountered good quality reservoir in the Kuparuk formation, with indications of hydrocarbons. These had previously been interpreted as likely gas condensate or residual oil and no mapped targets had been identified, as this was not a play that 88E had been pursuing. The results at Talitha A are highly encouraging regionally for the Kuparuk, including across Project Icewine, and the 88E internal geoscience team is now re-assessing the potential across our acreage.”

88 Energy said it was “also evident that several of the other prospective horizons encountered in Talitha A, where pay has been interpreted by Pantheon, extend into Project Icewine acreage.”

Game changing results

The most recent information from Pantheon was released April 19 and April 20; the last a webinar for investors and analysts.

In the Q & A period at the end of the online presentation, Pantheon execs restated the company’s “ultimate goal” on the North Slope: To prove up their acreage, sell it to a larger oil company and move on.

Bigger companies can afford to take it further, to bring it into production, they said.

Talitha A results to date, they said, give Pantheon an “enormous leverage in proving up” their acreage, which consists of approximately 160,000 nearly contiguous acres on state land with 9-10 year leases (see map in the pdf and print versions of this article). The acreage has four prospects: Talitha, Theta West, Alkaid and Leonis, about which the company has said very little.

Drilling and testing were done by affiliate Great Bear Pantheon.

The results? Talitha A was drilled and expected to be flow tested to prove up 1 billion barrels of recoverable oil in four horizons in a 2,000-foot hydrocarbon column.

Instead Pantheon found five horizons and a 3,700-foot column (confirmed by external experts).

Preserved in Kuparuk

Why did Pantheon elect to make the time remaining in the short winter drilling season all about the Kuparuk and not move up the wellbore to the four other horizons?

Because it was a 340 million-barrel target with “exceptional logs and gas chromatograph readings” and VAS analysis confirming the presence of light oil (42.3 API). And once you move up hole, you can’t return.

Also, the Kuparuk was “an established producer regionally” and a “commercial flow test would lead to resource/reserve.”

Basically, it was “too good a target to let go.”

The Kuparuk reservoir, which was the third most important target in the Talitha A well plan and found to be at the deepest level in the wellbore, was “oil wet,” which is very unusual on the North Slope and elsewhere in the world. That revelation was completely unexpected for Pantheon and its contractors.

The executives explained that water wet “has to do with what fluid is around the sand grains.”

A high-pressure, oil wet reservoir can be “your friend” if you expect it in advance, but not if you don’t, they said.

High pressure, oil wet reservoirs versus the common water wet reservoirs generally give you higher early well rates, and usually produce more later, but they are not your friend if you discover their existence after the fact which is what happened to Pantheon.

And that’s because oil wet reservoirs must be drilled differently to control pressure, which is what the company will do in the future.

Luckily, the other four oil-bearing zones were not oil wet and can be drilled normally, they said.

The company did an open hole test in the Kuparuk, which is where their problems began.

They had a failure of their original test unit, then attempted to run a liner that was unsuccessful, and then sidetracked the well - and that’s when they found they had an over-pressured reservoir.

Nonetheless, the Kuparuk remains a “viable target with material resource potential,” Pantheon officials said.

And they left the suspended Talitha A wellbore in “excellent condition” and “ready for testing next season.”

Even more oil

An enormous volume of high-quality data was generated from the well, including more than 400 VAS samples taken every 10 to 20 feet in the 3,700-foot column, which Pantheon executives said will assist the farmout discussions that they have recommenced to attract a suitable industry partner to best exploit the play.

What’s more, in the 3,700-foot column every reservoir interval was charged with light, mobile oil - 35 to 42 degree API range.

Pantheon management said Talitha A “more than validates 1 billion barrels” and announced a resource reevaluation was coming at the end of May that will upgrade that estimate.

Another perk from analysis to date: The “emergence of Theta West as a giant and new prospect.”

“The discovery of oil in the Basin Floor Fan will become an area of intense focus” in the Theta West prospect, Pantheon's largest target, now considerably de-risked by the Talitha A results. In an April 19 release, the company described it as a “exceptionally large Basin Floor Fan in a better structural location.”

Hence, Pantheon said, it “should attract strong partner interest in drilling this significant prospect.”

The executives giving the presentation also touted the fact that their drilling cost was one-third less than budgeted.

“Estimated future drilling costs” are now “much lower,” they said.

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