Vol 21, No. 20 Week of May 15, 2016
Providing coverage of Alaska and northern Canada's oil and gas industry

The Chukchi enigma

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Region continues to hold major resource potential despite setbacks


Petroleum News

The cancellation of Shell’s Arctic offshore exploration program and the relinquishment of most Chukchi Sea oil and gas leases clearly mark the end of the most recent phase of hydrocarbon exploration in the region. But the rocks under the Chukchi’s frigid waters have not changed: The region continues as a world-class, relatively unexplored petroleum province.

Bureau of Ocean Energy Management geologist Kirk Sherwood told Petroleum News May 9 that the very complexity of the Chukchi geology adds to the likelihood of the region containing substantial petroleum resources. The fact that Shell’s most recent drilling did not find significant oil is probably best viewed as an indication of that complexity, and not as a pointer to a lack of resource potential. It is all a question of the timing of oil generation in oil source rocks, and the underground plumbing whereby the generated oil flows into oil traps.

“All the key things are there and appear to be present in quantity,” Sherwood said. “It’s the right combination that we’re looking for.”

Burger still promising

Despite Shell’s disappointment from its drilling in the Burger prospect, the main target of the company’s recent Chukchi Sea exploration program, BOEM still sees this prospect as a prime exploration play. Shell drilled into one section of the main geologic structure at Burger, but the complete exploration play extends across a substantial area across and on the west side of that structure.

“It’s a wonderful play,” Sherwood said. “It’s still the dominant oil and gas play out there in the Chukchi.”

There is a known major gas field in the main Burger structure, discovered from the original Burger well, drilled by Shell during a 1989 to 1991 exploration program. In its 2015 drilling Shell clearly tried unsuccessfully to find an oil pool under the gas. But there could be oil and gas elsewhere in the structure, and there are several other untested structures in the play, Sherwood said.

Excellent source rocks

The key to optimism over the oil potential of the Chukchi is the known existence of the Shublik formation, one of the major oil source rocks of Arctic Alaska, under much of the Chukchi Sea region. The Klondike well, in particular, also drilled by Shell in that earlier exploration program, encountered a tremendous source rock section. The well penetrated a structure in what ConocoPhillips has referred to as the Devil’s Paw prospect in its recently abandoned Chukchi exploration program.

The Shublik at the Klondike well is an excellent source rock, with almost the characteristics of an oil shale. At this location there are about 500 feet of the top quality source rock and, in total, about 1,000 feet of oil-prone source, Sherwood said.

“That’s a huge plus for the basin,” he said.

Modeling of the history of the source rocks indicates that these rocks have reached temperatures conducive to the formation of oil and gas across much of the region, with oil rather than gas likely to have been formed under the locations of the Burger and Devil’s Paw prospects. In 1995 Sherwood and his colleagues estimated that as much as 3 trillion barrels of oil could have been generated from the offshore oil kitchen.

Oil found from the Klondike well shows affinity with the oil from the Alpine field in the central North Slope. But, curiously, liquid hydrocarbons found in the gas encountered by the original Burger well had an isotope composition matching the pebble shale, another Arctic Alaska source rock. But in the Chukchi Sea region the pebble shale appears to be more gas prone than oil prone, Sherwood said.

Major rock sequences

The Chukchi sea region holds all three of the major petroleum bearing rock sequences that are found onshore Arctic Alaska: the late Devonian through Triassic Ellesmerian sequence; the Jurassic and early Cretaceous Beaufortian rift sequence; and the Cretaceous and Tertiary Brookian sequence.

Despite the fact that perhaps half of the potential Chukchi Sea oil and gas plays that BOEM geoscientists have recognized exist in the Brookian sequence, the prime potential exploration targets remain in the older Ellesmerian and Beaufortian sequences, in major geologic structures that were identified many years ago from 2-D seismic surveys, Sherwood said. The Ellesmerian, the sequence that includes the Ivishak formation, the primary reservoir rock for the giant Prudhoe Bay field, tends to hold relatively thick rock units with reservoir potential. Plays involving the Beaufortian tend to have thinner reservoir targets.

Two top plays

The top two plays for BOEM’s new 2016 Chukchi Sea resource assessment are the Burger play and the Endicott play. Burger is on the east side of a major geologic trough called the Hanna Trough, which runs north to south under the Chukchi. The Endicott play involves huge faulted blocks on the west side of the trough.

As part of its 1989 to 1991 program, Shell drilled the Crackerjack well into one of several very large structures in the Endicott play. The well, which was drilled about 2,000 feet down from the crest of the structure, targeted what had been misidentified from seismic data as a wedge of the Sadlerochit group, the rock group that includes the Ivishak. Instead, the well encountered an older shale that, while containing some oil, was too tight to produce, Sherwood said.

The Klondike well, in what is now referred to as the Devil’s Paw prospect, also on the west side of the Hanna Trough, targeted and found the Ivishak. Unfortunately, however, at the Klondike location the Ivishak, rather than being porous sandstone, consists of organic shale, a part of the source rock sequence rather than an oil reservoir, Sherwood said. On its way to the Ivishak the well did pass through some Beaufortian sands with reservoir potential and indications of oil, but, with these sands not being a target, and with a casing shoe in the well disrupting the well logging for the Beaufortian interval, the findings were inconclusive, Sherwood said.

Brookian prospects

When it comes to the Brookian sequence, there are some large prospects in the extreme northern Chukchi and a prospective fold belt under the southern part of the sea.

A significant risk when it comes to the oil potential in the fold belt relates to uncertainty over when the folds in the rock strata formed in relation to the timing of oil generation from the oil source rocks: The folds in the strata could trap oil but may have formed after the oil had already migrated from the source. On the other hand, geologic faults known to rise into the folds could have acted as conduits for oil to flow into the fold structures. And some massive exposures of Brookian conglomerates and sandstones at bluffs to the east of Point Lisburne point to the possibility of excellent reservoir rocks in the fold belt.

In general, the BOEM scientists recognize the potential for stratigraphic oil traps in the Brookian of the Chukchi Sea region and have attributed oil resources to this trapping option, Sherwood said. However, there is major uncertainty associated with the play. And over much of the Chukchi shelf the Brookian appears to be somewhat sand starved. A stratigraphic trap involves a situation in which the interlaying of impermeable and permeable rock strata creates a situation in which oil becomes trapped.

Under the northern part of the Chukchi Sea there are some ancient incised valleys, later filled with sands of Tertiary age. Although the manner in which the sands lap against the walls of the valleys leads to difficulty in potential reservoir geometries, there are situations where the sand can stack up to create a potential hydrocarbon play, Sherwood said.

The northeastern Chukchi

The extreme northeastern section of the Chukchi contains some particularly intriguing geology, with a massive thickness of ancient basement rocks, predating the Ellesmerian sequence. The basement rock sequence includes about 15,000 feet of carbonate rocks, overlain by 15,000 feet of clastic sediments. Rocks in the Canadian Arctic Islands thought to be analogous to the Chukchi rocks are known to contain oil. And in 1988 Amoco thought that it had detected small oil seeps over a structure in these ancient rocks of the Chukchi region, Sherwood said.

Overall, there are excellent source rocks, good reservoir rocks and giant geologic structures under the Chukchi Sea. The BOEM scientists have identified many prospects with areal extents larger than those of the Prudhoe Bay and Kuparuk River fields on the North Slope.

“It’s rare to find a basin where so much comes together,” Sherwood said.

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BOEM publishes new OCS resource assessment

The Bureau of Ocean Energy Management has published its 2016 assessment of undiscovered oil and gas resources under the U.S. outer continental shelf. The agency reruns its resource assessment every five years, in conjunction with its five-year lease sale program — the last assessment was published in 2011. The 2016 assessment incorporated data available as of Jan. 1, 2014.

Estimates for undiscovered resources for the Alaska outer continental shelf appear to have changed little since the 2011 assessment. The mean estimates of undiscovered, technically recoverable oil are again headed by the Chukchi Sea, with a mean value of 15.38 billion barrels. The mean for the Beaufort Sea is 8.22 billion barrels, while the mean for the federal waters of Cook Inlet is 1.01 billion barrels. The equivalent estimates for natural gas are 76 trillion cubic feet for the Chukchi Sea, 27 tcf for the Beaufort and just over 1 tcf for Cook Inlet. The assessment suggests that, while there may be some oil under the federal waters of the Gulf of Alaska, that region is more prospective for gas, with an estimated undiscovered resource of some 4 tcf.

As usual, the estimates indicate a wide range of uncertainty, with the oil estimate for the Chukchi, for example, ranging from a 95 percent probability of at least 9.3 billion barrels to a 5 percent probability of 23.08 billion barrels.

Estimates of undiscovered resources that may be economically recoverable show numbers that shrink to near zero at current low oil prices and require a significant price rise to increase to substantial numbers. In the Chukchi Sea, a remote region far from the nearest oil and gas infrastructure, an oil price of $60 per barrel results in an estimated recoverable volume of 2.87 billion barrels, while a price of $110 per barrel is needed to push that volume above 10 billion barrels.


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