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Great Bear planning more exploration Deciding on testing of Alkaid well; going to conduct a fifth 3-D seismic survey in leased acreage south of Prudhoe and Kuparuk ALAN BAILEY Petroleum News
Great Bear Petroleum Operating LLC is currently evaluating opportunities to test the Alkaid No. 1 exploration well that it drilled on the North Slope last winter, Patrick Galvin, Great Bear executive vice president, told the Alaska Oil and Gas Congress on Sept. 23. And the company plans to shoot a fifth 3-D seismic survey in its North Slope acreage in the coming winter, thus establishing an extremely comprehensive 3-D dataset across the company’s leases, Galvin said.
Great Bear’s current plan of operations envisages the drilling of three exploration wells, including the Alkaid well, all in the same general area to the west of the Dalton Highway, south of Prudhoe Bay. But because of operational difficulties, the company was only able to drill one well, the Alkaid well, during the past winter, and had run out of time to conduct testing after completing the well, Galvin said. In particular, the flooding of the Dalton Highway during the winter created logistical problems for the drilling operation, especially given the highway closure between the drilling site and Deadhorse, the source of supplies for field operations, he said.
Evolving strategy Reflecting on what Great Bear has achieved since purchasing more than 500,000 acres in state leases in 2010 across a broad swath of the central North Slope, Galvin said that the company’s exploration strategy has evolved as it has discovered more about its lease holdings.
Initially the company had embarked on a program designed to exploit the possibility of extracting oil directly from the North Slope’s prolific oil source rocks, using techniques such as horizontal drilling and hydraulic fracturing, along the lines of shale oil development that has been carried out with great success in the Lower 48. The three primary source rock intervals on the North Slope are stacked one above the other, thus opening up the possibility of investigating all three at the same location, Galvin said.
In the summer and fall of 2012 Great Bear drilled two wells off the Dalton Highway, having identified six potential well locations with year-round access near the highway. The company acquired about 650 linear feet of rock core from the source rocks penetrated by these wells, Galvin said.
The company also embarked on a major program of 3-D seismic surveying across its acreage, for the identification of optimum places to drill. But that seismic enabled the company to discover conventional drilling prospects within the major rock intervals of the North Slope petroleum system, Galvin said. And, as thinking about so-called conventional and unconventional oil development has evolved in the oil industry, Great Bear’s view of its exploration opportunities has morphed into seeing more of a spectrum of opportunities, ranging from pure source rock development at one extreme to, on the other hand, the development of traditional oil reservoirs.
Oil migration Great Bear purchased leases in an area where the source rocks are believed to have generated oil, with that oil understood to have migrated north into the reservoir rocks of oil fields such as Prudhoe Bay and Kuparuk River. Under Great Bear’s exploration concept, much of the generated oil would have remained in the oil source rocks, while some of the oil would have become trapped in various underground rock structures in the process of migrating north. Great Bear is using its 3-D seismic data to find those potential trapping structures, thus enabling the company to drill in search of oil in the structures as well as seeking oil left in the source rock intervals, Galvin explained.
In addition to conducting seismic surveys, Great Bear has carried out LIDAR - light detection and ranging - surveys in its acreage, to develop detailed topographic maps for the planning of surface developments such as the construction of ice roads. The three exploration wells in Great Bear’s current operations plan all require winter drilling, with site access by ice road.
Exploration challenges Reflecting on the challenges facing oil explorers working on the North Slope, Galvin commented on the general shortage of data in areas outside the existing oil fields. For example, no previous wells had penetrated the Shublik, a key oil source rock in Great Bear’s exploration acreage, he said. The annual winter exploration season, which depends on the freezing of the ground and on the snow cover, is short and unpredictable in length - it is difficult to predict when drilling can start and how many wells can be drilled in a season. There can also be significant permitting challenges - Great Bear’s relatively simple 2015 winter drilling operation required 19 permits and involved 16 different government agency contacts, Galvin said.
And, especially given a lack of competition within the industry service sector and a tendency to execute one-off exploration drilling programs, the costs of conducting exploration are high.
Great Bear plans to address these challenges by completing the 3-D seismic coverage across the company’s exploration acreage, expanding its inventory of potential high-impact prospects and then screening and prioritizing the prospects, Galvin said. The company anticipates executing a multi-well exploration program that will achieve economic efficiency by securing a large amount of work over multiple years, he said. Ultimately there could be a number of development projects within the Great Bear acreage, he said.
State can help Given the difficult exploration environment, the state can act as a catalyst for accelerating exploration and facilitating moves towards the execution of development projects, Galvin said. With a need for more well and exploration data, the state’s exploration incentive program has proved to be of significant assistance in easing the amount of capital needed at the high-risk end of the exploration and development life cycle. Commenting that the value of state participation in that high-risk component of the investment cycle cannot be overstated, especially given the challenges of new exploration in an area with little existing data and no support infrastructure, Galvin said that Great Bear is particularly anxious that the state should extend the credit program that is currently set to expire in June 2016.
The state can also improve the coordination of the permitting process, eliminating some redundancy in the process, Galvin said. And the state needs to engage with the U.S. Army Corps of Engineers, to try to establish a reasonable approach to wetlands dredge and fill permitting, a permitting process that can trigger the need for an environmental impact statement and, hence, lead to significant development timescale uncertainty, he said.
With the exploration season on the North Slope tending to shorten over the years, additional support infrastructure will be critical in the future, Galvin said. Appropriate infrastructure in key exploration areas could minimize the need to construct ice roads over long distances and would help reduce the uncertainty over the opening dates for exploration seasons, he said.
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