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Heading back to North Slope
Big Nanushuk oil discoveries by Armstrong, Repsol, forces rethink of North Slope potential Kay Cashman Petroleum News
New major discoveries in the Nanushuk formation on Alaska’s North Slope are causing some significant rethinking of the oil potential of the region, as companies move toward development of these finds and assess further exploration opportunities - companies such as the Oil Search/Armstrong Energy/Repsol group; ConocoPhillips; Paul Craig; the 88 Energy consortium; and Malamute Exploration.
Veteran oil and gas investor and developer Paul Craig told Petroleum News, “Some people are preoccupied with ANWR opening … but we (the western North Slope) have the biggest clinothem in the world.”
In Craig’s opinion, “The Lower 48 has shifted from exploration to mining projects in tight oil (commonly referred to as shale oil) when they can get production costs low enough. It doesn’t have exploratory risk, but Bill Armstrong and his partners are still out there doing real exploration. That takes guts and vision. Armstrong was preceded on the North Slope by ARCO’s Robert O. Anderson at the Prudhoe Bay discovery. That’s what made America great in the first place - people who took intelligent risks.”
Petroleum geologist Paul Decker from Alaska’s Division of Oil and Gas talked to Petroleum News in June 2018 about the nature and significance of the new finds. Decker sees the new Nanushuk oil play as opening the possibility of further significant discoveries to the west of the central North Slope. The play may also prove valuable as a geologic paradigm for oil prospects in the newly opened 1002 area of the Arctic National Wildlife Refuge, or ANWR, Decker said
Recent finds include Armstrong’s Pikka/Horseshoe trend in the Nanushuk, Conoco’s Willow discovery in the Nanushuk of the northeastern National Petroleum Reserve-Alaska, or NPR-A, as well as Conoco’s Narwhal trend in the Nanushuk (see July 2018 map with this story in upcoming edition of Inside Alaska Exploration).
Mark Myers said in 2016 of the Armstrong discoveries that “the proven contingent oil reserve number makes the discovery the largest since the Alpine field, the probable contingent reserve number the largest since the Kuparuk field, and the possible contingent number makes the discovery the largest since Prudhoe.”
The company and its latest partner who has taken over as operator, Oil Search, continue to talk to Myers and show him geologic data.
Myers’ career includes commissioner of the Alaska Department of Natural Resources; director of Alaska’s Division of Oil and Gas; director of the U.S. Geological Survey; and earlier senior staff geologist for exploration for ARCO Alaska and Phillips Alaska (before mergers created ConocoPhillips) including survey chief for field programs in the Mackenzie Delta, Cook Inlet and North Slope. He received his doctorate in geology from the University of Alaska Fairbanks, specializing in sedimentology, clastic depositional environments, surface and subsurface sequence analysis and sandstone petrography.
First Nanushuk development After paying $400 million and agreeing to cover most of the exploration and development costs (undisclosed amount), Oil Search in collaboration with Armstrong is first pursuing a 120,000 barrel-per-day project in the Nanushuk in the Pikka unit.
Interests as of February 2018 in the Pikka unit are Oil Search 25.5 percent, Armstrong 19.125 percent, GMT 6.375 percent and Repsol 49 percent. Interests in adjacent exploration areas include Oil Search 25.5 percent, Armstrong 37.125, GMT 12.375 and Repsol 25. Interests in the Horseshoe leases are held by Oil Search 37.5 percent, Armstrong 28.125, GMT 9.375 and Repsol 25.
Oil Search has an option through June 30, 2019, to acquire an even larger interest in the project. For an additional $450 million, the company could acquire Armstrong’s remaining 25.5 percent and partner GMT Exploration’s remaining 37.5 percent interests in the Pikka unit and the Horseshoe block, as well as an additional 25.5 percent interest in adjacent exploration acreage and 37.5 percent in the Hue shale.
During the winter of 2017-18 Conoco encountered commercial quantities of oil in the Putu Nos. 2 and 2A wells, and in the Stony Hill No.1 well, all in that Pikka/Horseshoe trend. Conoco is now planning a standalone development of its Willow discovery, rather than do another step-out from Alpine (Colville River unit facilities) because the large amount of oil expected from Willow would overload the existing facilities.
Brookian oil plays The Nanushuk formation is part of what geologists refer to as the Brookian sequence, the youngest and shallowest of the petroleum bearing rock sequences in Arctic Alaska. The sediments that formed the rocks were deposited down the margin of an ancient marine basin that filled from west to east, with the basin margin itself migrating in that same direction, as the basin filled. The more sandy sediments deposited in shallow water at the top of the margin later formed the Nanushuk formation.
Oil in the Nanushuk is found in what are called stratigraphic traps, hydrocarbon traps created through the disposition and sequence with which the sediments forming the rocks were laid down. The key to understanding the success of the Nanushuk play is the effect of cycles of sea level change and corresponding changes in sediment deposition, as the ancient basin margin migrated east, Decker explained.
During periods of relatively low sea level, rivers dumped large quantities of sand out across to the basin shelf edge; it also appears that the sands were commonly reworked along the shelf edge to form elongated sand bodies, in some cases several miles long, such as is now observed in the Pikka/Horseshoe trend, Decker said.
Distinctive oil traps Then, as sea level rose, submerging the sands, the tops of the sand bodies were scoured off and impervious muddy sediments were deposited on top, to form what would later become hydrocarbon seals. In cross-section, the package of sediments took on a sigmoidal shape, pointed at top and bottom, with the sand at the top pinching out between mud above and below, and with the pointed end of the sand body directed towards the west, towards the source of the sediment pouring into the basin. Oil later accumulated in upper parts of the sand bodies.
Editor’s note: See full story in the upcoming Inside Exploration special pub, expected to be released by Petroleum News in August.
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