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Intriguing reserves estimates posted for Kitchen Lights
For more than a decade, the players behind the Kitchen Lights unit have argued the offshore oil and gas prospect may be one of the “hidden giants” of the Cook Inlet basin.
In November 2011, then-operator Escopeta Oil Co. raised eyebrows when it claimed that early drilling at the Kitchen Lights Unit No. 1 well had discovered approximately 46.7 billion cubic feet of gas in place, suggesting 3.5 trillion cubic feet of gas in place for the entire prospect. The current operator, Furie Operating Alaska LLC, offered smaller figures at a legislative hearing in March 2012, saying Kitchen Lights probably holds about 750 bcf, with a potential production rate of up to 30 million cubic feet per day.
Now, Furie’s German parent company is offering new estimates.
In a press release issued earlier this year, Deutsche Oel & Gas AG — the spelling is German — announced the results of a recent assessment by Texas-based Sierra Pine Resources International of “roughly one ninth of its production area in Kitchen Lights unit.” The results? A mid-case scenario of 72.1 million barrels of oil and 543.8 billion cubic feet of gas “classified as ‘probable’ and ‘prospective’ exploitable reserves.”
(Under generally accepted definitions, “probable” indicates a 50 percent likelihood of actual amount meeting the estimate and “prospective” indicates a 10 percent likelihood.)
The first impulse for many upon reading the phrase “roughly one-ninth of the production area” would be to make a back-of-the-envelope calculation to gauge the total: roughly 648.9 million barrels of oil and roughly 4.89 trillion cubic feet of natural gas in place.
Even at 50 percent recovery, it would be a big haul.
Think again But the impulse is flawed, according to geologist David Hite. “While it is tempting to take the resource values cited and multiply by nine to get the structure or unit volumes, to be able to do so would require a reservoir that is uniform in thickness across the prospect, and has uniform or an average porosity across the prospect,” Hite told Petroleum News April 1. “Thus each acre would have the same volume of effective reservoir and gas.”
In Cook Inlet, this is rarely the case, Hite said.
“If you have seen a cross-section correlating several wells across a field in Cook Inlet, you will quickly recognize that a given channel sandstone may or may not be present in a well a few hundred or thousand feet away, let alone across the entire field,” he said.
In its press release, Deutsche never makes the jump from partial field estimate to full-field estimate. Instead, it focuses on the promise of its two exploration wells to date.
“Our first two drills and the estimates derived from them confirm the great potential in the Kitchen Lights unit,” Deutsche Oel & Gas CEO Kay Rieck said in the release. “For example, the figures obtained now by SPRI reflect a mere ninth of our total exploration area in the Cook Inlet basin — in a region where Shell has been active for years and the state of Alaska supports gas and oil exploration with sizeable investment subsidies.”
(Although Shell drilled some of the earliest exploration wells in the Kitchen Lights area, those wells date back to the 1960s. Shell sold its Cook Inlet acreage in 1998 and since returning to the state in 2005 has been focused on the Arctic outer continental shelf.)
Possible? Probable? So how do the estimates of the “first two drills” hold up?
A 2004 U.S. Department of Energy report said Cook Inlet could potentially contain between 13 tcf and 17 tcf of undiscovered conventionally recoverable gas, in addition to the 8.5 tcf of recoverable gas already discovered at that point. The DOE report also estimated that the largest possible undiscovered field in the basin could contain some 3 tcf of original gas in place. A 2011 report from the U.S. Geological Survey estimated that the Cook Inlet basin contained a mean of 13.7 tcf of conventional undiscovered gas resources — Kitchen Lights is conventional — with the largest mean field size expected to be some 2 tcf. Because of that, Hite, who was one of the authors of the 2004 DOE report, told Petroleum News in November 2011 that the initial 3.5 tcf figure was “at the upper end of what I would consider reasonable to expect” although “not impossible.”
Deutsche pulled the release from its website after publishing it, and the company did not respond to an emailed request to its German press office for comment about the figures.
As with any prospect, only the drill bit can answer reserve questions conclusively. Furie recently received Coast Guard certification to move its Spartan 151 jack-up rig to the Kitchen Lights unit. The company could not be reached to discuss its plans for this year.
—Eric Lidji
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