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March 2001

Vol. 6, No. 3 Week of March 28, 2001

Rotational model spins out clues to next big Arctic oil find

In search of the next Prudhoe: Shared geology indicates Alaska, Siberia and Canadian Arctic islands once were part of the same landmass

Steve Sutherlin

PNA Managing Editor

It may be that the North Slope has more in common with Siberia than Canada’s Arctic, geologically speaking — in which case, you can blame it on the rotational model.

And the model is more than just an esoteric talking point. It may actually hold the clues to where the next big Arctic oilfield is hidden, Mike Mickey, a paleontologist with Micropaleo Consultants Inc., told PNA in a recent interview.

Mickey, Alan P. Byrnes of the Kansas Geological Survey and Hideyo Haga of Micropaleo Consultants are co-authors of the soon-to-be published study, “Biostratigraphic Evidence for ‘Rotational’ Episodic Time-Transgressive Opening of the Canada Basin.”

The theory holds that the northern shores of Alaska and Siberia once touched Canada’s Arctic islands but, more than 200 million years ago, rotated counterclockwise into their current positions and resulted in formation of the Arctic Ocean basin. Mickey said there may actually be stronger geological links between the Siberian shelf and the North Slope than between the North Slope and Canada, although no drilling has yet been done offshore in the Siberian Arctic.

Mickey said BLM geologist Art Banet has studied geochemical fingerprints of oil and found that oil from fields on Alaska’s North Slope is exactly the same as oil from fields in the Canadian Arctic islands, suggesting oil in the two regions came from the same source.

Prudhoe strike sparks Canadian interest

Just after the discovery of oil at Prudhoe Bay, rotation theorists fanned hopes that Canada’s Arctic might hold a mammoth sister oilfield to Prudhoe Bay, North Slope geologist Gil Mull told PNA recently.

After ARCO and Humble Oil’s Prudhoe Bay No. 1 well struck oil at Prudhoe Bay, Mull was a well site geologist for Humble, which was part of Standard Oil of New Jersey, and a forerunner of Exxon. Mull and other Humble geologists were sent to the Edmonton exploration office of Imperial Oil, a 70 percent-owned subsidiary of Standard, to discuss the Alaska find and its possible implications for the Canadian Arctic. (Today, Exxon holds a 69 percent stake in Imperial. Both are major players in the Mackenzie Delta.)

“The Canadians were interested in the details of the geology in the Prudhoe Bay area,” Mull said. “They wanted to exchange information to see if there was anything similar along the margin of the Canadian Arctic islands.”

Mull said that the rotational theory is a hypothesis originally proposed by Irv Tailleur of the U.S. Geological Survey and endorsed by many, but not all geologists, because the evidence is not conclusive.

Not a lot is known about the geology offshore from the Canadian Arctic islands but Mull said that probably 80 percent to 90 percent of geologists familiar with the Arctic accept the idea that there has been some sort of rotation.

Equal opportunity oil prospects

Mickey said the Arctic islands and Siberia harbor equal opportunities to find oil.

“We know there’s oil in the Arctic islands already but it’s not economic to produce,” he said.

Far northeast Siberia may be the most likely to hold a Barrow or Prudhoe type formation, Mickey said. Because the Siberian-Alaska platform drifted away from the Arctic islands, the islands don’t have a subduction zone, such as the one that created the Colville trough in Alaska where the advancing crustal plate collides and descends under the Brooks Range.

“Alaska has more oil because of the subduction zone; that could be the case in Russia,” Mickey said. Some of Alaska’s oil exists in grabens, trenches that form when blocks of crust move downward between parallel faults near rifted plate margins, he said.

BP targeted grabens at Milne

BP understood grabens at Milne Point, and it increased production by targeting the graben system with its wells, Mickey said.

Proprietary seismic data and previously published studies confirm that the Niakuk No.1, Point McIntyre No. 1 and the Point Thomson wells penetrate grabens, according to a report provided to PNA by Mickey (see sidebar).

Russia is likely to have similar formations and similarities may exist between the National Petroleum Reserve-Alaska and eastern Siberia, Mickey said.

He believes that if oil formations similar to those on the North Slope exist in Siberia, they exist offshore.

The Siberian continental shelf is covered with younger sediments and is much wider than the continental shelf off the coast of Alaska. The positive match of Siberian oil to the Arctic islands awaits oil drilling on the Siberian shelf.

The Russians have little drill data, but there is great scientific interest on the part of the government, Mickey said: “The Russians have more people on these sorts of studies.” He visited Russia and found that paleontologists and geologists were interested in the rotational model.

But the Siberian shelf won’t be drilled any time soon because the Russian government doesn’t have the money or equipment needed, and it is unwilling to allow outsiders into the area for exploration, he said, adding that the Russians have plenty of oil onshore.

Back to the Chukchi

The best current prospect is probably to find and identify grabens in Alaska, Mickey said.

“There is more oil to be found in offshore northern Alaska in different age grabens,” he said.

Mickey predicts rigs will go back to the Chukchi Sea, this time with the right philosophy, to look for grabens and to look for stratigraphic traps holding oil along the ridges, applying lessons learned in Alaska.

Ice and a thick sediment layer, particularly in the Chukchi Sea and Siberia, will make drilling a challenge, Mickey said, but time, technology and higher oil prices will eventually conquer the obstacles.





Phillips to deliver Timor Sea gas to West Coast

Kristen Nelson

Phillips Petroleum Co. wants to see natural gas from the Timor Sea north of Australia fueling markets in Mexico and Southern California by 2005.

Phillips said March 8 that it has signed a letter of intent with El Paso Corp. for a major liquefied natural gas project to deliver some 4.8 million tons a year of LNG to the West Coast.

The letter of intent is for long-term purchase of LNG for Southern California and Baja from an LNG plant to be built by Phillips near Darwin, Australia, with sales beginning in 2005.

Phillips said it expects a definitive agreement will be signed by mid-year.

“With future gas sales to this LNG project — and to domestic customers in Australia’s Northern Territory and elsewhere — the Timor Sea will become a new center of production for Phillips, commercializing significant quantities of gas and condensate reserves,” said Bill Parker, Phillips executive vice president for worldwide production and operations.

The LNG will be re-gasified in North America and sold as approximately 680 million cubic feet per day of natural gas for electric power and commercial and industrial development in Mexico’s Baja California peninsula. Phillips said the LNG would also provide a new source of natural gas supplies for Southern California markets.

El Paso would be responsible for marketing the natural gas and said it is talking to customers about long-term sales arrangements for the gas, which it believes would provide an important new source of gas for growing California markets and for emerging markets in Mexico’s Baja California.

El Paso said this project is part of its goal to become a leading LNG merchant. It has terminal capacity at the Elba Island and Cove Point LNG terminals, which are being reactivated, and is importing LNG at the Lake Charles terminal.

Interest up in Timor Sea

Phillips discovered gas in the Timor Sea in 1995 at the Bayu gas and gas condensate field. Bayu and the adjoining Undan field were unitized in 1997; nine successful appraisal wells have been drilled at Bayu-Undan, which Phillips operates and in which it has a 58.5 percent interest.

Phillips said Feb. 22 that it was acquiring an additional interest in the Greater Sunrise fields in the Timor Sea operated by Woodside Energy Ltd., bringing its total interest to 30 percent, and has also agreed to purchase a 25 percent interest in Shell Development (Australia)’s Timor Sea Evans Shoal gas field.

Phillips and Woodside and Shell have agreed to cooperative development of Timor Sea gas resources in the Bayu-Undan and Greater Sunrise fields. Phillips said Feb. 22 that agreements covering supply of gas and marketing of LNG, pipeline infrastructure and field optimization, are expected to be finalized by mid-year.

Bayu-Undan contains an estimated 400 million barrels of condensate and 3.4 gross trillion cubic feet of natural gas. The Sunrise fields contain an estimated 321 million barrels of condensate and 9.16 trillion cubic feet of natural gas. The Shell-operated Evans Shoal field contains an estimated 6.6 gross trillion cubic feet of dry gas without CO2.

LNG facilities for project

Phillips spokeswoman Kristi DesJarlais told PNA that engineering design studies will begin immediately for the LNG plant near Darwin. The total capital outlay will be $3-$3.5 billion for the Darwin LNG plant, LNG ships and the North America receiving terminal. The LNG plant will be owned one-third each by Phillips, Shell and Woodside. Phillips will be the plant operator. The ships and receiving plants will be owned jointly by Phillips and El Paso.

Phillips said it is working with El Paso to develop LNG shipping and a new LNG receiving terminal on the West Coast and that the companies are working with Mexican and U.S. authorities to establish the site of the new terminal and acquire regulatory permits. The terminal would begin providing service in 2005. Existing pipelines will be used to move the re-gasified LNG to market.

The Darwin LNG facility would be built using Phillips’ Optimized Cascade LNG process — used at Phillips’ LNG plant in Kenai and licensed to other users worldwide. The facility will be supplied from the Greater Sunrise fields in the Timor Sea, which contain gas reserves of approximately 9 trillion cubic feet.

Gas production from the Woodside-operated Greater Sunrise could begin as early as mid-2006. Gas required to satisfy Greater Sunrise deliveries prior to this time will be made available from Phillips-owned equity reserves in Bayu-Undan and possibly other participants in the Bayu-Undan project.

Phillips is developing Bayu-Undan in two phases: A $1.4 billion gas-recycle project, for which engineering design work is ongoing, to be followed by a gas project which will require a 185-mile subsea pipeline to Darwin.

Woodside, which began exploring offshore Australia in the 1960s, has been providing North West Shelf natural gas to customers in Western Australia since 1984, and has been exporting LNG to Japan since 1989. Woodside began producing from the Timor Sea in 1999.


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