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Apache eyes new opportunities in underexplored CI basin
Editor’s note: A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story. Coming less than a week before the U.S. Geological Survey announced a new, optimistic view of the quantities of undiscovered oil and gas remaining in Alaska’s Cook Inlet basin, the state’s bumper $11-million areawide Cook Inlet lease sale on June 22 provided some much needed good news in the face of a certain amount of doom and gloom around Alaska declining oil and gas production. (See story on page 1 of last week’s Petroleum News.)
While the underexplored Cook Inlet basin has long been the poor relation to the North Slope when it comes to oil development, many petroleum geologists believe that the Inlet still has much to offer an exploration company willing to take on the unique challenges of its petroleum geology.
Robert Swenson, director of Alaska’s Division of Geological and Geophysical Surveys, told Petroleum News June 28 that he feels particularly excited that Apache Corp., by far the biggest bidder at the sale, is taking such an active interest in the Inlet.
“It’s exciting times,” Swenson said. “We need to get exploration going again in the Cook Inlet.”
Seismic the key Apache has been testing a new wireless nodal seismic technique in the Cook Inlet basin and has found that the technique works in the basin. The company now plans to conduct a program of seismic surveying. New, high-quality seismic data is the key to exploration in new plays in the basin, Swenson said.
“That’s going to be a deal breaker,“ he said.
Prominent among the acreage that Apache bid on were two sizable fairways of tracts on the east side of the Cook Inlet, mostly offshore. The more southerly of these fairways includes some tracts formerly in the Cosmopolitan unit, offshore Anchor Point, and extends north to an area west of Kasilof, south of the City of Kenai. The more northerly offshore fairway lies east of the North Cook Inlet gas field and the Kitchen Lights unit, to the north of the onshore Swanson River field.
A train of en echelon folds in the rock strata pervades these areas on the east side of the Inlet, while the known existence of an oil pool at Cosmopolitan demonstrates that oil has flowed out of the Mesozoic source rocks in the area, Swenson said (oil in the Cook Inlet oil fields is known to have originated from Mesozoic sources). And although earlier phases of Cook Inlet exploration and development have resulted in the drilling of wells in most of the obvious major structures that were clearly visible in 1960s vintage seismic data, that seismic data could not adequately resolve the more subtle structures on the east side of the Inlet that Apache will presumably now seek, using the new, higher resolution seismic that it plans to shoot. There are many of these smaller, difficult-so-see structures between the major structures, Swanson said. There is also the possibility of finding what geologists refer to as stratigraphic traps, formed for example where oil or gas has become trapped in the sand bodies that fill ancient river channels.
These are “the things that the new seismic technology is going to pick out of the data,” Swanson said. “And there’s a lot of playing room between the big, big structures.”
Onshore leases Apache has acquired some onshore leases at the southern end of the Kenai Peninsula, near the North Fork unit where Armstrong Cook Inlet has started producing natural gas from its North Fork gas field. In this region there is a large fold in the rock strata, less tightly deformed than the structures that host the Cook Inlet oil and gas fields and not very well imaged by the available seismic data, Swanson said. Some geologists have in the past pointed to oil potential in some of the deeper rocks in the North Fork area and Armstrong has indicated an interest in seeking oil at North Fork.
The southern end of Apache’s more northerly Cook Inlet fairway lies near where Marathon drilled an exploration well in its Sunrise prospect in 2010, inside the Kenai National Wildlife refuge. Marathon said the well “encountered zones of interest” but released no further results.
In the northerly part of the lease sale area, Apache has picked up some leases around the mouth of the Susitna River, on the north side of the Cook Inlet. This area has both oil and gas potential in geology distinguished by complex structures adjacent the major geologic fault that forms the northern margin of the basin, Swenson said. Again, modern seismic data may prove a key to successful exploration.
“There’s a lot of structure going on up there that’s really hard to image on seismic,” Swenson said.
Known prospects Other bidders at the lease sale appear to have targeted plays around known gas prospects. Petroleum News understands, for example, a lease on the west side of the Cook Inlet picked up by Aurora Exploration is the Wolverine gas prospect near the Chevron- operated Lewis River unit.
A few miles away, Aurora also picked up two North Alexander leases. Danny Davis, president of Escopeta Oil, the company which previously operated those leases but which relinquished the leases in 2010, said in 2008 that he expected the prospect to hold about 100 billion cubic feet of natural gas.
John Martineck, bidding as an individual, made the highest bid of the sale, putting $605,779 on the table for a tract on the Kenai Peninsula near the recent gas discovery by Buccaneer Energy, at Buccaneer’s Kenai Loop prospect, north of the city of Kenai. Buccaneer said that its Kenai Loop No. 1 well had tested at a rate of 10 million cubic feet of gas per day.
Among other bids on small numbers of tracts, Cook Inlet Energy and Marathon picked up leases that appear to add to those companies’ existing lease positions, Cook Inlet Energy on the west side of the Inlet and Marathon on the east side; Nordaq purchased an onshore lease at East Foreland on the Kenai Peninsula, immediately south of an offshore lease that company already owns.
—Alan Bailey
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