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THE EXPLORERS 2006 - Talisman’s FEX shooting for five wells Company continues to build NPR-A onshore, offshore acreage position; execs looking for ‘big prize’ in Alaska Kay Cashman Petroleum News
Six companies will drill at least 13 oil exploration wells across northern Alaska in the winter drilling season of 2006-07 and FEX L.P. is one of them.
FEX, which first entered Alaska in 2003 as Fortuna Exploration, is planning to drill as many as five wells in the Northwest Planning Area of the National Petroleum Reserve-Alaska.
In early October 2006 FEX, which is a subsidiary of Calgary-based Talisman Energy, filed for an Alaska Coastal Management Program consistency review of its NPR-A exploration program with the Office of Project Management and Permitting.
FEX told OPMP that its five-well program was a continuation of the previous winter’s exploration program on its leases south of Cape Simpson and west of the Ikpikpuk River in NW NPR-A.
In the winter of 2005-06 the company drilled the Aklaq 2 well and a sidetrack, but due to weather problems had to leave testing it to the winter of 2006-07.
This winter’s drilling will be done by two rigs — Nabors 14E rig currently stacked at a Cape Simpson staging area and the new Arctic Wolf rig, owned by the Akita-Doyon joint venture, which will be brought in from the other side of the Colville River via rolligon as soon as conditions allow.
FEX said its winter exploration program would involve building up to five ice pads and 81 miles of ice road, as well as one 5,000-foot ice runway and several smaller airstrips.
The company has three rolligons under contract for its NPR-A exploration program.
The company said it “placed 50 thermistors along the travel route between Cape Simpson and Aklaqyaaq No. 1 to assess ground conditions in anticipation of obtaining U.S. Bureau of Land Management authorization for early tundra access,” which it defines as December.
Although FEX has nine well locations staked, it said in its plan of operations that “probable well sites will be at Aklaqyaaq No. 1 and Aklaq Nos. 3, 6, and 7” and that “two to three reservoir penetrations may be drilled at each of the locations during the 2006-07 drilling season. Well evaluations (testing) and formation interpretation testing may be performed at the well locations.”
Aggressive bidder at sales In addition to its exploration activities in Alaska, FEX has been an aggressive bidder in recent lease sales.
More than 75 percent ($10 million) of the high bids at BLM’s Sept. 27, 2006, NW NPR-A lease sale came from FEX and 60/40 bidding partner Petro-Canada.
The two companies were just as aggressive in the first NW NPR-A lease sale in 2004 when, bidding separately, they collectively bid $40 million — $26.5 million of which came from FEX.
In the 2006 sale the partners took some 562,000 acres, paying an average of almost $18.50 an acre, and winning all 48 tracts on which they bid.
FEX/Petro-Canada also had the high bid, at $201.03 an acre for tract 272, a total of $2,280,100 for that tract, adjacent to a tract for which FEX paid $5.09 an acre in the 2004 NW NPR-A sale.
The companies’ 2006 bids were on tracts south and west of a large block on the northeastern edge of the sale area in which both companies took acreage in the 2004 sale. The new tract acreage extends as far west as Atqasuk. In the north the companies filled in north and east of 2004 tracts.
Richard Garrard, geoscience manager for FEX in Alaska, told Petroleum News after the sale that the company shot proprietary 3-D seismic in the sale area in the winter of 2006-07.
FEX has some 100 percent acreage in NW NPR-A, some of which has been cross-assigned to Petro-Canada, Garrard said.
Active in Beaufort offshore NPR-A In addition to its growing acreage position in NPR-A, FEX began picking up leases offshore in the Beaufort Sea in 2004, dominating a State of Alaska Beaufort Sea lease sale in which it took 19 leases in Harrison Bay offshore NPR-A to the east of Smith Bay.
And in March 2006 the company won another 25 leases at a state Beaufort Sea sale in Smith Bay itself.
In addition to complementing the company’s land position south of Cape Simpson, FEX’s new leases in Smith Bay could line up with a possible exploration fairway across the northern part of NPR-A to the company’s existing leases on the west side of Harrison Bay, Paul Decker from Alaska’s Division of Oil and Gas said following the 2006 lease sale.
Decker sees some particularly interesting exploration possibilities in Smith Bay.
“It’s a nice crestal position on the Barrow Arch, with shallow water and logistically connected to their onshore exploration program in NPR-A,” he said.
People have long known about four oil seeps on the coast at Cape Simpson, just west of Smith Bay. It’s a natural oil trap where Brookian topset sands come up against shale in an ancient incised canyon, Decker said. The oil from the Cape Simpson seeps likely originates from an “oil kitchen” to the north, in a lower Cretaceous source rock system known as the HRZ, he said.
“That would put this (Smith Bay) area squarely in between the kitchen and the seeps,” Decker said. “So you probably have a pretty good plumbing story to be able to charge this with nice light oil.”
In addition to a possible Brookian play, there are potential Ellesmerian plays below the lower Cretaceous unconformity (ancient erosion has probably scoured out the Beaufortian middle and upper Jurassic sands that are found in nearby onshore wells). The East Simpson No. 1 and No. 2 wells on the coast near Smith Bay found some interesting Sadlerochit and Endicott sands below the lower Cretaceous unconformity, Decker said.
First onshore state acreage In the Oct. 25, 2006, North Slope lease sale FEX took its first onshore state acreage in northern Alaska — a block of seven leases west of the trans-Alaska oil pipeline including the old Atlantic Richfield Susie 1 well.
Since it arrived in Alaska, Talisman executives have expressed expectations of finding substantial volumes of oil on its acreage onshore and offshore NPR-A.
Talisman’s Executive Vice President of Exploration John ‘t Hart said in 2006 that, because of the remoteness of Alaska, “we are going for a big prize, bigger than we have ever drilled.”
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