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Great Bear advances drilling plans Selects drill sites in pre-disturbed, active industrial area along highway, pipeline corridor to minimize environmental impact Kay Cashman Petroleum News
On Sept. 14, Great Bear Petroleum filed a lease plan of operations with the Alaska Department of Natural Resources’ Division of Oil and Gas, outlining the 2011-12 exploration and evaluation program for its North Slope unconventional resource play, the first of its kind in Alaska.
The independent’s six drill sites are along a 15-mile long stretch following the Dalton Highway and the trans-Alaska oil pipeline, chosen because the corridor is a previously disturbed, active industrial area with existing access roads and gravel sites, thus minimizing the environmental impact of drilling into the underlying source rocks, mostly shale, that generated the oil and gas in northern Alaska, including the giant Prudhoe Bay and Kuparuk River fields.
New gravel would be needed for “transitional driveways between the existing gravel roads/pads.”
Great Bear is proposing to extensively use rig mats to protect any undisturbed lands.
The first wells will be vertical holes down to 9,000 to 12,000 feet for coring and logging, which will be followed, or intermixed, with drilling “side track wells or laterals” from those vertical holes to perform short-term production flow tests after hydraulic fracturing.
The company will rotate through the drill sites, likely drilling no more than four vertical wells with one lateral each, taking core samples from the vertical wells for lab analysis, and then returning to each of those wells to drill laterals and conduct hydraulic fracturing and production testing. The order in which drilling and production testing will take place is dependent on the analysis of the cores taken from the wells — analysis that will begin immediately after the first vertical is drilled.
‘Proof of concept’ in one year The goal of Great Bear’s 2011-12 program is to achieve “proof of concept” — i.e. to demonstrate that the oil and natural gas liquids in its leases are capable of commercial production, a process that is less about proving the oil is in the source rocks and more about coming up with a well design that can produce commercial quantities of oil.
There are about 24 authorizations and permits the company had to have to first execute its summer fieldwork program, which has been successfully completed, and then to proceed with source rock drilling and evaluation. Great Bear has filed for 13 of those permits and authorizations and received six, with the balance set to be filed on or before Oct. 1.
Pad construction and gravel repair and conditioning work for the first drill pad is expected to start in early to mid-November, with drilling to begin in mid-to-late November, and continue on and off for about 12 months.
Payoff huge for state Year-round access is standard in all source rock operations and especially critical for Great Bear, its plan of operations says.
Typical Alaska, winter-only, exploration access involving ice roads and pads will stretch the exploration and evaluation phase to three to four years, the company says. That will delay development and getting oil in the pipeline, as well as burn up 40 percent or more of the seven-year lease terms. (Half of Great Bear’s leases have seven-year terms; the others, 10 year terms.)
Great Bear says achieving proof of concept in one year and thus being able to proceed to field development is important for project economics and for a state with declining oil production because it can potentially mean hundreds of thousands of barrels of new, high-quality oil (petroleum is cleanest at its source) in the trans-Alaska pipeline and thousands of new jobs.
According to a North Dakota University study Bakken source rock development created 13,000 new jobs in North Dakota between 2005 and 2009. That state has one world class source rock: Alaska has three, stacked one on top the other. Great Bear is looking to eventually develop all of them in its swath of 499,423 acres of state land south of Prudhoe Bay and Kuparuk.
Extracting oil from just two of three stacked shale source rocks in Great Bear’s 45-year measured drill-out program, can potentially produce 200,000 barrels per day by 2020; 350,000 bpd by 2035; 450,000 bpd by 2041; peaking at 600,000 bpd in 2056, with a sustained long-term production of 450,000 barrels per day out as far as 2074.
Named after the stars From north to south, the drill sites company and state regulatory officials identified in the summer fieldwork program are Alcor No. 1, Merak No. 1, Mizar No. 1, Megrez No. 1, Dubhe No. 1 and Alioth No. 1, named after stars within the URSA Major Constellation, i.e. The Great Bear. (See map from Great Bear’s Sept. 14 filing with this story.)
In its plan of operations the company says it will be using a 1,500 to 2,000 horsepower rig that can be broken down into pieces and trucked to and from each location. The name and specifications of the rig will be given to DNR and the state Department of Environmental Conservation “prior to activity,” Great Bear says in its Sept. 14 filing.
Company President Ed Duncan told Petroleum News in a Sept. 22 email that Great Bear will not be using Doyon’s Arctic Fox rig, as previously reported by PN. The rig was considered “early on,” but “dropped … from contention in July,” he says.
Resource plays are different Proving a resource play, Great Bear says, is different than proving a conventional play.
“One exploratory well is generally all that is needed to prove a reservoir or pool exists so that development of a field can begin. A north-south transect is required across Great Bear’s leases to test the targeted source rocks, calibrate the gas/oil ratio and determine whether production can be established at commercial rates,” the company says in its plan of operations.
Great Bear also says its exploration and evaluation program will not pose the same risk as conventional drilling because liquids production from source rocks requires stimulation to extract oil — specifically, the use of fracing and pumping.
The Alaska Oil and Gas Conservation Commission agrees. The default oil spill response planning standard of 5,500 barrels a day for conventional wells in an uncontrolled scenario was reduced by AOGCC for Great Bear’s 2011-12 program to 500 barrels a day because, in AOGCC’s words, “the evidence shows with reasonable certainty” that the standard rate for Great Bear’s wells targeting the HRZ, Lower Kingak and the Shublik source rocks would produce a rate less than 500 barrels of oil per day for a vertical un-fractured well and less than 1,000 bopd for a vertical fractured well.
Great Bear has the support of Gov. Sean’s Parnell administration, which is fully behind the increased oil production that source rock development has brought to North Dakota, Texas and other states.
The company’s contractors include general SolstenXP; ASRC Energy Services; Schlumberger; Jon Iversen , attorney with Stoel Rives and former director of the tax division within the Alaska Department of Revenue; and Pat Galvin, attorney with K&L Gates and former commissioner of Revenue.
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