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EXPLORERS USA 2005: MMS reappraises Chukchi Sea Burger well May be largest find on Alaska OCS Petroleum News
With gas prices at major U.S. hubs above $7 per thousand cubic feet and the prospect of a North Slope gas line, the U.S. Minerals Management Service is encouraging people to look again at a major gas discovery in the Burger structure in the Chukchi Sea.
The Burger well encountered the gas during a Chukchi exploration program headed by Shell between 1989 and 1991. At the time of the discovery people were searching for oil rather than gas and paid little attention to the gas find.
An MMS re-appraisal of the Burger prospect released in early 2005 has lifted the most-likely recoverable reserves from an original estimate of 5 trillion cubic feet of conventionally recoverable gas to a new estimate of 14 tcf. The estimate indicates a possible range from 8 tcf to 27 tcf. The corresponding estimates for condensate are a most-likely volume of 724 million barrels and a range from 371 million to 1.404 billion barrels.
“We did (the assessment) pretty much over from scratch,” Kirk Sherwood, an MMS geologist, told Petroleum News Feb. 3, 2005. “We went ahead and allowed for a more robust or complete filling in the prospect … and that generated a lot of additional resources.” Higher oil and gas prices MMS prepared this new appraisal of Burger in 2001 but the agency has only just released its report on the results to the public.
In 2001 companies were making development decisions based on $12 to $18 oil prices, said Larry Cooke, a supervisory geologist with MMS. We’re putting the report out now because people are looking at higher sustained oil and gas prices and we’re seeing a situation where this type of prospect can become economic, Cooke said.
“We have started getting … enquiries about Chukchi from industry,” Cooke added.
And with a known hydrocarbon accumulation that is probably very large, Burger provides a unique opportunity to assess a major prospect in the Chukchi Sea.
“We selected this as a test object because we knew something about it — we could estimate some kind of discovered resource figure,” Sherwood said. Similar to Kuparuk The Burger structure consists of a dome 25 miles in diameter, sitting on a structural ridge that branches southwest across the center of the Chukchi shelf, from a point on the Barrow Arch about 50 miles northwest of Barrow. The Cretaceous sandstone reservoir at Burger is part of what geologists call the rift or Beaufortian sequence — this sequence is associated with the pulling apart of the Earth’s crust that occurred when the Canada Basin of the Arctic Ocean formed.
The Burger sandstone forms an exact analogy to similar rift sequence sandstones that form the reservoirs at the Kuparuk River field in the central North Slope, Sherwood said. And the prolific Pebble Shale hydrocarbon source rock that also occurs on the North Slope caps the Burger reservoir.
At the Burger well the sandstone reservoir is just over 100 feet thick and seismic data indicates that the reservoir may extend at a similar thickness through much of the dome. However, seismic interpretations of the Burger structure show a threefold increase in thickness of the rift sequence on the west side of the structure, where geologists believe that faulting during sedimentation has caused thickening of the sedimentary sequence. If the reservoir sandstone has increased in thickness in proportion to the rest of the sequence, you could find 300 feet to 400 feet of reservoir rock on the west side of the structure, Sherwood said.
Sherwood compared this possibility to the thickening of the Kuparuk sands in sunken fault blocks at Point McIntyre.
“So we draw upon that analogue to infer the potential for thick sands on the west side of the (Burger) structure,” Sherwood said.
The Burger well drilled through a flank of the Burger structure, probably at a point where the sandstone lies completely within the gas column. Water probably lies under the gas somewhere below the depth at which the well penetrated the base of the sandstone. The complete Burger structure is 1,221 feet high, with a crest at -5,139 feet subsea and a spill point at -6,360 subsea. Subsea completions To assess the economics of developing the Burger prospect MMS had to consider how best to extract gas from a wide area in a remote offshore location.
“What we have here is basically … a thin reservoir spread over a large area and what ultimately controls your economic success is concentration of resources per well site,” Sherwood said.
So MMS petroleum geologist Jim Craig proposed the use of subsea well completions hooked into a single concrete platform to lower the cost, Cooke said.
The MMS development scenario also assumes an 80-mile subsea gas pipeline from the platform to land and a 300-mile overland pipeline direct to a compressor station at the northern end of a gas line from the North Slope.
Craig compared Burger with several offshore gas fields in various parts of the world and it turns out Burger is probably and could cost less per thousand cubic feet of gas than several North Sea fields.
The Norwegian Asgard field provides a good analogue for Burger, Cooke said. Viable at $5 per mcf Plugging the estimated development costs and gas reserves into a standard economic model resulted in a breakeven point for the development at a natural gas price of about $5 per 1,000 cubic feet of gas delivered to the U.S. Midwest.
“The standard NPV (net present value) model … that allows costs and gas prices to inflate at the same rate yielded a $5 (per thousand cubic feet) year 2000 price paid in Chicago to basically break even,” Sherwood said.
And the economic model predicted an economic field life of about 22 years, with 11 tcf of economically recoverable gas and 600 million barrels of economically recoverable condensate.
The MMS economic model also shows how different economic assumptions such as gas price inflation, general price inflation and discount rates affect the threshold gas price for a viable development project.
Sherwood said Burger may be the largest discovery on the outer continental shelf and could rank alongside some of the larger hydrocarbon accumulations on the North Slope.
“Even in our minimum case now — 7 tcf — that would be up there with Point Thomson,” Sherwood said. “At the mid case on a barrels-of-oil equivalent it’s about 3 billion barrels … that’s a Kuparuk size.”
The MMS report is available online at http://www.mms.gov/alaska/re/BurgerResources/Burger Fact Sheet.pdf
—This story is an abbreviated version of an article that appeared in the Feb. 20 edition of Petroleum News
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