An ‘oil museum’

Apache believes Cook Inlet has as much oil left as it has already produced

Eric Lidji

For Petroleum News

For Apache Corp., the Cook Inlet basin might be the Louvre of oil.

“When you go up there it’s kind of like going back into time. It’s like an oil museum, is kind of how I’d describe it,” John Bedingfield, vice president for exploration and new ventures for Apache said at the large Houston-based independent’s annual Investor Day on June 14. “It’s interesting, but things have just been frozen for 40-plus years.”

Apache believes there is as much oil still to be discovered in the Cook Inlet basin as has already been produced in the 55 years since the first discovery well in the region.

To justify that enthusiasm, Bedingfield offered a glimpse of the ambitious three-year 3-D seismic program Apache is conducting in the Cook Inlet. He showed investors a strip of data manipulated just enough to keep competitors from recognizing the location.

“I wish I had taken the scale bar off now,” Bedingfield added as a beguiling aside.

The seismic uncovered eight previously unidentified leads. Extrapolated across its entire leasehold that suggests as many as 650 potential leads, according to the company.

Based on those early results, Apache believes “only a handful of fields have been discovered out here,” Bedingfield said. The field size distribution of the basin “strongly” suggests another 1.3 billion to 1.4 billion barrels of oil yet to be discovered, he said.

Bedingfield didn’t say how much of that oil Apache believes is technically, not to mention economically, recoverable. A June 2011 U.S. Geological Survey assessment estimated 599 million barrels of undiscovered but technically recoverable oil remained in the basin, the mean figure of a possible range of 108 million to 1.359 billion barrels.

The reason operators have not found those fields yet is seismic, he said.

“Every single valid trap that’s been drilled in this basin has hydrocarbons. It does not mean it’s commercial, but every trap has got hydrocarbons,” Bedingfield said, meaning exploration will be “an exercise in trap definition and basically risking investment.”

That’s why the basin is “tailor made” for 3-D seismic.

Until now, much of the 3-D seismic shot in Cook Inlet has been “effectively development scale” and therefore “typically they would be, from a design perspective, insufficient to image some of the structural complexities that we see in the basin.”

In addition to a large volume of plays, Apache expects the seismic work to reveal “complex plays.” Noting the basin contains 100 million barrel fields covering only 800 acres, Bedingfield said the 3-D seismic should show “stacked plays” and “big columns.”

Development in 2013?

The campaign started small in November, just enough to “shake out the operational business and see where our problems were,” he said, and resumed at full steam in March.

Because daylight is one of the limiting factors for seismic collection, Bedingfield said Alaska presents a unique advantage during its epic summer days. Apache expects to be able to collect between 300 and 400 square miles this year, or a third of its program.

A collection of environmental groups recently challenged the seismic program in court, saying the National Marine Fisheries Service shouldn’t have issued an authorization to Apache for the accidental disturbance of marine mammals during offshore program.

Apache plans to drill its first well in the third quarter and possibly a second later in the year. Acknowledging the many “ifs” involved, Bedingfield said Apache could begin development plans for the region as soon as next year, depending on exploration results.

Earlier this year, Apache outlined plans to drill wells on both sides of Cook Inlet, but subsequently decided to drill both on the west side, where it has gathered seismic data.

Major exploration focus

At more than 1 million acres, it is nearly double the next largest play. At 1.3 billion barrels of prospective reserves, it is barely trailing a prospect in the Kenyan deepwater.

It is also the only traditional exploration play in the Apache portfolio. The other exploration plays in the Americas and New Zealand are resource plays, such as shale or other unconventional formations. The Kenya program is targeting a deepwater field.