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The Explorers 2020: Alaska spirit and ‘great rocks’ shine through COVID-19
CORRI A. FEIGE Commissioner, Alaska Department of Natural Resources
Alaska has long been a significant presence in North America’s oil industry. Anchored by Prudhoe Bay, the continent’s largest oil field, Alaska’s North Slope producing region recently shipped its 17 billionth barrel of oil through the Trans-Alaska Pipeline System and is still going strong.
While in-fill drilling in the Central North Slope has continued to identify new pools of oil, exploration in the Brookian Sequence on state lands and adjacent National Petroleum Reserve-Alaska lands has been very successful. New discoveries have defined the North Slope’s Brookian play, with the greatest excitement being generated by the Nanushuk Topset trend. With six new discoveries since 2015, the shallow, conventional and laterally extensive reservoirs that compose this formation have stirred a frenzy of exploration on Alaska’s North Slope.
The Nanushuk formation is a shallow deposit comprised of topset structures deposited from west to east as vast amounts of sediment shed from Eastern Russia’s Chukotka region and filled the marine basin. Like other shelf edge deposits, the Nanushuk was deposited in long and thick, but narrow, bodies perpendicular to the direction of basin filling; in this case running along a roughly north-south axis over many, many miles.
Seismic work has revealed attributes and amplitudes that have helped identify which shelf edge sands contain hydrocarbons and have allowed some de-risking of potential exploration targets.
Nanushuk discoveries started in 2015 Exciting discoveries in the Nanushuk formation started in 2015, when innovative explorers Armstrong Oil & Gas Inc. and Repsol E&P USA Inc. made their Pikka discovery east of the Colville Delta. ConocoPhillips followed with its Willow discovery in 2016, and in 2017 Armstrong and Repsol successfully drilled the Horseshoe No. 1, confirming that the Nanushuk topset trend extended roughly 40 miles from Pikka.
In 2018, ConocoPhillips discovered West Willow while following up on information from its Putu and Stony Hill wells to define their Narwhal trend. Armstrong sold its interests in Pikka to newcomer Oil Search (Alaska) LLC which followed up with its successful Mitquq and Stirrup wells this past winter. All told, currently identified resources in the Nanushuk play could amount to approximately 2.15 billion barrels of recoverable oil.
2019-20 exploration Alaska’s 2019-20 exploration season began with great promise, as the industry continued to target the Nanushuk. Oil Search (Alaska) drilled its Mitquq-1 and Stirrup-1 wells, reporting exciting results in the Nanushuk topset trend in each. The Mitquq well was logged and cored, recording 172 feet of oil and 29 feet of gas in the Nanushuk, and a stabilized flow rate of 1,730 barrels of oil per day from a single stimulated zone. Oil was also encountered in the deeper Alpine sand when Oil Search drilled its Stirrup well, reporting an oil column with net pay of 75 feet, with tests showing a stabilized flow rate of 3,250 barrels per day from a single stimulated zone.
ConocoPhillips targeted Nanushuk topsets by drilling its Tinmiaq-18 and Tinmiaq-20 wells at Willow, a project now in the late delineation phase, though they have released no public information. ConocoPhillips also targeted a new Nanushuk sand by drilling Harpoon-2, one of three bores planned for the formation. Again, no results were made public.
COVID-19 By March, however, world events eclipsed the oil industry’s demonstrated interest in the Nanushuk play and Alaska. The concerns over a global COVID-19 pandemic spread north, causing exploration to pause in favor of a deliberate program of minimizing the risk of exposure to workers. Alaska’s state government and oil industry alike responded rapidly to protect the health of industry employees and the public, conserve valuable resources, and safeguard production facilities and infrastructure.
Industry operators began by removing all non-essential personnel from North Slope operations and holding essential workers in place at their job sites, then implementing strict quarantine practices for rotating crews, establishing rigorous social distancing and sanitizing protocols, and taking other steps to maintain the integrity of their operations and facilities.
State government also responded quickly and comprehensively to ensure the safety of its employees and the public while continuing operations. The Department of Natural Resources quickly retooled its workforce to function both in-office and remotely, implemented its own rigorous social distancing and public health protocols, and moved all possible public-service functions online.
Division of Oil and Gas As oil prices plummeted in response to the contraction in global demand, DNR’s Division of Oil and Gas granted several operator requests for extensions on annual lease rental payments and consulted with industry leaders to identify ways to accommodate the uncertainties brought by COVID-19 on a case-by-case basis. The division made it easier to submit well data by email or file-transfer-protocol websites, began offering updates on oil and gas leasing news via online subscription, and continued publishing decisions, news, and other important data online.
Throughout the pandemic event, DNR and other state agencies continued offering full services to the public and industry and maintained regular hours without interruption, while leveraging the opportunity to polish workplans to achieve the optimal balance between commercial considerations, and the challenges of operating in a changed environment.
In one particularly bold step forward, the division, with the assistance of global digital marketing firm EnergyNet, conducted its first-ever fully online areawide oil and gas lease sales, for the Alaska Peninsula and Cook Inlet sale on June 17. The division will build on this promising success by holding this fall’s North Slope, North Slope Foothills and Beaufort Sea areawide sales online, as well.
Outlook great The outlook for oil in Alaska is great. Portions of the Nanushuk topset play are headed toward development. Other Nanushuk discoveries are in the delineation phase. Still other opportunities reside in the portfolios of operators with the proven ability to deliver. And with investment focus shifting away from shale back toward conventional oil development, the industry is again succumbing to Alaska’s lasting allure.
A significant part of that attraction is knowledge that the Nanushuk topset play is just a portion of the Brookian sequence’s potential. There are features basin-ward of the Nanushuk shelf edges in the oil-bearing Torok formation still awaiting evaluation. What’s more, this play type extends eastward to the limits of state land on the central North Slope, and there are even more, younger topsets and basin floor features yet to explore. Armstrong, Oil Search, and Eni are among the proven explorers that have staked out sizeable holdings on the east side of the North Slope, and there is still more acreage available to lease.
It’s also important to remember that the Brookian, while hot, is not the only game in town. There is much more oil yet to be found in the proven, older portions of the section. This potential awaits savvy explorers - both those present in Alaska today, and those yet to arrive.
Despite the lingering challenges of dealing with COVID-19, Alaska oilfields remain stable, fruitful and ripe for much continued production. TAPS throughput has returned to near its forecast volumes of about 500,000 barrels a day. Exploration opportunities are varied and the capacity to deliver new oil to market remains available and ready. Alaska’s land holds the promise of vast hydrocarbon accumulations yet to be discovered. Alaska’s government, laws, fiscal systems, workforce and culture remain strongly supportive of the oil industry.
World oil markets, the oil industry and our communities will recover from the COVID-19 pandemic, adapt to new conditions, and emerge stronger and smarter. As they do, Alaska will be leading the way with one of the hottest shallow, onshore, conventional oil plays available anywhere in the world today.
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