Providing coverage of Alaska and northern Canada's oil and gas industry
March 2019

Vol. 24, No.13 Week of March 31, 2019

Explorers magazine preview: Development the focus at Kitchen Lights

One of the more intriguing exploration targets is oil in the deep Jurassic at 20,000-plus feet, making drilling expensive for Furie

Kay Cashman

Petroleum News

With the seventh plan of development for its offshore Kitchen Lights unit not due until October 2019, Furie Operating Alaska has offered only a glimpse of its exploration plans for the gas producing Cook Inlet field beyond that time.

It is certain, however, that the Texas-based independent’s Alaska subsidiary exceeded its exploration commitment in its current development plan by testing a seismic anomaly in the Tyonek for potential gas and drilling an “exploration tail” from its A-4 development well into the Tyonek formation, which is below the Beluga formation, from which natural gas production was to come.

Unfortunately, per a February 2019 Enstar Natural Gas Co. filing with the Regulatory Commission of Alaska regarding Furie’s temporary problem in delivering gas to the Southcentral utility due to freezing water combining with gas to form solid hydrates, it appears the drilling into the Tyonek formation proved disappointing.

Story began with Escopeta

The history of Kitchen Lights unit development dates back to mid-2009 when the state Department of Natural Resources’ Division of Oil and Gas approved formation of the Kitchen Lights unit, combining the Kitchen, Northern Lights and Corsair prospects.

Kitchen Lights unit approval was a culmination of efforts by leaseholders and the state over a number of years to find a way to get drilling done on a series of prospects in Cook Inlet, originally held by different leaseholders but by then consolidated in Escopeta Oil Co.’s hands under the leadership of Danny Davis.

At that time only one of the prospects, Corsair, had seen a drill bit.

Shell, Phillips and ARCO had drilled exploration wells in the Corsair prospect from 1962 to 1993. Four of the wells targeted oil; one targeted gas. The wells had gas shows - some also tested small quantities of oil.

The Northern Lights prospect, south of the North Cook Inlet unit along the anticlinal trend that connects it with the Corsair structure, was targeting a downdip extension of Tyonek Deep oil reservoirs encountered in most deep North Cook Inlet wells.

“The play depends on the Tyonek Deep sands extending some distance south of the North Cook Inlet unit and still remaining in the oil column,” the division said at the time.

Internal changes aside, in 2011 Escopeta was essentially restructured and renamed Furie and came under different leadership.

A major milestone occurred later that year when the company announced the discovery of a large natural gas field during the drilling of the KLU No. 1 well from the Spartan 151 jack-up rig.

Furie’s Alaska leadership changed again in 2018 when Scott Pinsonnault, the company’s chief operating officer, took the helm He has been augmenting Anchorage staff, adding a new vice president of operations and an HSE official, and has contracted with Petrotechnical Resources of Alaska to act as Furie’s technical arm.

Plan for 2019 exploration

According to a state notice approving the company’s latest, and sixth, plan of development in December 2018, Furie completed its planned 2018 Kitchen Lights drilling program.

In 2017 Alaska’s Division of Oil and Gas had issued Furie a notice of default and opportunity to cure, because, the division said, the company had failed to meet drilling and development commitments. But, in the new plan approval the division said that with Furie having complied with its commitments, the state was curing the default.

Completion of the A-1 and A-4 development wells in 2018 would allow the field to produce natural gas from four wells, a contractual requirement for Furie’s gas supply agreement with Enstar. Kitchen Lights’ Julius R. platform has six well slots.

In addition to development and maintenance activities in 2019, Furie would like to drill exploration wells in the Kitchen Lights unit but, to do this requires additional financing and the payment of state tax credits it is owed, the plan of development approval says. (Following fiscal problems resulting from the plunge in oil prices in 2014, the state delayed payment of production tax credits that were owed to companies such as Furie.)

“Exploration activities have been severely constrained by the state’s lack of any meaningful payment for outstanding production tax credits for the last several years - and the absence of any payment for this fiscal year,” the plan of development said.

By February 2019 the company had planned to mature two prospects outside the Corsair block of the unit, and to present the results to the division, together with evidence that reasonable efforts were underway to drill exploration wells in 2019 or 2020. (The unit is divided into four blocks, Corsair, North, Central and Southwest, all offshore in Cook Inlet, with development drilling taking place in the Corsair block.)

Unfortunately, hydrate blockages in the pipeline that delivers gas to shore from Furie’s offshore platform although cleared out, have apparently held up this process, as of March 28, 2019, when Explorers entered the deadline phase.

Drilling deep for oil

One of the more intriguing exploration targets in the Corsair block is drilling for oil in the deep Jurassic strata underlying the Tertiary rocks that host producing oil and gas fields in the Cook Inlet basin.

The proposed well, KLU No.6, would be drilled to a depth of approximately 24,000 feet previous company plans have noted.

But drilling that deep would be costly, part of the dilemma facing Furie.

Missing giants

Petroleum News’ Explorers magazine published in 2004 sheds some light on Furie’s interest in the deep Jurassic. Following are excerpts from that article, titled The search for Cook Inlet’s ‘missing giants.’

The U.S. Department of Energy’s recently published report on Alaska Cook Inlet natural gas hypothesizes that there are missing giants - large oil and natural gas fields that remain to be found in Cook Inlet. …

“After Prudhoe Bay was discovered, the inlet became a stepchild, so the working scenarios in the inlet were strictly a development-type scenario. … Consequently very little exploration work has been done,” Bob Warthen, a consulting geologist working with Escopeta said. Warthen has worked the inlet since 1967. ….

In 1992, Warthen began working all the available data on the inlet, including well information and seismic, and looked at rocks, trying “to get a better understanding of the intricacies of the formations.”

And he developed a basin map, “let’s just call it an idea map, or as Danny (Davis) calls it, our ‘play book’,” he said.

That idea map, in different iterations, identified acreage acquired by Escopeta. …

The work Warthen originated on the inlet was focused on the petroleum system and potential untested habitats and traps for hydrocarbons. In addition to Warthen, geologists Walter Wells and Frank Banar, retired from Mobil, contributed to Escopeta’s “idea map,” hiring on as consultants. …

“We started really focusing on the petroleum system, on the migration path, the generating area. …

“When it leaves the source area, it migrates up dip and fills the deepest traps first,” he said. “As these are filled the oil continues to migrate up dip filling the shallowest traps in turn.”

U.S. Geological Survey had theorized that only 4 percent of the volume of oil that theoretically generated from Cook Inlet source rock has ever been identified.

Some of the oil could have leaked out of the basin, Warthen said. And there has been a theory that the basin tilted and the oil remigrated. If the basin tilted, he said, some traps would be pretty well filled and others are going to be only 15-20 percent filled.

But the known traps are filled between 58 and 65 percent, except Middle Ground Shoal, which Warthen said was filled 80 to 85 percent.

The Escopeta acreage … is “just to the east of Middle Ground Shoal and situated directly overlying the Tertiary/Mesozoic depocenter and we believe the early oil is migrating in an east-west direction,” Warthen said.

Because of the known migration path of oil in the inlet, it is believed that oil migrated into the Kitchen prospect traps, filled those, and subsequently migrated on to Middle Ground Shoal and then into other fields, and “that’s the reason why Middle Ground Shoal is about 80 to 85 percent filled and the rest of these (farther along the migration path) are less (filled),” Warthen said. “We believe that these prospects are among the missing giants postulated by the U.S. Department of Energy,” he said.

“We kept referring to this area here as the area where the oil was ‘cooked’, i.e. being the ‘kitchen’” - hence, the names Kitchen and East Kitchen. …

There is no production from the older Cretaceous and Jurassic in the upper Cook Inlet basin, although surface oil seeps are known from the Jurassic Tuxedni formation. The Tuxedni, said Warthen, has been identified by the USGS as the source rock for all of the oil present in the Hemlock. ….

Escopeta does not attribute any reserves to pre-Tertiary, he said, but considers them a very viable future target.

One of the things the Department of Energy report says is that the inlet has been explored for structural traps but not for stratigraphic traps. “There was no concentrated exploration for stratigraphic-type plays or potential below where they’ve found everything in the Hemlock (formation).” East Kitchen is a structural trap, he said, while Kitchen is a faulted stratigraphic trap first proposed by the USGS.

What Escopeta is doing matches up with the Department of Energy report’s description of two-phase exploration history in mature basins, first exploration for structural traps like the company’s East Kitchen prospect, Davis said, and then a second phase focused on stratigraphic plays like the company’s Kitchen prospect.

“At this point in time Cook Inlet exploration is still in the structural prospect phase,” he said. “Few if any exploration plays have been pursued and drilled solely on stratigraphic trapping concepts. Based on exploration results in basins elsewhere, this implies as much as 50 percent or more of the basin’s reserve potential has not been investigated,” Davis said.

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