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Great Bear evaluating eight prospects Continues to look for conventional oil opportunities south of Prudhoe Bay as a route to the viable development of source rock oil ALAN BAILEY Petroleum News
Following some intense work analyzing the results of 3-D seismic surveys in its acreage south of Prudhoe Bay, Great Bear Petroleum Operating LLC’s geoscience team has identified eight conventional oil prospects, Pat Galvin, the company’s chief commercial officer and general counsel, told the Alaska Oil and Gas Congress on Sept. 21. Although most of those prospects are in the Brookian sequence, one prospect, the Avenger, is in the Kuparuk, Galvin said.
And, because those prospects are stacked on top of each other, all can be probed with just two wells. Moreover, most of the prospects tie into oil shows that were observed in the nearby Pipeline State No. 1 well, he said.
The Brookian is a relatively young and shallow rock sequence under the North Slope, while the Kuparuk, the rock unit containing the reservoir sands for the Kuparuk River field, is in the deeper and older Beaufortian sequence.
Evolving focus Great Bear, when it first entered the Alaska oil scene in 2010, focused on testing the possibility of developing oil from the North Slope’s prolific source rocks using the techniques developed for unconventional shale oil development in the Lower 48. And in 2012 the company drilled two stratigraphic test wells near the Dalton Highway to evaluate the source rock oil concept. The company also embarked on a multi-year program of 3-D seismic surveying across its leases.
But around 2013 the company started identifying conventional oil prospects from its seismic data, while also realizing that developing a conventional play first could open the way to economic viability for an unconventional development, Galvin said.
“What we recognized was that we really needed to find a more conventional play first and have that be the backstop to justify the infrastructure investment,” Galvin said. “Once the infrastructure is in place, the unconventional play would be economic.”
In the winter of 2015 the company drilled the Alkaid No. 1 well to test a conventional target, using an ice pad and an ice road four miles west of the Dalton Highway. Unfortunately, however, the flooding of the Dalton Highway that winter following an overflow of the Sag River cut the drilling program short, preventing Great Bear from testing the well.
“We’re looking for an opportunity to go back and test it, but we’re encouraged by what we found there,” Galvin said. Galvin did not comment on any upcoming drilling plans that his company may have.
Large lease position Great Bear operates a broad swath of about 500,000 acres of state leases south of the Prudhoe Bay and Kuparuk River fields, and stretching east of the Dalton Highway and Sag River. Oil services company Halliburton has a 25 percent working interest in a portion of the leases, while Australian company Otto Energy has working interests in leases across the entire Great Bear acreage, other than in the central blocks where Great Bear has already drilled, Galvin said.
Following five years of seismic surveying, Great Bear now has seismic coverage of more than 1,000 square miles of its acreage, Galvin said. From 2012 to 2015 the seismic surveying focused on the central part of the acreage, while last winter the company had the far western and far eastern sides of its acreage covered.
Asked about how quickly Great Bear could move to oil production if the company locates a viable oil resource, Galvin commented that the timing would depend on the location of the discovery. The company has six well locations staked out close to the Dalton Highway, including the two wells drilled in 2012. Oil could be trucked from those locations, thus simplifying development until a suitable pipeline is built, Galvin said. On the other hand, a more remote location would involve a longer development process.
North Slope challenges Galvin also reflected on the challenges that Great Bear faces in conducting its North Slope program. The primary challenge, he said, is the chaotic state fiscal situation in Alaska. In particular, Gov. Bill Walker’s veto of tax credit payments has created uncertainty and “a devastating environment in which to operate,” he said. If the state offers tax credits then it needs to pay the credits when they are due, he said.
Rather than bouncing the production tax arrangements around as a political football, as they have been in every election for the past 20 years, increased oil production and increased state oil revenues will require political equilibrium in the tax system, Galvin said. He also cautioned against viewing all the various state tax credits equally, given that each credit was introduced for a particular reason. Galvin particularly argued for the value to North Slope explorers of the net operating loss credit, saying that this credit puts companies with no current North Slope oil production on an equal footing to those that do have production.
Other challenges for a company exploring on the North Slope include a lack of data outside the area of the existing oil fields; short exploration seasons of unpredictable length; and the numerous permits required from multiple government agencies. And when it comes to North Slope oil development, there is a need for a more regional approach to wetlands mitigation, rather than the incremental approach on a case-by-case basis, Galvin commented. In general, the North Slope has a high-cost business environment, with a need for a critical mass of more competition, he said.
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