As reported in the Aug. 8 issue of Petroleum News, 88 Energy says studies done in conjunction with Merlin 1 post-well testing and analysis have confirmed additional upside oil potential in the Umiat oil field, which was the first oil field discovered on Alaska’s North Slope and is a two-lease unit.
Merlin 1 was the exploration well 88 Energy drilled in Project Peregrine this past winter. The Umiat oil field is adjacent to the southern end of the Peregrine lease blocks.
Merlin 1 penetrated a thick section of deeper Grandstand sands that are also found in the Umiat unit reservoir.
According to the U.S. Geological Survey the depth of the oil encountered in Umiat wells ranges from 250 feet to 1,350 feet. (This does not mean there is a 1,100-foot-thick column of oil. It means the range of depths over which the reservoir occurs and is folded upward into an arch.) The Merlin 1 well reached a total depth of 5,267 feet.
“Wireline data collected over this interval is being analyzed and integrated with the Umiat dataset. Preliminary pressure analysis suggests there is potential for bypassed pay in the footwall of the Umiat structure. The Umiat footwall has only been penetrated by one well (Umiat 11), which was drilled in 1952 with a crude logging and testing program. Seismic attribute analysis suggests there is potential for additional reservoir sands in the footwall of the Umiat structure,” 88 Energy said.
Discovered in 1946 by a contractor for the U.S. Navy, Umiat was never produced because its Grandstand reservoir was thought to be shallow, partially frozen in permafrost, and low pressure.
But Peter Zamarello was convinced that the shallow oil at Umiat was seepage from something much larger and deeper to the north.
Peter (Pete) Zamarello was an Alaska strip mall entrepreneur and a long-time oil and gas leasing partner of Anchorage-based Dr. Paul Craig, a board-certified clinical neuropsychologist.
Following is their Umiat story.
Winning northern Umiat lease
On June 3, 2002, Interior’s Bureau of Land Management opened sealed bids for oil and gas tracts within the National Petroleum Reserve-Alaska - it was the second NPRA lease held by the feds.
At the time the price of oil was stuck in the low $20 range. Thus, existing players in NPRA took the largest number of tracts in the sale.
Phillips Alaska, predecessor of ConocoPhillips, submitted the most bids and was second in dollars spent. (See lease sale map in the print and pdf versions of this story).
Arctic Falcon, which held an NPR-A lease at Umiat, was the only unsuccessful bidder. It lost out to a 50/50 partnership of Zamarello and Craig in a bid for an adjacent tract to the north, L-006.
Zamarello and Craig knew that the oil at Umiat was noncommercial at $20 a barrel, but they envisioned better oil prices ahead. They also saw more oil potential in the Umiat oil field.
Craig dusted off a 1953 U.S. Geological Survey report about the field that he found archived in the Alaska Collection at Loussac Library in Anchorage. The report described the wells drilled by Husky under contract to the Navy between 1946 and 1953. Craig surmised that the report’s well data showed there were about 1 billion barrels of oil in place in the permafrost of the Grandstand formation at Umiat.
Zamarello, who Craig said, “loved to study real estate,” had studied the North Slope since the 1960s and was already aware of a geological structure called the Grandstand formation. He firmly believed that the motherlode within the Grandstand formation would be found deeper than the known reserves at Umiat, to the north of the east-west fault defining the crest of Umiat Mountain; a ribbon of reservoir rock charged with high quality oil extending in an arc from Umiat all the way north to the coast.
“Today, everybody talks about the Nanushuk group because of all the discoveries made in the play. Geologically, the Grandstand is the youngest of three depositional zones within the Nanushuk group. The older two zones deeper in the Grandstand are the Chandler and Niniluk groups,” Craig said.
Knowing what we know today regarding Pikka, Willow, Harpoon and other Nanushuk oil discoveries, Zamarello’ s vision was 20-20.
Finding partners tough
When Craig and Zamarello attempted to find partners to explore their North Umiat prospect, nobody believed that the duo could possibly be onto something of commercial value. And, of course, oil prices were low, and the acreage was far from existing North Slope infrastructure.
Eventually, Mark Landt with Renaissance Alaska approached Craig and Zamarello and struck a deal. Renaissance has moved through a lot of hands since then and ended up in the hands of 88 Energy, the owner-operator of 300-plus square miles of oil and gas rights immediately to the north of Umiat (dubbed Project Peregrine).
Using Renaissance’s 3D seismic data combined with USGS 2D seismic data and the facts learned from drilling the Merlin 1 exploration well, 88 Energy’s technical team believes a substantial oil reservoir may be tucked up along the north side of the Umiat Mountain fault.
The northern lease is six miles (east to west) by three miles (north to south). The bottom row of six sections was south of the Umiat Mountain fault. The northern 12 sections are on the north side of Umiat Mountain - right where Zamarello believed a drill bit would penetrate the mother lode.
Zamarello passed away in 2014. When Craig read 88 Energy’s recent press release about Umiat, he said he smiled, thinking, “Pete was right all along! There is oil beyond that hill.”
