Thursday, December 27, 2012

Assembling the data; Great Bear ends drilling season, plans seismic, assessing drill results

Alan Bailey

Having drilled its first two vertical wells, the Alcor No. 1 and the Merak No. 1, as part of a pioneering shale oil program on Alaska’s North Slope, Great Bear Petroleum has called a halt to its drilling season for this year, Ed Duncan, the company’s president, told the Alaska Geological Society on Dec. 23. The company is drilling a series of test wells at six locations next to the Haul Road south of Prudhoe Bay, in hopes of proving the technical and economic feasibility of producing oil direct from the prolific oil source rocks of northern Alaska.

“The first two wells that we’ve drilled south of Prudhoe have provided us a plethora of new data,” Duncan said.

Drilling suspended

The company had originally hoped to drill a couple of horizontal sidetrack wells from the initial vertical wells by the end of this year, to test oil production from the shale oil play. But, with the drilling and subsequent rock sample analysis taking longer than anticipated, the company has settled for just drilling the two vertical wells for the time being.

“We have suspended drilling operations for the season,” Duncan said. “Certainly operations took a little bit longer than we expected, particularly on Alcor, and the lab analysis quite frankly has taken much longer than we had hoped.”

The concept behind the test wells was to drill through the three major North Slope source rock units — the Shublik, the lower Kingak and the Hue shale/HRZ — at locations where geologists have predicted that the extent of past subsurface heating, referred to as the thermal maturity, would be appropriate to the formation of oil, and hence to support the existence of oil in the rocks.

And Duncan expressed optimism about what his company has found so far.

“We have drilled through all of our targeted source rock units,” Duncan said. “We’ve proven those (to be) present at the depths predicted and in the state of thermal stress or thermal maturity, certainly within the range of expected outcomes.”

Data collection

Duncan said that Great Bear and its partner, Halliburton, had taken considerable care to obtain as much data as possible from the two test wells and that the companies had done extensive rock coring in the wells. The idea now is to plug the data into regional geology and petroleum system models, particularly targeting the geology and properties of the Shublik, the top contender for a potential shale oil play.

And, in addition to penetrating the source rock intervals, the two wells drilled through other rock sequences — Brookian turbidites, Kuparuk sands and the Ivishak — that elsewhere on the Slope form oil reservoirs in some of the producing conventional oil fields of the region.

“We’re also going to be revising regional reservoir models for all the conventional units,” Duncan said. “They’re clearly of high interest to us in addition to the unconventional resource play.”

Seismic surveys

Great Bear has already carried out a small, 57.6-square-mile 3-D seismic survey around its well locations. This winter the company plans to extend its seismic coverage west across the company’s leases and has contracted with CGGVeritas to carry out a suitable survey.

“We’ve just executed a contract to acquire another 380 square miles of 3-D,” Duncan said. “Effectively we’ll be covering the central core of the … Great Bear lease holding.”

The additional seismic data will feed into Great Bear’s geologic modeling, to provide insights into where to conduct resource play tests. And although the company continues to focus on shale oil, the seismic will probably shed new light on conventional exploration opportunities.

The larger seismic survey “is very likely to populate our prospect inventory, not just with additional locations for resource play tests … but we also expect a fair number of conventional type prospects to evolve out of that,” Duncan said. “We’ve got some good ideas, but I would really like to make our investment decisions with a large inventory of conventional things to play with as well.”

Geologic modeling

A part of the data analysis involves the updating of a North Slope petroleum system model based on computer software developed by Schlumberger. Great Bear used this model when deciding on where to acquire leases and the company now anticipates refining the model using new data.

“Now that we have additional well information from Alcor and Merak, we’ll be able to up the ante by quite a lot, in fact, on adding additional detail and fidelity to the model output,” Duncan said.

Duncan said that Great Bear had contracted with retired U.S. Geological Survey geologist Ken Bird, a recognized expert on North Slope geology, as part of the team working on Great Bear’s data analysis. A PhD student from Stanford University will also be working on the company’s seismic and well data, and the company is considering the potential involvement of other students in the analysis.

Environmental assessment

Great Bear has also carried out a more than 200-square-mile survey using Lidar, a laser-based system for measuring surface topography. This survey will provide highly detailed topographic information for Great Bear’s leased acreage, as well as bathymetry for lakes, with this information providing a platform for a regional environmental assessment, and for state and federal permitting.

“We’ll be initiating a regional environmental assessment across the tundra, particularly moving west from the highway into the core of our acreage,” Duncan said. “Those studies will be very important for the purposes of federal and state permitting as we move to the west over time.”

The company will also be participating in the “current and pending political process” in Alaska, Duncan said.

Work schedule

But Duncan did not offer any comment on how the timeline for the geologic data analysis program might impact the schedule for moving towards the development phase of Great Bear’s overall shale-oil program. The company had hoped to start some extended shale-oil testing this winter, with a view to possibly making a decision in mid-2013 on whether to proceed to a full-scale development. Presumably, with no horizontal wells drilled and no production tests started, that decision will have to be deferred.

Patrick Galvin, Great Bear’s vice president of external affairs and deputy general counsel, told Petroleum News in a Dec. 17 email that the analysis of data from the Alcor and Merak wells was taking much longer than anticipated and that the company’s drilling rig contract had expired for the season before the company had reached a position to decide on what drilling to do next.

Although Great Bear sees the possibility of conventional oil targets as an exciting addition to its North Slope program, the company continues to see its core strategy of pursuing the shale-oil resource play as its primary objective, Galvin wrote.

“When the analysis on our drilling program is completed, bolstered by the 3-D program we are acquiring, Great Bear will be in a strong position to determine its next steps in its exploration program,” he wrote.

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