Technological advances and industry know-how have enabled the oil industry to venture into a number of frontier areas – the deepwater Gulf of Mexico, for example – and attain success.
The foreboding Arctic region now looms as the last frontier for explorationists.
Experts peg it to be a treasure trove of untapped Black Gold – but it won’t be recovered easily or inexpensively.
The resources are conventional, but the environment is highly unconventional.
In the past three decades, more than 200 billion barrels of oil have been discovered there, according to Alastair Fraser, EGI Chair in Petroleum Geoscience at Imperial College of London.
“Ultimate resources are estimated at 114 billion barrels of undiscovered oil and 2,000 trillion cubic feet of natural gas,” Fraser said. “If these estimates are correct, these hydrocarbons would amount for more than a fifth of the world’s undiscovered reserves.”
Fraser is a former exploration manager at BP where he began working on the North Slope in 1979 and was involved in BP’s circum-Arctic project beginning in 2002.
He also was one of the speakers for the current AAPG-AAPG Foundation’s Distinguished Lecture program, recently completing two tours of eastern and western Canada as this year’s Shell Distinguished Lecturer.
Fraser offered two topics during his tour: One dealt with Angola exploration, but the other took advantage of his BP professional experience on the North Slope: “Oil and Gas Exploration in the Arctic.”
“Harnessing the considerable resources of the ‘Final Frontier,’” he added, “will be fraught with many technical, political and environmental challenges that will engage many minds – both scientific and political – over the next half century.”
Challenges and Concerns
Besides the technical challenges of recovering hydrocarbons in this generally ice-covered part of the world, the concern for protecting the unspoiled environment looms large.
Not surprisingly, the humongous jackpot awaiting the explorers has stimulated both government and industry interest in an array of areas, including the U.S. and Canadian Beaufort Sea, east and west Greenland, and the Kara Sea on the Siberian shelf.
If you want to know just how big a challenge the Arctic region presents, check out Royal Dutch Shell’s experience thus far.
The company has labored diligently for eight years and spent close to $5 billion working the Beaufort and Chukchi seas offshore Alaska, where it encountered a slew of problems.
The highest profile setbacks in its planned drilling program included significant issues in 2012 involving two drillships. The company ultimately was limited only to top-hole drilling the upper 1,500 feet of its Arctic wells in 2012.
The drillship debacles and other problems placed the company under a virtual high-powered magnifying glass, ultimately triggering widespread concern among various anti-drilling groups, government agencies and others.
Speculation is rife that Shell will return to the Arctic sometime this year, but speculation is just that.
Russia, the United States, Canada, Norway and Greenland hold major interests in the Arctic, where some areas, such as Alaska, have been explored for a number of years. Certain others only now are digesting results of their first deep seismic surveys.
In fact, lack of a meaningful database is one of the issues looming large within the E&P offices.
Fraser noted this dearth of data holds particularly true for regional seismic and wells in the high Arctic, with drilling concentrated in a few regions and large areas of the Arctic being rather poorly understood.
Don’t Walk Away
Still, it would be folly to walk away from the awaiting prize.
“Four main factors are always required for a good working petroleum system,” Fraser said, “and I believe that these are all present in an array of formats throughout the Arctic.”
- World class source rocks.
- Sufficient heat flow for oil generation and migration.
- Excellent reservoirs – for example, thick, permeable sandstones, major deltas and carbonate platforms.
- Giant structures sealed by mudstones or salt.
Fraser emphasized that although there is significant ice in the Arctic, it is mobile – and its distribution varies from year to year.
Regardless, a seasonal approach to exploration is essential.
“The clockwise-rotating ice exits the Arctic into the North Atlantic through Baffin Bay and between Greenland and Iceland,” he said. “This produces hazardous icebergs, which will impede (seismic) data acquisition and prospective drilling.
“The moving ice is a hindrance to economic exploration, drilling and development.
“Still, so many parts of the Arctic are accessible,” Fraser added. “The Barents Sea (to the north of Norway and Russia) is ice-free year-round.”
Then there’s the current state of the historically ice-bound Northwest Passage, which is the Arctic sea route linking the Atlantic and Pacific Oceans. Today, one can navigate this now-open stretch in only a few days.
This bodes well for seismic data acquisition, exploration drilling and eventual development of production facilities.
The Arctic shelf is quite broad and shallow. For instance, the water depths of the Chukchi Sea range between 200 meters at most, down to less than 20 meters.
The vast areas of unexplored acreage in the Arctic include a 5,000-kilometer stretch of shallow continental shelf extending from the North Chukchi Basin to the North Kara Sea, according to Fraser. He noted there is not a single well in this sizeable area.
“Fifty percent of the Arctic is continental shelf – the largest tracts of undrilled continental shelf on the planet,” he declared. “We like continental shelves as they have basins, (and) basins have source rocks and oil and gas.
“The USGS (U.S. Geological Survey) has done a lot of wonderful work (in the Arctic), saying the Arctic is going to be quite gassy,” Fraser said. “I think it will be quite oily, because we’re looking at world class oil prone source rocks that will be in the oil window.
“A lot of gas has been found in the Arctic so far, mostly in western Siberia in Russia,” he said. “As you go farther north, the source rocks producing the gas come back into the oil window.”
The Only Place
Look for politics to play a significant role in Arctic E&P as the various countries jockey for the prime acreage.
“Some wonderful battles have taken place over acreage such as the south Kara Sea,” Fraser noted jocularly, “which is my favorite piece of exploration acreage on the planet.”
To date, two structures have been drilled there, resulting in large gas discoveries. For now, they sit under ice, taunting the experts who must determine how to produce them.
It behooves all industry participants to be aware of just how major the issues are relative to the environment and the people in this region.
“The Arctic is a wonderful pristine wilderness,” Fraser emphasized. “As an industry we have to be very careful, be better than we’ve ever been before.
“Four million people live and work north of the Arctic Circle,” he noted. “Twenty percent of these are indigenous, and it’s very important they have a say in this. But the oil companies have worked with local populations all over the world, so they know how to do this.”
Well, you ask, if it’s all so tedious, why not go elsewhere?
“The Arctic is the only place where we can really replace production from a conventional resource.”
Editor's Note: At press time, Shell announced that it is putting its 2014 Arctic drilling plans on hold.