Wildcats to Come Calling at NPR-A

'High Reward' Sought

Companies eyeing exploration in the National Petroleum Reserve-Alaska (NPR-A) see prospects there as good to great, despite a scarcity of previous drilling in the Reserve.

The industry acquired almost 580,000 NPR-A lease acres in a recent U.S. Bureau of Land Management sale, with winning bids totaling more than $63.8 million.

The June sale covered almost four million acres in NPR-A's northeast corner. Anadarko Petroleum Corp. and Phillips Alaska Inc., bidding jointly, took 34 of the 60 lease tracts awarded in the sale.

TotalFinaElf E&P USA, TFE submitted the six highest bids of the sale. It bid over $10 million apiece for two tracts and $7 million on a third, according to BLM.

Jim Emme, Anadarko's vice president of exploration, said the company has completed an independent resource assessment of the central Arctic area in Alaska that included samples of source rock intervals.

"At the end of all this independent work, we determined that there was as much oil as has been generated in the central Arctic," he said.

"We're also looking for gas in the foothills, and we consider that a tremendous prospect," he said. "There's good reason for us to believe there is as much gas in the foothills as sits in the Prudhoe Bay gas cap."

Emme said Anadarko's numbers agree with the latest NPR-A resource assessment from the U.S. Geological Survey, presented in May at the AAPG/SPE Pacific Regional Conference in Anchorage.

That assessment indicates nine billion barrels of oil in NPR-A, he said, "with seven out of nine barrels coming from the Beaufortian."

Positive Signs

NPR-A covers more than 36,000 square miles in northwestern Alaska. It extends along the coastline in the north, the foothills of the Brooks Range in the southwest and the Colville River in the southeast and east.

Known prospects include the Beaufortian Upper Jurassic Topset play plus a Brookian Clinoform play and a Torok structural play.

Anadarko and Arco Alaska heated up interest in the frigid tundra area in 1995-96 with discovery of the Alpine Field, just east of NPR-A.

"For us that was a huge positive step forward, especially since it documented a new type of play in the Jurassic Alpine sand," Emme said.

Just as important, the discovery produced high-quality crude of 40 degrees API gravity, an oil quality previously unknown in the NPR-A area.

Image Caption

A remote Arctic rig moves carefully — and, for the environment, cautiously — to the Spark locations in Alaska NPR-A.
Photo courtesy of Phillips Petroleum

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Companies eyeing exploration in the National Petroleum Reserve-Alaska (NPR-A) see prospects there as good to great, despite a scarcity of previous drilling in the Reserve.

The industry acquired almost 580,000 NPR-A lease acres in a recent U.S. Bureau of Land Management sale, with winning bids totaling more than $63.8 million.

The June sale covered almost four million acres in NPR-A's northeast corner. Anadarko Petroleum Corp. and Phillips Alaska Inc., bidding jointly, took 34 of the 60 lease tracts awarded in the sale.

TotalFinaElf E&P USA, TFE submitted the six highest bids of the sale. It bid over $10 million apiece for two tracts and $7 million on a third, according to BLM.

Jim Emme, Anadarko's vice president of exploration, said the company has completed an independent resource assessment of the central Arctic area in Alaska that included samples of source rock intervals.

"At the end of all this independent work, we determined that there was as much oil as has been generated in the central Arctic," he said.

"We're also looking for gas in the foothills, and we consider that a tremendous prospect," he said. "There's good reason for us to believe there is as much gas in the foothills as sits in the Prudhoe Bay gas cap."

Emme said Anadarko's numbers agree with the latest NPR-A resource assessment from the U.S. Geological Survey, presented in May at the AAPG/SPE Pacific Regional Conference in Anchorage.

That assessment indicates nine billion barrels of oil in NPR-A, he said, "with seven out of nine barrels coming from the Beaufortian."

Positive Signs

NPR-A covers more than 36,000 square miles in northwestern Alaska. It extends along the coastline in the north, the foothills of the Brooks Range in the southwest and the Colville River in the southeast and east.

Known prospects include the Beaufortian Upper Jurassic Topset play plus a Brookian Clinoform play and a Torok structural play.

Anadarko and Arco Alaska heated up interest in the frigid tundra area in 1995-96 with discovery of the Alpine Field, just east of NPR-A.

"For us that was a huge positive step forward, especially since it documented a new type of play in the Jurassic Alpine sand," Emme said.

Just as important, the discovery produced high-quality crude of 40 degrees API gravity, an oil quality previously unknown in the NPR-A area.

Phillips became operator at Alpine when it acquired Arco Alaska's interests. The field now produces close to 100,000 barrels per day.

Their ongoing exploration activity near NPR-A made Anadarko and Phillips logical participants in the June lease sale. But the most significant result, and a major surprise, came from the emergence of TotalFinaElf (TFE) as a new player in the Reserve.

TFE, awarded 20 tracts with winning bids totaling more than $53.5 million, outbid the Anadarko-Phillips combination on some tracts in head-to-head bidding.

"We've spent a number of years analyzing the petroleum system in this area," said Randy Ponder, TFE exploration manager for Alaska. "We believe the principal risks are reservoir and hydrocarbon type.

"TotalFinaElf's overall strategy is to explore areas with high reward," he added. "The NPR-A has high potential and is under-explored. It has all the ingredients required for hydrocarbon accumulations: source rocks, reservoir rocks, traps, etc."

Seeing Similarities

TFE's Ponder said the area of tracts acquired in the NPR-A lease sale has many similarities to reported discoveries on trend.

"The source rock is the same, but is deeper," Ponder said. "The overlying seal capacity is not an issue but there are potential side seal issues. The traps are similar to analog accumulations."

TFE sees good potential for several new major oil-field discoveries in NPR-A, "one of the areas of the world where there is open acreage that has not been heavily explored by the industry, offsetting new large oil and gas fields," according to Ponder.

"Our group's acquisition strategy was based upon close consideration of socio-cultural, logistical and environmental issues and the definition of our exploration campaign," he said. "The ongoing evaluation of potential development scenarios will be formulated in close cooperation with the local communities.

"TotalFinaElf, as a responsible oil and gas operator, is conscious of the environmental challenges and sensitivities involved in the exploration and development of this permafrost zone, characterized, as you know, by flat tundra in summer covered by snow and ice in winter."

To protect the tundra, companies can drill in NPR-A only during the months when the ground is frozen, allowing truck and equipment transport.

"We can only drill about three months out of the year — that's probably the biggest challenge we have, squeezing the wells into that window," said Diane Kerr, Alaska exploration manager for Anadarko.

Take time to move in and set up drilling equipment and the exploration window shrinks even further, sometimes to as little as two months, she added.

"What we're looking for (in the NPR-A area)," she added, "is creative approaches to exploration."

Wanted: Something New

Dick Garrard, exploration manager-core areas for Phillips Alaska, agreed that new ideas and approaches will be needed to open up NPR-A.

"The biggest problem we're facing as we get more remote is that the more conventional exploration drilling methods have to change," he said.

The tundra in northwest Alaska has to freeze to a depth of 12 inches to allow travel, according to Garrard. To save time on equipment move-in, one rig is being stored on an insulated ice pad about 120 miles west of Kuparuk.

"As we go to more distant locations we're having to use a different technology. Up to now, we've been using conventional ice roads," Garrard said. "On a good day — and that's when the temperature is minus 20 degrees Fahrenheit — it takes about a day to lay a mile of ice road."

Environmental considerations make the process tricky.

To get water for building ice roads, "we have to know whether these are fish-bearing lakes, and how much water can be taken down," he explained.

As an alternative, Phillips Alaska has experimented with use of rollagons, all-terrain vehicles that move on large, low pressure adjustable tires. Garrard said rollagons were used to move Nabors Alaska's 16-E rig to the Hunter A well location inside NPR-A.

Rollagons can operate without penetrating the tundra and don't require ice roads. However, time gained from direct transport can be lost to drilling equipment disassembly and reassembly, Garrard noted.

The short drilling season means "you're using a lot of expensive equipment that can sit idle for six to eight months of the year," he said.

And environmental regulations require drillers to take exceptional precautions, including recovering and removing all fluids, and grinding and reinjecting cuttings, according to Garrard.

"Ideally, the only thing noticable when you come back the next year is the wellhead," he observed. "I can't think of anywhere in the world where exploration is as highly regulated as it is on the North Slope."

Despite the challenges to drilling in the NPR-A area, "we've come back here for three years," he added. "And if we can get the money, we'll be back again."

'A Lot of Running Room'

Both Garrard and Emme welcomed TFE's apparent commitment to NPR-A exploration.

"Frankly, I think it's good to see new companies come in with their own programs," Emme said, especially since so many wildcats will have to be drilled over such a large area.

He noted the lack of existing well control in much of NPR-A, including vast areas that may average one wildcat per 20 townships.

Even in areas with more prior drilling, trap identification and prospect generation rely on 3-D seismic and AVO or seismic-attribute analysis, he commented.

Emme sees exploration progressing from Alpine into NPR-A, with Jurassic targets the likeliest candidates. In the Moose's Tooth area about 30 miles due west of Alpine, five out of the six wells drilled have encountered hydrocarbons, all from Jurassic-level, Alpine-like sands, he said.

"There's a lot of running room and we're looking to extend that into NPR-A," he said. "As we step into the Moose's Tooth area, we will find fields that will become (development) hubs themselves, and others will become tie-backs to the Alpine field."

Long-reach horizontal drilling allows extensive and year-round development from a hub site with minimal intrusion, and Emme cited work at Alpine as a successful example.

"The goal there is to do something from a very small footprint. The production facility on the surface amounts to two pads, a total footprint of about 100 acres," he said.

Emme's outlook for the rest of NPR-A makes it clear he's a big believer in the area's natural gas potential. A very big believer.

Noting that Anadarko also explores in Canada's Mackenzie Bay area, Emme said he thinks the industry will need two natural gas pipelines from the Arctic, not the either/or scenario now proposed.

He sees a gas price of $3.25 per Mcf holding the U.S. supply steady and projects a price of $4 per Mcf to grow the supply, since more gas will be needed in the future.

With additional potential for discoveries below the Jurassic and "new drilling that's uncovered some new ideas and new plays we didn't know existed," Emme is excited about the future of NPR-A.

The biggest lesson so far:

"Good things can happen by drilling significant wildcats."

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