In the business of oil and gas exploration, it’s all about managing risk. Companies are more likely to drill where there are strong indications of hydrocarbons from field and seismic data, nearby wells and discoveries – and preferably, all of the above.
So, when the federal government officially opens the doors in the near future to the “Coastal Plain” of the Arctic National Wildlife Refuge for commercial drilling, it could be like watching a game of poker.
As it stands, a single onshore exploration well could be the key to scooping up the most prospective tracts and revealing if ANWR holds another giant on the North Slope. During a brief period when exploration activities were allowed, Chevron and BP drilled the KIC No. 1 well in 1986 in a corner of Native lands immediately adjacent to the “1002 Area,” which is the part of ANWR that is expected to open soon for drilling.
Chevron, BP and possibly Hilcorp Energy Company (which purchased BP’s North Slope assets earlier this year) have access to data from the KIC well, as does the Arctic Slope Regional Corporation, established pursuant to the Alaska Native Claims Settlement Act of 1971.
For those who don’t have access to this data, the risks are much higher. Operators interested in exploring this area likely will be limited to existing proprietary 2-D seismic and information compiled by the U.S. Geological Survey, which estimated in 1998 that the 1002 Area contains anywhere from 4.3 to 11.8 billion barrels of recoverable oil. Such a wide range makes investing in frontier territory risky, but not necessarily a dealbreaker.
Despite the paucity in data, USGS Senior Research Geologist David Houseknecht said there is evidence that suggests ANWR could be prolific, but it must be analyzed with great attention to detail. For the savvy and perhaps lucky explorers, it could lead to one or more sizeable discoveries.
Unlike the geology of much of Alaska’s North Slope, the geology in the east, which includes ANWR, is highly complex. After recently reprocessing raw 2-D seismic data shot in the mid-1980s, analyzing nearby wells and conducting fieldwork, Houseknecht said any new findings by the USGS have “not dramatically changed our interpretations” in the resource assessment of the 1002 Area released in 1998.
While he does not have clearance to reveal any new geological insights, he has been able to discuss geologic certainties and uncertainties across the 1.56 million-acre coastal plain selected for future lease sales.
The North Slope is sourced from Shublik, lower Kingak and Brookian rocks – the Shublik being largely responsible for the large discoveries of Prudhoe Bay in 1968 and the Pikka field in 2013. While it is questionable whether or not the Kingak and Shublik source rocks are present in much of the 1002 Area, Cretaceous Brookian source rocks are known to be widespread across 1002, Houseknecht said. In addition, analyses of oil-stained outcrops and nearby offshore discoveries indicate that younger, Paleogene Brookian source rocks are present offshore.
The USGS has determined that the younger Brookian source rocks – associated with the Canadian Mackenzie Delta source rocks offshore – likely have charged the eastern part of 1002.
“The presence of Brookian source rocks is significant, and rich, oil-prone source rocks are likely present across the 1002 Area,” Houseknecht said.
If oil is present, the geology of the 1002 Area suggests it has likely accumulated in structural traps toward the east and in stratigraphic traps in the west. Yet to pinpoint stratigraphic traps, 3-D seismic data – of which there is none – would be beneficial.
“The biggest uncertainty in the western part of 1002 is whether stratigraphic traps in Brookian rocks are large enough to be economically viable,” Houseknecht said. “The stratigraphic traps, which are clearly visible in seismic data in some areas, are similar to those in which significant oil discoveries have been made in the Nanushuk Formation farther west on the North Slope.”
In the eastern part of 1002, potential structural traps can be seen in 2-D seismic data, but Houseknecht cautioned that determining the presence of Shublik and Kingak source rocks and requisite older reservoir rocks could be challenging.
“One key ingredient in assessing risk in the eastern area is understanding when the traps formed, when oil was generated within the 1002 Area from the Brookian and the Shublik, if it is present, and when offshore oil was generated and how far onshore it migrated,” Houseknecht said. “We are quite confident there was an offshore, young oil charge.”
Just south of the 1002 Area, outcrops in the Sadlerochit Mountains show that Shublik source rock and some of the best quality reservoir rocks (such as the Triassic Ivishak Formation, which is Prudhoe Bay’s primary reservoir rock) were eroded progressively northward by the Lower Cretaceous Unconformity. If this trend continued to the north, both the Shublik and the Ivishak could be absent from much of the 1002 Area, Houseknecht said.
Yet it is possible that Shublik and Ivishak rocks are present in a large graben, which may extend into the northeastern 1002 Area. Data from the KIC well likely resolves this uncertainty.
Nearby wells, including the Aurora well – drilled just offshore the 1002 Area by Tenneco Oil Company in 1984 – suggest the best quality reservoir rocks, including the Ivishak and Lisburne – are absent in the western part of the 1002 Area, but could be present in the eastern part if the graben extends onshore. The Aurora well also showed the presence of Kingak shale. But again, “anyone with KIC well data knows whether or not these reservoir rocks are present and whether the Shublik source rock is present,” Houseknecht said.
The presence of older reservoir rocks is important, particularly in regard to the Niguanak high. This structure, which is obvious in 2-D seismic data, is a large anticline that runs approximately 10 miles south to north. Because no well has ever been drilled on the Niguanak high, it remains unclear if older rocks have formed what would likely be a large reservoir. Houseknecht noted that the KIC well was drilled on a deeper structure similar in geometry to the Niguanak high and therefore could contain information beneficial to evaluating its potential.
“The bottom line is that what we know for certain is there is a structural high that has the geometry of structural traps. Almost every other aspect is a risk factor,” Houseknecht said. “Is there oil in it? People need to unravel this history with as much detail as possible.”
The central part of the 1002 Area has its uncertainties as well. This region contains many wedgetop basins that display seismic evidence of favorable combinations of source rocks, reservoir rocks and trap geometries. The main risk is the integrity of the seals.
ANWR – Full Speed Ahead?
Despite the uncertainties present in the 1002 Area, the USGS stands behind its most current assessment, which states the region has “potentially enormous oil and gas resources.” While it estimates that the majority of oil to be in the western part, which is closest to existing infrastructure, it also stresses that oil will likely be found in a number of accumulations rather than a single large accumulation, such as Prudhoe Bay.
The federal government is requiring at least two lease sales in the 1002 Area – no less than 400,000 acres each – with one taking place before Dec. 22, 2021 and the other no later than Dec. 22, 2024. It has been stated by U.S. Secretary of the Interior David L. Bernhardt that the first sale could occur before the end of this year.
ANWR’s 1002 Area has remained off-limits to exploration since its creation under the 1980 Alaska National Interest Lands Conservation Act. Despite decades of debate between the industry and environmentalists on whether or not to allow exploration of the area, it has remained closed.
However, last August, Bernhardt – acting in accordance with a 2017 law opening the 1002 Area – approved leasing the coastal plain, which is considered the most prospective area in ANWR.
Opening the 1002 Area has prompted a host of lawsuits by environmentalists and other groups that could potentially stall a lease sale. It also has been said that a change in administration could slow its progress.
Will the scarcity of data and a prolonged industry downturn become another obstacle from running full speed ahead in an area that has intrigued explorers for decades? Or, perhaps the spirit of exploration will prevail, compelling operators to hedge their bets in a region that has yet to stop delivering significant discoveries.