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Petroleum News: Lease sales attract broad interest

Alaska’s Beaufort Sea, North Slope areawide sales attract bids targeting a wide variety petroleum plays across northern Alaska
Alan Bailey
There’s nothing to beat high oil and gas prices to stimulate lease bidding. Add in the prospect of a North Slope gas line and you have the necessary ingredients for the State of Alaska’s March 1 humdinger Beaufort Sea and North Slope areawide lease sales. (See sales results in the March 5 edition of Petroleum News.)
Just a few days before the sales geologist Paul Decker from Alaska’s Division of Oil and Gas spoke at the Pac Com conference in Anchorage about oil and gas plays in northern Alaska. Decker explained how the plays relate to three major rock sequences: the Mississippian through Triassic Ellesmerian sequence; the Jurassic to lower Cretaceous Beaufortian sequence (also known as the rift sequence); and the Cretaceous and Tertiary Brookian sequence. Each of these sequences contains a major petroleum system and supports a variety of existing oil fields.
After the lease sales Decker speculated with Petroleum News about the types of petroleum play that the lease purchasers might be targeting.
Chevron/Unocal highest total amount bid
Union Oil Company of California (now owned by Chevron) took a swath of 48 inland leases south of the Kuparuk River Unit. At $6.95 million Unocal achieved the highest total amount bid of any company at either of the lease sales.
The southern part of the Unocal lease area lies around the Heavenly 1, Malguk 1 and Amethyst wells, Decker said. A mid-Brookian deepwater sandstone, 800 to 900 feet thick, forms a prominent feature in these wells, he said. These sands correlate broadly to the reservoirs of the Tarn and Meltwater oil fields to the north, but are fine-grained with relatively low permeability and porosity. Oil and gas shows are common, although the fine-grained nature of the sandstone may be more appropriate to gas production.
The northern sector of the Unocal leases lies on the same general trend of mid-Brookian rock deposition, Decker said.
Eni Exploration
Eni Exploration Co. bid $5.62 million for a block of 11 tracts to the east of the northern part of the Unocal leases. Eni appeared to be consolidating its central North Slope lease position — the company purchased a nearby group of leases, south of the Kuparuk River unit, from Armstrong Alaska in 2005.
Like Unocal, Eni appears to be targeting Brookian plays, Decker said — the lower Cretaceous unconformity at the base of the Brookian sequence lies at a depth of around 10,000 feet in the area of the Eni leases. The nearby State Pipeline No. 1 well revealed some interesting Brookian Cretaceous sands, Decker said.
ConocoPhillips Alaska purchased three tracts to the west of the Unocal leases, near the Kuparuk Uplands Ekvik No. 1 well, and is probably also targeting Brookian plays. The notable thing about the Ekvik well is that it found especially good Brookian reservoir quality sands of Cretaceous age, Decker said.
ConocoPhillips’ other purchases in the North Slope areawide sale consisted of six tracts at the southwest corner of the Kuparuk River unit. To the southwest of these tracts Pioneer Natural Resource purchased a single tract just west of the Meltwater field and Cronus unit — Pioneer is drilling in the Cronus unit this winter.
Native corporation Arctic Slope Regional Corp. bid on a block of tracts in a trend between the Cronus unit and the Atlas 1 and 1A wells, southwest of the Kuparuk River unit. This trend may involve a Brookian deepwater sand play, akin to that targeted in the Atlas wells, Decker said. The regional corporation also bid on a second block of tracts that lies west of the recently added Palm drill site extension of the Kuparuk River field, in the area of the Placer No. 1 and Placer No. 2 wells.
AVCG LLC bid on a block of tracts to the northwest of the first block of ASRC tracts. The AVCG tracts lie in an area of complex lease ownership but appear to be close to AVCG’s Titania and Cronus prospects.
AVCG also bid on one tract that fills in a block of leases that the company holds in Gwydyr Bay, north of the Prudhoe Bay unit. In January Ken Thompson, the company’s managing director, told the Alaska Industry Support Alliance that Gwydyr Bay is a Kuparuk sands play, with some deeper horizons of interest.
Cross Island area
Offshore, in the Beaufort Sea sale, ConocoPhillips purchased acreage north of Point Thomson that Decker said seemed most prospective for Tertiary Brookian turbidites. The company also appeared to be consolidating its offshore position by its purchase of nine tracts in the Cross Island area of the Beaufort Sea — the company already owns some neighboring federal leases on the outer continental shelf.
The new leases in the Cross Island area lie on the edge of a high fault block on the north side of the Barrow Arch, the major geologic structure that underpins the petroleum geology of most of the producing oil fields around the central North Slope. Public seismic data suggests Beaufortian potential associated with faults along the north side of the faulted block in the Cross Island area, where the edge of the block inclines down towards a deeply sunken fault block known as the Dinkum Graben, Decker said.
“You’d be preserving the section at or just below the lower Cretaceous unconformity,” he said.
Play concepts in the area would be similar to the Niakuk and Point McIntyre fields, he said.
About 20 miles to the southeast of the Cross Island area, BP Exploration (Alaska) moved to consolidate its position around the Liberty field, a play involving the same Ellesmerian reservoir as the nearby Endicott field. The company bid more than $5 million for a tract off the northeast corner of Liberty and more than $130,000 for a tract on the southwestern edge of the field. However, the lease on the first of these tracts is now subject to a legal dispute involving the partnership of Craig and Zamarello, who also bid on that lease.
The Craig and Zamarello group appears to be the highest bidder on another tract offshore the Colville River Delta adjacent to Pioneer’s Oooguruk unit. And another partnership, Stepovich and Gilberston, took two tracts between the Colville River Kuparuk River units, to the south of the Craig and Zamarello lease.
Alaska newcomer Patterson Shaw, from Denver, Colo., bid on seven tracts adjacent to the Liberty field and extending east towards the Badami field. The geology of that area suggests interest in either an Ellesmerian Endicott play or a Badami-style Brookian play, Decker said.
Smith Bay
Decker sees some particularly interesting exploration possibilities in Smith Bay, where FEX has taken 25 tracts some 140 miles west of Prudhoe Bay.
“It’s a nice crestal position on the Barrow Arch, with shallow water and logistically connected to their onshore exploration program in NPR-A,” Decker said.
People have long known about four oil seeps on the coast at Cape Simpson, just west of Smith Bay. It’s a natural oil trap where Brookian topset sands come up against shale in an ancient incised canyon, Decker said. The oil from the Cape Simpson seeps likely originates from an “oil kitchen” to the north, in a lower Cretaceous source rock system known as the HRZ, he said.
“That would put this (Smith Bay) area squarely in between the kitchen and the seeps,” Decker said. “So you probably have a pretty good plumbing story to be able to charge this with nice light oil.”
In addition to a possible Brookian play, there are potential Ellesmerian plays below the lower Cretaceous unconformity (ancient erosion has probably scoured out the Beaufortian middle and upper Jurassic sands that are found in nearby onshore wells). The East Simpson No. 1 and No. 2 wells on the coast near Smith Bay found some interesting Sadlerochit and Endicott sands below the lower Cretaceous unconformity, Decker said.
Complements other positions
In addition to complementing the company’s land position south of Cape Simpson, FEX’s new lease position in Smith Bay could line up with a possible exploration fairway across the northern part of NPR-A to the company’s existing leases on the west side of Harrison Bay.
Anadarko Petroleum Corp. bid on six tracts on the eastern edge of Smith Bay and may be pursuing the same Barrow Arch plays. Anadarko also appears to be consolidating its position around the Jacob’s Ladder trend on the east side of the state’s lease sale area, where the company bid on seven leases. Jacob’s Ladder has an Ellesmerian play, somewhat analogous to the Lisburne field in the central North Slope, involving oil reservoirs in fractured and eroded limestones of the Lisburne group.
In the southwestern corner of the North Slope lease sale area Anadarko bid on a single tract in the area of the Gubik gas field, near Umiat. Anadarko already has some oil and gas options on adjacent Arctic Slope Regional Corp. land, Decker said.
Arctic Falcon Exploration LLC, owner of some leases in the neighboring Umiat oil field, bid on another tract at Gubik.
Bidding group Cade and Donkel also bid for a tract at Gubik. And Cade and Donkel picked up a tract on another known gas accumulation at the Kemik well, to the east of the Haul Road. Additionally Cade and Donkel bid on a series of tracts near the northern end of the trans-Alaska pipeline, and in the Beaufort Sea near the area of the existing North Slope oil fields.
Another bidding group, Bachner, Forsgren and Feddersen, bid on a series of tracts that fill in the area between the Point Thomson unit and the Jacob’s Ladder trend at the northeast corner of the North Slope sale area. This group may be anticipating future developments at Point Thompson and Jacob’s Ladder.
Sun-West Oil and Gas Inc. bid on a single tract next to the shore on the east side of the Arctic National Wildlife Refuge. The tract is in the area where the State of Alaska has proposed a stratigraphic test well and is adjacent to the Angun Point oil seep, Decker said. In the March 30 Mineral Management Beaufort Sea lease sale Shell took some leases several miles farther out on the Beaufort Sea continental shelf from the Sun-West lease.

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