Great Bear still planning for shale project on Slope

Great Bear Petroleum, an independent oil and gas company based in Anchorage, still has high hopes for its planned oil shale development on the North Slope.

Company President Ed Duncan said the company hopes to begin a shale development program in 2014 but meanwhile has a 3-D seismic program underway on its North Slope leases aimed at defining potential conventional oil and gas resources that have been discovered.

The potential for the shale to produce oil has yet to be tested. Duncan believes the North Slope shales could be as prolific as the huge and productive Eagleford shale formations in Texas, but that has yet to be demonstrated.

Meanwhile, Halliburton, Great Bear’s technology partner in the oil shale play, has earned a 25 percent share in 126,000 acres of state leases. This is part of Great Bear’s 570,000 acres of leases in the central North Slope.

Halliburton has extensive experience in the large hydraulic fracturing that is done in shale oil and gas wells.

“They have invested and have fully earned their share,” Duncan said.

Great Bear drilled two vertical wells last year to extract core from shale formations in the eastern part of its leases, which are in a broad east-west block across the central slope, but a plan to drill a horizontal leg and do a production test on one of the wells was delayed.

Duncan said there was no immediate plan to contract for a rig to drill the horizontal leg and do the test.

“The rig market is tight,” he said.

In an interview, Duncan also said he could not comment on the analysis of potential oil content in the shale cores that were taken.

“The drilling did reveal a complex series of “stacked” plays, of conventional and unconventional (shale) resources that are intermingled, he said.

The  3-D seismic program that was started last winter and will continue this winter is intended to help Great Bear better understand the geology, Duncan said. This company has spent $40 million so far on the seismic, he said.

The first two wells drilled by Great Bear are on the Dalton Highway south of Prudhoe Bay, but Duncan said future drilling may be further west on Great Bear’s leases, which are along an east-west “fairway” of shale formations that lie south of the producing Prudhoe Bay and Kuparuk River fields.

“We have a dominant position on the fairway,” Duncan said.

State geologists say the shale fairway extends from around the Dalton Highway in the east to the Colville River to the west and on into the federally managed National Petroleum Reserve–Alaska.

Industry sources familiar with the project, asking to remain unidentified, said the shale formations farther west may be more prospective for shale oil development.

Great Bear drilled the first two tests on sites adjacent to the Dalton Highway, which allowed for lower costs because of the year-around access. Locations farther west, however, are remote and will require winter drilling and construction of snow and ice roads.

The three known shale formations in Great Bear’s leases are the principle source rocks for the large conventional fields farther north including the Prudhoe Bay, Kuparuk and Alpine fields.

Duncan would not comment on the possible quality of oil extracted from the shale but said that he expected it to be similar to the oil being produced now in the fields to the north since the shales were the source of that oil. Oil in the producing fields range between the mid-20 degree to 40-degree API gravity.

The potential for North Slope shale oil has yet to be proven but if it is feasible an Eagleford-type development could bring about another oil boom on the Slope. Duncan foresees drilling 200 wells a year in his project. Those would be clustered on pads, somewhat like is now done in the large conventional fields of the Slope, but there would eventually be a lot of pads.

Roads, utilities and pipelines to connect the pads, which would be built in an east-west grid atop the shale formations, would have a major surface impact, which poses challenges in securing permits from government agencies, industry sources have said.

Water, however, is a problem that appears manageable, Duncan believes. He thinks Great Bear will be able to tap into brine water sources deep underground for use in fracturing. The water could then be re-injected underground or recycled, as is now being done in the Lower 48 shale production.

Water use and disposal is now a major issue for shale oil and gas in the Lower 48 states, but it would be less of a problem on the North Slope, Duncan has said.

Tim Bradner can be reached at [email protected].

09/26/2013 - 6:15am