Great Bear spuds well south of Prudhoe Bay

Great Bear Petroleum has resumed its North Slope exploration drilling. The company “spudded,” or started, its Alkaid No. 1 well Feb. 5 to test a prospect on the Great Bear’s leases south of Prudhoe Bay and plans to drill a second well nearby this winter, Talitna No. 1.

The Nabors Alaska Drilling Co. Rig 106 is being used on the drilling, Great Bear vice president Pat Galvin said. About 60 workers are being employed on the rig.

Both prospects are conventional oil and gas formations rather than the extensive shale formations that were the targets of two earlier wells Great Bear drilled in 2012, Galvin said. However, at least some of the shale formations will be penetrated by these wells, which will allow additional samples to be taken from the shale for more testing, he said.

If the drilling is successful it’s possible that some production testing could be underway this summer, with the produced oil trucked to Prudhoe Bay on the Dalton Highway, Galvin said. Another 40 workers would be employed in production tests if they occur.

Great Bear’s winter program is budgeted at $50 million, he said.

The 2012 wells, aimed at testing the shales, were drilled in the summer on gravel extensions built on the Dalton Highway, an all-year gravel road that extends south of Prudhoe Bay to Interior Alaska.

That drilling was primarily to extract core samples from the shale for analysis, although the company hoped at the time to drill one horizontal segment for a production test. That was not done, however.

Great Bear still considered the drilling successful because valuable data was obtained.

“The samples met or exceeded our expectations in terms of organic compounds (of hydrocarbons) and the right thermal maturity, which meant the rocks were prone to the formation of oil rather than, say, for natural gas,” Galvin said.

The 2012 well results also showed a substantial presence of conventional oil prospects on Great Bear’s leases, which has now been affirmed by 3-D seismic testing the company did in 2013 and 2014.

This has caused Great Bear to shift its plan to focus first on conventional oil, the hopes being that this will help pay the costs for a long-term evaluation and development of the shale oil resource, Galvin said.

The prospects this winter are located a few miles off the Dalton, which has required the construction of short segments of ice road. The two well locations are close enough that one support camp is being used to support both wells, he said.

If the results are encouraging the company will be able to do follow-up drilling this summer from well sites adjacent to the highway, as it did in 2012. Exploration wells are almost always drilled in winter on the North Slope because the tundra must be frozen before ice or snow roads can be built to locations off the road system.

Because of its proximity to the highway, however, Great Bear can drill in the summer, an advantage because the contract rates for drill rigs should be less than in winter, the peak season for contractors, Galvin said.

Great Bear is the first company to focus on potential shale oil on the North Slope, an unconventional oil resource. The company unveiled its strategy with an aggressive program of acquiring acreage in the state’s 2010 “area-wide” North Slope lease sale and followed up with additional leases added in the statewide sales held in the following years.

The objective is to determine if the North Slope shales, which are very large and are known to be the source rocks for the region’s large conventional oil fields, can produce oil in the way that the Eagleford shales in Texas and the Bakken shales of North Dakota are now major oil producers.

The North Slope shales are very similar to the Eagleford shales, Great Bear officials have said in the past.

Scientists have confirmed that the oil found in the large producing fields such as Prudhoe Bay, Kuparuk River and Alpine, originated in the shale “source” rocks lying to the south. Over geologic time the oil seeped out of the source rocks and migrated upward, to the north, into large sandstone rock layers. When further migration was blocked by impermeable “cap” rocks, the large oil reservoirs were formed.

Great Bear is betting that a large amount of oil remains in the source rocks that can be produced like companies are doing in the Eagleford and Bakken shales of the Lower 48.

An additional advantage for Great Bear is that all three of the major shale formations on the slope, the Shublik, Kingak and Hue formations, are all present, even “stacked” on top of each other along with conventional oil reservoirs, Galvin said.

Galvin said another possibility is that at least some of the North Slope shales might be produced without large-scale fracturing of the rock, which must be done in the Lower 48. If the Slope shales are naturally fractured enough, which could be the case, the amount of fracturing needed might be reduced.

This could reduce costs, a key concern with any North Slope project.

Galvin said another initiative by Great Bear is an aerial LIDAR survey (light detection and ranging) of surface terrain contour and tundra lake bathemetry on about 10,000 lakes that has given the company highly accurate information to use in securing permits.

Two types of LIDAR were used in the lake surveys, one that is water penetrating and the other water reflecting so that the bottom contours of the lakes can be seen as well as the water levels. This allows for an accurate assessment of the water contained in the lakes.