Anchorage Daily News

When the U.S. Minerals Management Service held its Chukchi Sea lease sale in February, the agency collected about $2.6 billion in high bids on some 488 tracts.

So what's attracting oil and gas companies to this remote and challenging region?

Essentially, an abundance of large geologic structures combined with a suite of rocks that are similar to those in the prolific oil province of the North Slope, MMS geologist Kirk Sherwood said a recent meeting of the Alaska Geological Society.

"The Chukchi is structurally complex and because of that there are a lot of prospects," Sherwood said.

"We've got about 850 that we've mapped out."

Of those prospects, 83 are larger than 40,000 acres, making them comparable in size to some North Slope oil fields, Sherwood said. If any of those prospects hold oil and gas, they may be large enough for viable development.

"Our studies have indicated that for the large pools out there we do see tolerable development economics, despite the high cost of operating in that harsh environment," Sherwood said.

THREE PROMISING TARGETS

There are three major sequences of rocks in northern Alaska: Each sequence is associated with a major petroleum system and all three occur under the Chukchi Sea.

The first is known as the Ellesmerian. It involves rocks deposited from an ancient landmass to the north of what is now the Beaufort Sea coast roughly 200 million to 400 million years ago. The Ellesmerian includes the reservoirs for the Prudhoe Bay, Lisburne and Endicott fields.

The next sequence is known as the Beaufortian or rift sequence. It resulted from the breaking apart or rifting of the Canada basin of the Arctic Ocean about 100 million to 200 million years ago. The Kuparuk River, Alpine, and Milne Point fields, among others, involve Beaufortian reservoirs.

The rift sequence is associated with the formation of the Barrow Arch, a major structure that extends along the Beaufort Sea coast and that guided the migration of petroleum to major oil fields such as Prudhoe Bay. The Barrow Arch extends under the Chukchi Sea.

The third major sequence is known as the Brookian sequence. It formed millions of years ago as a result of the emergence of the Brooks Range, which caused sediments to flow into a huge basin, known as the Colville basin, under what is now the North Slope. That basin extends west under the Chukchi.

Fields such as Meltwater, Tarn and West Sak are associated with the Brookian sequence.

LEARNING FROM THE PAST

Much of what is known about the geology under the Chukchi Sea has emanated from the roughly 100,000 line-miles of 2-D seismic that was shot in association with MMS lease sales there in 1988 and 1991, and from five Chukchi wells drilled during that era, Sherwood said. The five wells were called the Popcorn, Crackerjack, Diamond, Burger and Klondike.

To some extent, the 2008 lease sale represented a rerun of the earlier sales, with 172 of the 488 tracts leased this year having been leased before, Sherwood said. However, companies this year did not seem interested in the Brookian plays that had attracted bids previously. But some Brookian plays were excluded from this year's sale, he said.

"What everyone seemed to be going for (in 2008) focused on the plays relating to the Ellesmerian and the Rift sequences," Sherwood said. Almost all of the leases are on extensions of the Barrow Arch, he said.

And 91 percent of the high bids in the 2008 sale clustered around the Burger, Klondike and Crackerjack structures.

"That tells you where the exploration interest is being focused in the Chukchi Sea," Sherwood said. "They have favorable locations relative to the Chukchi oil generation kitchen and they are large prospects with opportunities that remain untested by existing wells."

And, although the Chukchi wells did not discover any oil pools that people viewed as economic at the time, the wells did encounter hydrocarbons.

So what exactly did the wells find that continues to spark exploration attention? And what might the companies that bought leases in 2008 be looking for?

BURGER GAS FIELD

The Burger well discovered a major gas field in a 107-foot-thick, rift-sequence sandstone, Sherwood said. Part of the Burger structure attracted the highest single bonus bid in the 2008 sale.

"The sandstone was gas saturated," Sherwood said.

The part of the structure most likely to be productive encompasses 97,000 acres, while the area of the structure delimited by a possible spill point for the reservoir is almost 200,000 acres in extent, Sherwood said. Sherwood said that he and MMS geologist Jim Craig estimated that the Burger structure might contain 14 trillion cubic feet of natural gas, with a possible range from 2 tcf to 63 tcf. That would make it a huge gas field.

The current North Slope oil fields are known to hold 35 trillion cubic feet of gas reserves, Sherwood said.

But is oil under the gas at Burger? The sidewall cores in the well showed a small, residual oil saturation, suggesting that the reservoir might have once contained oil that the gas later displaced, Sherwood said.

"That opens up the possibility of an oil ring or an oil column beneath the gas accumulation at Burger," he said. However, an investigation of the chemical data from the well has failed to either prove or disprove the presence of an oil pool, he said.

KLONDIKE AND CRACKERJACK

The Klondike well tested a set of Ellesmerian rocks that include the Ivishak formation -- the main reservoir at Prudhoe Bay, the nation's largest oil field. But the well found barren shales, rather than the sandstone rocks found at Prudhoe.

The well did sample some oil and there is further exploration potential around the Klondike structure, Sherwood said.

The Crackerjack well was looking for Ivishak sandstone on the east flank of a huge, 100-mile-long elevated, faulted block, Sherwood said. Unfortunately, the Ivishak turned out to be missing at the well location. Although Ivishak-equivalent rocks are likely present near the well, experience at the Klondike well suggests that drilling into the local Ivishak would prove futile.

But the well did encounter oil and gas in several sandstones and, as at Klondike, there are some untested exploration possibilities at the prospect.

The Burger, Klondike and Crackerjack wells lie right in the area where oil is likely to have flowed into reservoir rocks. And the findings from the Chukchi Sea wells dispelled worries that the rocks might have become overheated as a result of deep burial at some time in the past -- that was a big concern during the Chukchi exploration that took place 20 years or so ago, Sherwood said.

"We had a fear, and I think industry to a certain extent shared that fear, that we'd go out there and find a bunch of smoking cinders where our reservoirs ought to be," Sherwood said.

In fact reservoirs like Burger were found to be in pretty good shape, he said.

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