A somewhat belated Happy New Year! Welcome to the first Petro Ninja – Enlighten Geoscience Well of the Week for 2022. The holiday break between articles was a little longer than I originally intended, but (as I would always tell my profs) I hope you will agree it was worth the wait.
All the snow shoveling, wood chopping, trying to stay warm and outdoor activities gave me a chance to cogitate on a few themes in the oil and gas industry and see some possible connections. The result is this post, which attempts to provide some context to the usual recitation of the geology and production metrics of a particular well and formation.
If you read these missives you probably subscribe to the ARC Energy Research Institute podcast and blog (if you don’t, I highly recommend them). In his most recent post, Meet the new boom. Different from the last boom, Peter Tertzakian reiterates the case that operators face pressure to use increased cash flow to increase dividends to investors rather than grow production.
While this will most likely be the case for existing companies, one might add a codicil that there will be capital pools looking to benefit from increased prices by funding start-ups without the pre-existing obligations. At least that is the outlook of an optimist. But what plays might these companies chase?
Put yourself in the shoes of the putative junior oil and gas company. You need to find a niche to exploit. The lucrative acreage in the Canadian big plays (Montney, Deep Basin Upper Mannville, Clearwater, Duvernay and others) has all been tied up by deep-pocketed players. Where can you find a play no one else has already initiated? The Western Canada Sedimentary Basin, of course.
When the series on the past discoveries on the Peace River Arch (and some potentially to come) paused at the end of 2021, we had reached the end of the Devonian. The Peace River Arch (PRA) was a positive structural feature, and the Devonian plays discussed in the first segment of this series developed along the flank of this massif.
Reimer, D. – A., 1989
At the end of Wabamun time, the PRA began to collapse through a series of normal faults. This process was a factor during the Carboniferous to Jurassic (O’Connell, 1994). During the Carboniferous this collapse resulted in somewhat unique structures, sedimentological patterns and subcrop trends. These features included Pekisko aged Waulsortian mud mounds (WMMs) (Al-Aasm and Vernon, 2007; Reimer, 1989).
The reservoir characteristics of the first mounds targeted (Discovery well 100/07-06-082-12W5/00) were very promising. Reservoir thickness ranged from 34 to 50 metres thick and porosity from 6 to 25% (I love the term “Shelter Porosity” used to explain the higher end reservoir) and In-Place oil reserves estimated at 2 to 5 million barrels (Reimer, 1989). And these buildups were readily identified on seismic. Unfortunately, this oil was 11.7o API rendering the wells uneconomic. And thus ended the Pekisko Mud Mound play.
Production forecast courtesy of Subsurface Dynamics
Not quite so fast. In 1991, Anderson Exploration drilled 102/15-17-079-22W5/00. This well serendipitously discovered a WMM and has a forecast cumulative production of almost 775,000 bbls of 38o API oil from a depth of just under 1400 metres. That ought to be economic at $80/bbl WTI. What else should pique the interest of an intrepid explorer? How about a water cut of 5.6% over the course of 608,698.9 of total fluid production? Alongside a pressure vs depth ratio of 8.2 kPa/m, there is a prima facie case that this facies is in a lower pressure oil deep basin. The Normandville mound complex emphasizes the case made by Graham and Krause (2006) that the Mississippian is a vastly under-explored interval. And I haven’t even touched on the nearby Tangent Banff pool (100/03-35-080-24W5/00).
Al-Aasm, I. S., & Vernon, M. (2007)
What does this have to do with the current oil price boom and activity in the field and downtown Calgary? For over a decade the industry has been focused on resource plays and oil sands developments. The massive application of capital and coordination of effort to exploit these plays is reminiscent of the preparation for the invasion of Normandy during World War II. If D-Day is a metaphor for resource plays that require a massive application of resources, perhaps a plethora of small companies finding ways to exploit targets too small for the major companies is similar to the small boats that saved the day at Dunkirk. Both are very different approaches, but both were successful in increasing employment and production. The Dunkirk approach will require people to correlate a lot of wells, draw all sorts of maps, interpret seismic, describe core and log cuttings. Otherwise known as prospecting and exploring. Some of us consider this to be the fun part of the business.
References
Al-Aasm, I. S., & Vernon, M. (2007). Waulsortian-like mounds of the Mississippian Pekisko Formation, Northwestern Alberta: Petrographic and chemical attributes. Marine and Petroleum Geology, 24(10), 616–631. https://doi.org/10.1016/J.MARPETGEO.2007.04.003
Graham, B. and Krause, F., 2006. Mud-Mounds: The Key to Increasing Oil and Gas Production in the Carboniferous? In CSPG/CSEG/CWLS Convention 2006, What’s New? Where is Our Industry Heading? Calgary, AB, Canada, May 15-18, 2006.
O’Connell, S. C., 1994. Geological History of the Peace River Arch : in Geological Atlas of the Western Canada Sedimentary Basin, G.D. Mossop and I. Shetsen (comp.), Canadian Society of Petroleum Geologists and Alberta Research Council, https://ags.aer.ca/atlas-the-western-canada-sedimentary-basin/chapter-28-geological-history-the-peace-river-arch
Reimer, D. – A., 1989 in Geophysical Atlas of Western Canadian Hydrocarbon Pools Anderson. N. L., Hills, L. V. and Cederwall, D. A. Canadian Society of Exploration Geophysicists.; Canadian Society of Petroleum Geologists. https://cseg.ca/assets/files/atlas/K_Chapter_6.pdf