Western oil and gas technical journals as well as ordinary newspapers wax lyrical over the hydrocarbon resources of the Arctic, typically referring to it as the next global frontier. Huge resource estimates are bandied about – the USGS has suggested as much as 400 Bboe remains to be discovered, with over 80% of that thought to lie in offshore fields.
Of course, onshore Arctic exploration has a significant history, notably in Alaska and West Siberia, and there has been intermittent exploration in the Barents, southern Kara, Chukchi and Beaufort Seas.
Nevertheless, a significant part of the Arctic is represented by the largest shelf on Earth, the Eurasian epicontinental shelf, of which the major portion, amounting to some 3.5 million km2, is in the Russian Arctic – an area roughly equivalent to 700 offshore Angola deepwater blocks or 152,000 Gulf of Mexico deepwater blocks! The area is, to a large extent, sparsely explored due to its harsh environment, high cost of operations and forbidding logistics.
From the efforts of Soviet scientists and their successors, we know that the Eastern Barents, Kara, Laptev, East Siberian and Chukchi Seas contain over 40 sedimentary basins, and we have a reasonable idea as to their stratigraphy, sedimentology and structural geology. The Russian Barents and the southern Kara Seas represent the most explored petroleum provinces with large proven resources. In contrast, the North Kara is virtually unexplored, and there is only sparse seismic data over the other areas.
Drachev, Malyshev and Nikishin (2010) give an excellent overview of the tectonic history and petroleum geology of the Russian arctic shelves, and I have no intention of repeating what they say here.
However, building on the current knowledge of the petroleum geology, let us put politics to one side for the moment and assume that western IOCs will participate in exploration of the Russian Arctic. The question then arises – how can such exploration proceed both efficiently and effectively, in the best interest of both licence holders and the Russian government?
This raises three issues: how can IOCs and their Russian partners prioritise the sedimentary basins; is it possible to figure out in advance of drilling which of these are ‘oily’; and finally, is it even remotely possible to envisage huge swathes of Arctic ‘exploration’ 3D at sensible prices?
How Many ‘Oily’ Basins?
Let’s begin by considering the ‘oiliness’ issue.
There is a prejudice that these Russian basins may be dominated by gas due to the provenance of the organic material in the source rocks. However, when one starts digging into the knowledge base on source rocks for the Russian Arctic, using compilations by for example the USGS, Bernstein Research and the aforementioned review by Drachev et al., it quickly becomes apparent that actual data is generally absent. Thus, for example, in the Laptev Sea, one may freely speculate, unconstrained by any hard facts, that there may be present Paleocene and Mid-Eocene marine shales or Lower Cretaceous and Paleogene syn-rift sediments, or for the Russian Chukchi Sea that there may well be analogues to the prolific petroleum systems of the Arctic coast of Alaska.
The areas where there is actual positive evidence of working source systems are the East Barents Sea, where there are Triassic organic-rich gas-prone coal-bearing shaly sediments, and the South Kara Sea where there are Bazhenov bituminous shales, the main source rock of the West Siberia Basin, which may have generated significant gas plus possibly oil at the basin margins.
It is not surprising therefore that the current actions of western IOCs seem oriented towards either a fresh look at the Barents Sea or accessing the South Kara Sea – the target of BP’s ill-starred venture with Rosneft (and where ExxonMobil stepped in recently). It’s difficult to see other areas opening up rapidly given the absence of source rock indicators.
What About Seismic Acquisition?
IOCs have got used to exploring with vast amounts of ‘exploration’ 3D seismic. For example, the nearly 50,000 km2 of deep water and ultra-deep water Angola are covered ‘wall-to-wall’ with 3D, enabling Total, BP and others to enjoy a success rate of >90% in Blocks 15, 17, 18, 31 and 32. In Angola, this 3D typically costs around US $3,000 per square kilometre.
Broadly speaking, the Arctic presents two problems related to seismic acquisition – the ice itself and the limited time that the ice is open. Two companies have stated that they are addressing this issue:
ION Geophysical have been working in the Beaufort and Chukchi Seas, developing methods that work in and under the ice. They have shot very long offset seismic under the ice, which necessitates a very stable acquisition platform with no surface features, gun floats or tail buoys. This, together with the fact that an ice breaker sails the line ahead of the seismic boat, sets up very complex noise patterns, so completely new algorithms have been built to be included in the processing system. In addition, ION employ scientists who specialise in forecasting Arctic ice conditions, and also others who create ideal survey designs for these extreme conditions.
Polarcus have focused on building survey vessels with the capability to operate in Arctic sea ice, meeting extremely demanding ICE classification systems that specify hull construction, propulsion requirements, winterisation systems etc. They are also paying great attention to environmental issues such as sound mitigation and reduction of fluid emissions.
Now these are great technology ideas, great innovations, but with the best will in the world I cannot see either of these two companies being able to shoot vast tranches of exploration 3D at a cost of US $3,000 per square kilometre; five or ten times that, perhaps?
My point is that this displaces what has been the basis for efficient and effective offshore exploration since the mid-1990s and makes me wonder whether Arctic exploration can in fact be undertaken at reasonable cost? If we go back to exploring with 2D seismic, then we face drilling US $100 million wells at a risk of 1 in 4 or worse – not what we want to do!
How Much Data?
What data and knowledge do we have at the moment? For most of the basins, there is a reasonable understanding of stratigraphy, sedimentology and structural geology. Long wavelength gravity and magnetic data is available, as is a certain amount of 2D refraction and reflection data, the latter of which can be supplemented to some extent. Perhaps the next stage of geophysics should be to fly extensive Full Tensor Gravity (gravity gradiometry) surveys, which experience onshore, for example in East Africa, has shown can be a reliable tool for defining significant leads in a basin (see GEO ExPro Vol. 8, No. 1). Integrated with existing knowledge, this approach is capable of producing a basin-by-basin lead inventory.
The next step in the exploration process would then be to shoot ‘postage stamp’ 3Ds over the most interesting leads, to mature them into prospects; drilling could then follow.
I hope I don’t make this sound too simple? Getting to grips with potential source rocks and generating a reconnaissance exploration database is an expensive, extensive and detailed project which is beyond any one company and needs to be commissioned by the Russian government prior to licensing rounds.
And there is one final issue that we need to face.
The Deepwater Horizon tragedy set shock waves around the industry at large. North American academics and other experts have pointed out that a similar spill in Arctic waters could be devastating, with ice possibly hampering any spill responses for months. Many of the problems are logistical. Apart from having only a few months to do any remedial or clean-up work, airfields are remote, weather can ground flights and workers for weeks at a time, and it would probably be impossible to bring a large number of boats to the Arctic – up to 1,000 were used in the Gulf of Mexico clean-up.
Few companies have the resources to do what BP did in the Gulf anywhere, let alone in the Arctic. Shell has described what they believe is needed, saying that for its proposed offshore Alaska drilling programme, it has a three-tier Arctic oil-spill response system, consisting of an on-site oil-spill response fleet, near-shore barges and oil-spill response vessels, and onshore teams, the last able to respond within one hour.
Clearly this is a major undertaking and cost.
Both Greenpeace and the WWF are very exercised by the prospect of a major Arctic spill, for which they claim that no oil company is adequately prepared, painting a picture of relief wells unable to be completed in a single drilling season, oil trapped and moving under ice, and so on. Not only has Greenpeace targeted rigs that are currently drilling offshore Greenland but also ‘polar bears’ have broken into an oil company’s head offices in Edinburgh.
Just recently DNV (Det Norske Veritas, an independent foundation with the purpose of safeguarding life, property and the environment) presented the results of intense and targeted work, coming up with a concept for year-round drilling and exploration offshore north-east Greenland. More than anything their work illustrates a massive need for new technologies, improved standards and increased Arctic research. But that’s not all; they predict that drilling in the Arctic could be up to four times as expensive as drilling in the North Sea. This could be an underestimate…
It’s inevitable that North American and western European bodies are somewhat advanced in responding to the summer 2010 events in the Gulf. What does the Russian government think?
Drachev, Malyshev & Nikishin, 2010 : Tectonic history and petroleum geology of the Russian Arctic Shelves: an overview, in Petroleum Geology: From Mature Basins to New Frontiers, published by the Geological Society, London.