Been there, seen it, says geologist

Robert Meneley’s account of petroleum exploration in Canada’s Arctic Islands provides a salutary reminder of exploration risk

Alan Bailey

Petroleum News

Exploring for oil and gas on paper can be an entertaining exercise. But until someone augurs a drill bit into the ground, it is impossible to say with any confidence whether a promising looking prospect is real, or merely a mirage in an enthusiastic explorer’s dreams. And the same is true when it come to evaluating a potential petroleum province.

Take for example the Arctic Fold Belt, a region of huge geologic structures in the southern part of Canada’s Arctic Islands region, west of Greenland in Canada’s High Arctic. Half a century ago the mega-folds clearly visible in the surface geology were causing would-be explorers to chomp at the bit.

“If this area were assessed now it would be viewed, as then, as an absolute slam dunk for a multi-billion-barrel oil province,” consultant Robert Meneley told an audience at the Arctic Energy Summit Technology Conference in October. “But look what happened. … The Arctic Fold Belt which attracted so much of the early attention has proved a spectacular failure from a hydrocarbon accumulation standpoint.”

Meneley had been involved in a major oil exploration program in Canada’s Arctic Islands in the 1970s and 1980s and was overviewing the history of that exploration.

In fact the Arctic Fold Belt with its deformed upper Devonian and lower Paleozoic strata constitutes the most southerly of three major geologic provinces with petroleum potential in the Arctic Islands region. Immediately to the northwest of the fold belt lies the Carboniferous to Tertiary Sverdrup basin. And to the northwest of that, along the edge of the Arctic Ocean, lies the Arctic Coastal Plain with its sequence of Tertiary strata.

But the region presents daunting challenges for explorers. The Arctic climate is harsh and U-shaped channels approaching 500 meters (1,500 feet) in depth separate the various islands that characterize the region, Meneley said. In the eastern part of the region the islands are mountainous and capped with glaciers, while the islands to the west are flat with only local topographic relief. Even in the era of global warming and an ice-free Northwest Passage, the sea ice along the coast remains notoriously mobile, rendering exploration from the ice a hazardous proposition.

And the area is exceptionally remote, far north of the Arctic Circle. Nevertheless, the lure of oil can attract people even into the most challenging of situations.

“Pioneering surface geological work by the Geological Survey of Canada set the stage for the great land rush that started in 1960 and ran through 1968, by which time almost every available acre of land, sea and ice cap in the Canadian Arctic was held under exploration permits,” Meneley said.

And between 1961 and 1963 the first three exploration wells penetrated prospects in the Arctic Fold Belt. At which point the economic realities of operating in such a remote and difficult region sank in.

“The early operators were dismayed at the cost and complexity of Arctic exploration,” Meneley said. “They realized that they couldn’t work as individual companies but had to join forces as one coordinated exploration program.”

A consortium of exploration permit holders formed and negotiated a series of farm-in agreements. However, because the consortium could only raise $11 million out of the $21 million needed for the exploration program, the companies went to the Canadian government for help.

But the subsequent formation of Panarctic Oils Ltd., a consortium owned 55 percent by industry and 45 percent by the government, still didn’t solve the financial problems.

“Even with the input of government money, Panarctic was in serious financial difficulty, because the cost of the required program had been seriously underestimated,” he said.

The discovery of the giant Prudhoe Bay field on Alaska’s North Slope in 1968 changed all of that. Suddenly the Arctic became the focus of exploration interest.

In what Meneley described as “the heady days that followed” Panarctic was able to farm out many wells on favorable terms and raise additional money through the sale of stock to participating companies and the government. And Panarctic moved ahead with exploration drilling in Canada’s Arctic Islands.

Sverdrup basin

“Drake Point, the largest field to be found, was discovered by the first well to be spudded in the Sverdrup basin,” Meneley said. According to a report published by Indian and Northern Affairs Canada, Drake Point is a gas field with 3.5 trillion cubic feet of gas.

The discovery at Drake Point in 1969 was quickly followed by another discovery on King Christian Island.

“Both of the discovery wells blew out and King Christian burned with a spectacular flare for months,” Meneley said. “Once these drilling problems were sorted out, discoveries at Hecla, Kristoffer and Thor quickly followed.”

However, in 1973 a small gas field at Wallis proved to be the last onshore discovery, despite an onshore drilling program that lasted until 1985. And in April 1973 Panarctic decided to focus its exploration in the western Arctic Islands. The consortium farmed out undrilled prospects in the eastern area, although subsequent drilling in the east proved unsuccessful, Meneley said.

Also in 1973 Panarctic discovered oil at Bent Horn on Cameron Island in the Devonian Blue Fiord limestone of the Arctic Fold Belt. That discovery caused the consortium to expend considerable effort on trying to extend this play, but no further discoveries of significance were made.

The light oil at Bent Horn was produced seasonally from a single well and exported by tanker. However, the field was eventually abandoned due to declining reservoir pressure and other problems, after producing less than 3 million barrels of oil, Meneley said.

In 1974 Panarctic tried drilling some offshore delineation wells in known gas accumulations, in part as a means of testing the viability of drilling from thickened ice platforms. A phase of offshore exploration followed.

“The first offshore wildcat well at Jackson Bay in 1976 resulted in a new (gas) field discovery off Ellef Ringnes Island,” Meneley said.

Another consortium, the Arctic Islands Exploration Group, was formed by Panarctic, PetroCanada, Imperial Oil and Gulf Oil. The new group first made a small offshore gas discovery at Roche Point, and then a more substantial 2 trillion-cubic-foot discovery at Whitefish in 1979. A series of relatively small offshore discoveries followed, including oil in the Cisco field offshore Lougheed Island.

“The gas and oil discovery at Cisco was a high point, but enthusiasm diminished after two successful and one dry delineation wells demonstrated the complexity of that accumulation,” Meneley said.

After the drilling of two additional wells in 1986, the Panarctic exploration program ground to a final halt because of a lack of further attractive prospects, Meneley said.

The upshot of the complete program proved to be the discovery of 19.8 trillion cubic feet of gas and 1.9 billion barrels of oil distributed between 16 fields scattered across the western part of the Sverdrup basin. As a petroleum system, the Sverdrup basin was found to have good middle to late Triassic shale source rocks and a good, pervasive reservoir rock in the form of a regional Triassic to early Jurassic sandstone known as the Heiberg sand. The Jameson Bay shale of Jurassic age forms a regional seal. And there are large structures that can form hydrocarbon traps, some associated with salt domes and salt walls.

Unfortunately, however, the fracturing of the seal rock has in general allowed gas to escape from the traps, Meneley said. That has resulted in underfilled traps and the relatively small hydrocarbon accumulations sizes that characterize the basin and that present some significant challenges for viable development.

“Future explorers will need to develop new play concepts and have the ability to define and drill deeper exploration plays to achieve economic success in the western Sverdrup,” Meneley said.

To date no reservoirs, seals or traps are known within the Tertiary of the Arctic Coastal Plain, a region that continues to present difficult and very risky challenges to explorers, he said.

And that deceptive Arctic Fold Belt with its enticing structures?

There are potential reservoirs in carbonate Devonian and Ordovician carbonate rocks, but no one has found any high-quality reservoirs; source rocks are of marginal quality and are gas prone, Meneley said. In the 90,000 square kilometers of the Perry Island and Cornwallis Fold Belts within the Arctic Fold Belt, 23 wells have been drilled. But the lack of hydrocarbon shows and lack of effective porosity downgrade the prospects for finding major hydrocarbon accumulations, Meneley said.

All of the wells from the era of Panarctic exploration in Canada’s Arctic Islands have been permanently abandoned and the exploration infrastructure such as airstrips dismantled.

“In spite of conducting a well directed and comprehensive exploration program, only limited success was achieved,” Meneley said.