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The 'Next Big Shale Play' Is in...Alaska?

Ed Duncan is returning to Alaska's North Slope where his career began about 30 years ago. This time around he has today's unconventional drilling technologies to unlock what he expects will be a new beginning for himself and for the state.

Great Bear Petroleum, of which Duncan is president, has more than half a million North Slope acres -- acquired last fall at a cost of $8 million -- that Duncan thinks are ripe for unconventional oil and gas development. The company describes its acreage as being in the heart of the unconventional play fairway south of the Kuparuk and Prudhoe Bay fields. Duncan can't wait to start poking holes in the ground to target the Shublik formation, the Kingak Shale above and the Hue Shale above that.

"Their quality is extraordinary. They're regionally extensive; they have optimal thermal maturity, and they're at accessible, drillable depths onshore within reasonable proximity of existing infrastructure that has well in excess of the capacity we would need early on in the program," he said.

Alaska's shale potential is only just emerging as the industry's focus to date has been on conventional oil and gas production, the company says on its website. "Great Bear believes Alaska hosts the next big shale play in North America."

Duncan, who describes himself as a geologist who likes to drill, told NGI's Shale Daily his enthusiasm for the play is technical in nature. The focus, at least at the beginning, will be on oil.

"The Triassic Shublik formation and the Cretaceous Eagle Ford formation from the Gulf Coast are remarkably similar in geochemical makeup from the total organic carbon content as well as the type of organic material in the rocks," he said. "They're both oil-prone source rocks that will generate gas when they become thermally stressed at high maturity levels. Generally, very good oil-prone source rocks."

Great Bear plans to start by targeting the Shublik and possibly the adjacent Kingak. The Hue Shale will be a separate development program. "We have focused our leasing very, very carefully and heavily biased toward liquids production," Duncan said. "...There is a significant need in Alaska for oil production for TAPS [the Trans Alaska Pipeline System]."

TAPS is about 40 years old and is wanting for more oil to fill it. Great Bear could begin production in 2013 and stay in full development mode for 25-30 years, with another 25-30 years of productive life after that, Duncan said. "We're looking at another 50 years or so of production life on top of where we are right now with the current pipeline," he said. In other words, Alaska might need a new oil pipeline before Great Bear is done.

The technology needed to tap Alaska's shale is well familiar to the industry, Duncan said. "It's already resident on the North Slope. The companies that do most of the major pumping jobs, reservoir stimulation work in the Lower 48 are heavily involved in Alaska, and we've engaged with all of them," he said. "I am quite confident that that technology not only resides there but has in fact already been applied there."

The goal is to develop the Shublik to where it's a factory-type of production operation like what's been seen in Lower 48 shale plays.

"If [the first wells] go precisely as we would like them to go, we may move very quickly toward factory-style drilling," Duncan said. "One very big advantage we have in the North Slope Basin...is that the data are comparatively modern...compared to much of the data that were used in the early days [of the] Eagle Ford, Bakken and so forth...The basin is very well studied with a tremendous amount of analytical geochemical data. We are going to collect early in our program some whole rock data from coring operations. We'll use that to fine-tune our drilling and stimulation program in our early wells."

Duncan said full field development could be sanctioned after as few as four proof-of-concept wells. And "to get to the Shublik we have to drill through the Hue HRZ and the Kingak, so we will be getting very good analytical data on those rock units as we go down to the Shublik.

"There's an awful lot of leasing that goes on in every state that is really land speculation, hoping to sort of get in the middle of something that's developing. That's not who we are. I'm a technical guy. I'm a geologist by academic training and by career practice and an explorer at heart. We lease so we can drill, and that's what we're setting out to do."

The privately held company is not seeking joint venture partners and is "quite happy with our investor base," Duncan said without elaborating.

Great Bear recently leased office space in Alaska to house about five full-timers, one of them Duncan's wife, Karen Bryant Duncan, who is the company's general counsel and secretary as well as a vice president. "We're not planning on hiring a large number of permanent employees," Duncan said. "We have master service agreements with companies that cover everything from drilling to regulatory and permitting to pipe construction, crew housing. You name it, it's done."

Duncan allowed that he may one day retire in Alaska. The return to the North Slope is bringing his career full circle.

"I love the North Slope, worked it hard when I was a youngster and now it feels really, really good. It feels good at a lot of levels. We've done our science well. We've established a dominant leasehold position in a play that I think is the future for Alaska and critically for me and for my spouse.

"This really has a lot to do with leaving a legacy. This isn't just about finding oil and gas. This is doing something for the state of Alaska that's critically needed, hugely important at a societal level...It will be a massive economic boon for the state. That's what makes me happier than anything."

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