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~ GEOLOGICAL Sol KING ED HYDROCARBON Resource Base I~T~ODUCT10~ The coastal region of the North Slope of Alaska produces more petro- leum than any other area of the United States. The supergiant~ Pru&oe Bay field, many times larger than any other U.S. oil field, is one of five reservoirs that produce oil (Table 3-~. Although the Pru&oe field tends to overshadow the others, Kuparuk is a giant field in its own right, much larger than fields in the lower 48 states, and "lithe" Milne Point would rank as a major field in Oklahoma or Texas. GOAL Al O LOGY OF THE B"UFO~T ED CHUKCHI OUTDO CO~TI~TAL SHELVES The outer continental shelf (OCS) norm of Alaska stretches for more than ~ ,000 On from the border with Canada on the east to the International Date Line on the west. Along the margin of the Beaufort Sea, its width from the shoreline to the slope break at a water depth of 200 m ranges from 70 to 160 km. West of Point Barrow it widens into the broad Chukchi shelf, a triangular region about 500 On on a side. The region is therefore compara- ble in area to the Gulf of Mexico offshore region from Pensacola, Florida, westward to He Mexican border. 'A "giant" field is usually considered as ~ 500 x 106 bbl. "Supergiant" has been used differently by different writers, but all agree on ~ 5 x 109 bbl. 41

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42 OCS DECISIONS: ALASKA TABLE 3-1 Producing Fields of the Pnadhoe Bay Area Estimated Estimated Field TotalReserves Recoverable Pn~dhoe Bay 22 Bbbla 12+Bbbl Kupawk 6.4 Bbbl 2-3 Bbbl Endicott 1 Bbbl 400 Million bbl Lisburne 2 Bbbl 200 Million bbl Milne Pointb 500 ? Million bill 10() Million bbl abl= barrel; bbl= barrels; Bbbl= billion barrels (109 barrels) bMilne Point is not currently producing. It may be reactivated in the near fixture. Source: BP Exploration (Alaska) Inc., 1991. The shelf is the geological extension of the North Slope of Alaska and is underlain by a variety of sedimentary strata, including many formations Hat constitute source rocks and reservoir rocks for petroleum and natural gas. These range in age from Silurian to Tertiary (see Figure 3-! for He generalized geological dine scale) and are arranged in complex stratigraphic packages that document several major Earth events (Hubbard et al., 1987; Grantz et al., 1990; Haimila et al., 1990), including mountain building, uplift, and deep erosion; crustal stretching that formed deep basins that captured organic-rich sediments; and overprinting deformations that resulted in many types of geological structures that could be of! and gas traps. The Department of He Interior's Minerals Management Service (MMS) report on He Chukchi Sea Planning Area (MMS, 19871) summarizes the stratigraphy as follows: Three major stratigraphic sequences are recognized in north- western Alaska. (~) He Franldinian sequence (Precambrian to Middle Devonian metasedimentary rocks), which comprises He acoustic and economic basement complex throughout most of northern Alaska; (2) He Ellesmerian sequence (Devonian to early [sic] Cretaceous), which is composed of northerly sourced elastic and carbonate rocks; and (3) He Brookian sequence (early [sic] Cretaceous to Tertiary), which comprises a ciastic

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Em Period Epoch Mililon ream . .......... ,........... ............................ ............................... ................... .................................. ................ : ................................... .................................... ............................ ............................. .: ' '.'. ~' . i ,.,.~ ................................... ......................... ................................. ........ .............. .............................. ...................... .......................... ........ .... .... .............. ... ....... ; .; ............................ .......................... . ~ .............. _ . O ......... ~ .............. 0 .............. . . ~ ,.. ~ .... .- - ........ .~ :~ :: - ~....:.~.:..-. art. : .:. ::~: . :::~:-. . :~-~:~ :~:.:~ ::: :.: ~--:. . ~-::~ .~ :o.~ ::: :~:: ::::::: ::: :~: ::- - : : :: ~ :- :: : : I:: ::: =.:-::: .~ :-::::. .: : :~ :~ . .:~:-. :.-:: : ~ . ~ ::: I:: :: ~ :.:-:.'. A. ::~-:~:: :::::: -..: ~ :.:. :.~:: ..: ~ -: .:. .:~ . :. i-. ::::-:::::::::::: .: ::: Holocene (Recent) Quaterna~ Pleistocene (Glacial) Plio ene Miocene TeHia ~Oligocene Eocene Paleocene Ore aceous Jurassic Triassic 0.01 1.8 2.8. 4.05.3 2~26 ~8 _5 56 6 6 135 - 141 20~215 240 Pennlan 290 305 Pen nsylvan la n (Upper Carboniferous) 330 Mississipplan (Lower CarboniferousJ 360 365 Devonian Silurian Ordovician Cambrian 405 - 15 435 440 _495-51 0 570 PRECAMBRIAN FIGURE 3-1 Generalized geological time scale. GEOLOGICAL SE7TING 43 1

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44 OCS DECISIONS: ALASKA wedge that was shed generally northward away from the Brooks Range orogen. The Ellesmerian sequence is separated from the underlying basement by the Ellesmerian unconformity (KU) and from the overlying Brookian sequence by the Lower Cretaceous unconformity (LCU). Offshore, the Ellesmerian seismic se- quence is subdivided into lower and upper parts by a Permian unconformity (PU). The Brookian seismic sequence is subdi- vided into lower and upper parts by the mid-Brookian uncon- formity (mBU) of Late Cretaceous to Tertiary age. The generalized stratigraphic sequence is illustrated in Figure 3-2; that of the National Petroleum Reserve is shown2 in Figure 3-3. The structures that are known to be oil-productive in the Pru~hoe Bay region extend north- ward offshore and to the west and northwest. The of! industry studies the subsurface geology of this vast region and sorts out the region's complexi- ties to locate exploratory wells. The area's complexities suggest that many test wells will be needed before the amount of oil and gas there can be estimated accurately. Known onshore occurrences, however, make it likely that the offshore region contain significant quantities of of! and gas that can be developed if the economic obstacles due to the operating problems in the hostile arctic environment can be overcome. Indeed, the number and ver- tical distribution of oil-bearing strata in the Pru~hoe Bay region (Figures 3- 4a and 3-4b) and the probable extension of many of these formations suggest that the North Slope of Alaska and the adjacent continental shelf contain large reserves and that this region will continue to be explored and developed for some time. The similarity of the geology of the North Slope to several over passive continental margins adds to our confidence in this interpretation. Al T~OL[UM GEOLOGY Resource estimates of He offshore areas of Alaska emphasize a The National Petroleum Resewe-Alaska is a large area of the north coastal area of Alaska extending from Point Belcher on the west to the margin of the Prudhoe Bay area on the east.

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GEOLOGICAL SEITING 45 AGE MY LITHOSTRATI GRAPHY S E I S M I C HYDROCAR BON BP SOUT H NORTH S E Q U E N C E DISCOVERI ES QUAT W1~__QU ~ O ~z ~-MU- ~CANADIAN BEAUFOR I`J ~.. : :::.~: SAGAVANIRKTOK FM --- ~ z ~ TAGLU - ::: ~ o , ( M A C K E N Z I E D E L T. A ) . ' ::.:: . :: ::.:. .:. :--======~ ~ cn UGNU c ~. ~ COLVILLE GR ~ WEST SAK O I O O - _~ ;, m ml m ~ RB'FuT_- u M I AT ~ PEBBLE ~ ~ =~ - E (MACKENZIE DELTA) O ~,~ E QLUCE uC 1' P O I N T T H O M S O N O c' ~ K U P-A R ~ ~ R I V E R F M M I L N E P T . / o: == KINCAK F~ ~ z ~ BARROW GAS FIELD ~ -200 ~ y y ~ _ _ ~ _ <~ J cn ~ P Ff U D H O E BA Y z 5 ~ 6~ : . . E C H O O K A F ~ . ~ ~ ~ ~ ~ ~ ~ PRUDHOE BAY O ~ -300 ~ L I SB ~ ~ O 0 ~ C . -4 OO ~ ~ ~ EN D I COT T l ~5 ~ ~, ~ E R U O K P U K F ~ . OIL FIELD ~T DEPOSITIONAL GAS FIELD ~ UNCONFORMITY OIL AND GAS ~ EROSIONAL FiLD ~L UNCONFORMITY ,-. ., ~ SANDSTONE SHALE CONGL OMERATE ~ LIMESTONE ARGILLITE ~DOLOMITE FIGURE 3-2 Generalized lithostratigraphic column showing the relationship of onshore rock units in northern Alaska to offshore seismic sequences in the Beaufort Sea Planning Area. Significant hydrocarbon discoveries in northern Alaska and Canada are shown by their reservoir formations. Source: Craig et. al, 1985.

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46 OCSDECISlONS: ALASKA a, a) - = E `0 0 \~ a, 0 0 \ c ~ . 0 0 3 E ~ D `~, Z 0 ~ .0 .C ' 3 tt E ~n 0 tD Q UL ~ D Y S Q ,. 0 ~ ~E = - ct 0 ~ ~ 0 O ~ 0 .c Y y C =, 0 Y Z Z O O u~ u c~ z ~ ~ ~ m O ~ ~ ~O Z \ . 1 m m UJ L11 O O ~C LLI ~_ ~n UJ O C I _ G~ C] I~ G 4( <( o O ~ ~ F~,L, 00 G C) ~U o ~ _ , m ~ : Z <: Z' - o G =0 O {W ~ ~t O) dl lO'dO NIA~dnNOn Ue!U!OU8I8A o1 Ue!ql~/ue!:d~ SllO33~13'dO'd3M01 LU LU ~n LU a: UJ o U~ a, J u, O ~ J F ~: , Z Z UU ~ S y ~Z ~ UJ >. ~ Z ~ Z S ~ - G C) _ _ u, C uu N UU z UJ CO .E ~e ~o E l~ ~D O D ~ ~ ~ O ~ ~ ' E - 2 E O~ E ~ ~ ~ ~ ., E ~ ~ ~ ~ c ~c _ .o ~ ~ 0 c 0 ~ ~, ~ 3 ' ~ c} =~E 2 E c ~ E ~14 . all iP!W | Je~O1 NV183WS3113 ~ ~ E c ~ ~ c~ : - E E D O E o ~ 8 ~ > c 0= ~ ~ Yo 8 E ~ E s ~ ~ E .- e O-e S ~ E 0 . oSq ' . 1 z~ j; i ~ . . _ , ~ : c; 06 - ' ::~: ci ~ 1 1 ~ 11 L |$ , !21 .- t1 C I^. G ~ | '++ /++++ ++++ + + 1 - t u~ u~ C 1 - - 0 ~o - 0 0 ~ ~ ~ ~ ~ ~5 00 C~ ~ _' _ .~ o .e

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- GEOLOGICAL SE171NG 47 72 7oo 68 _ Arctic North Chukchi ~ Basin t :, 4~ li~? ~ Ocean Physiographic province ~boundary Normal faull ,r~ ~at/)rO/-y ~ Sstroclura' trough ~ ' / (/ T -~.. :_. , . . Stal p ,~ ~ . Hor~e y Lisburne j . /~_ -~|' '`~' ~\ o 100 Miles O I 160 Kilomelers Range :; \ on, (, , . . . . . FIGURE 34a Generalized structural features and geological framework of onshore and offshore northern Alaska. Source: Adapted from Thom~s etal.,l991. ~ 72 e ~East Oc South ~ Barrow Barrow \ Barrow l 158 Beaufort Sea '49 ;:,eai Point Gwydyr Island Mcintyre x~G Barrow Barrow Sandpiper \ | /Prudhoe / Point Thomson OCR for page 41
48 OCS DECISIONS: ALASKA substantial energy endowment in Me region. The estimates are, of course, widely variable depending on what method is used and We amount and quality of geological information-but all current estimates generally agree that about 25% of the country's undiscovered of! resources are offshore Alaska. This potentially huge energy endowment has attracted drilling in most of the offshore Alaska basins on leases previously obtained from Me federal government. The initial exploratory drilling programs also have led to consideration of additional lease sales, Me subject of this report: Navarin Basin, Sale 1073; Chukchi Sea, Sale 126; and Beautort Sea, Sale 124. None of Me offshore explorations had revealed oil in quantities large enough for commercial production until October 1992, when ARCO an- nounced an apparently commercial discovery in its No. ~ Kuv~um well in Me eastern Beautort Sea, about 97 On east of Pru~hoe Bay and 26 On offshore on federal acreage. Although only the discovery well has been Milled to date, many industry sources believe that the new field could con- lain reserves of ~ billion barrels or more. The real extent of Me field and Be number of barrels in it will be determined by confirmation and delinea- tion wells. Meanwhile, regardless of Be absolute field size, Me ARCO discovery highlights the reserve potential of offshore Alaska. Cllukch! Sea The Chukchi Sea province, approximately 400 Ian long and 240 km wide, is off the coast of Alaska between Barrow and Cape Lisburne. The province is limited on Be north by Be Chukchi Borderland, considered too far norm and in waters that are too deep to be drilled feasibly in Be near future (Thomas et al., 1991~. The province is bordered on Be east by Be edge of Be Arctic Platform and on Be west by Be margin of Be Chukchi Platform. To Be south and southeast the province is bordered by Be Herald Arch and Be seaward extension of Be Brooks Range (MMS, 1989~. The Chukchi Sea province is composed of Tree primary sedimentary basins: the Colville Basin, the Central Chukchi Basin, and Be Norm Chuk- chi Basin. The Colville Basin contains about 6,100 m of Brookian sedi 3 Although MMS canceled arK1 deferred the Navarin Sale for further review until 1996, a short description of the area is included in this report.

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GEOLOGICAL SEINING 49 meets in a northwest-to-southeast-trending foredeep trough north of the Brooks Range orogen. The Central Chukchi Basin is a north-trending off- shore extension of the Arctic Alaska Basin. It contains 12,200 m of Ellesmerian and Brookian sediments. The North Chukchi Basin contains more than 13,715 m of lower and upper Brookian elastics (MMS, 1989, 1991a). The stratigraphic sequences appear to be offshore extensions of the western North Slope stratigraphy. As at Crusoe, the underlying Frank- linian sequence of metamorphosed Cambrian to Middle Devonian rocks are the lower limits of possible petroleum deposits in the Chukchi province. The Ellesmerian and Brookian sections provide the source rocks and reservoir potential for petroleum in the area. The rocks of the Ellesmerian section (late Devonian to early Cretaceous in age) are shallow-water limestones and marine and nonmarine sandstones and shales derived from a northerly source. No COST (continental offshore stratigraphic test) well has been drilled in the province to provide public information about the likely sources and reservoirs of the Ellesmerian section, but seismic data indicate that the source of the offshore section was from the west (MMS, 1989~. The Cretaceous to Tertiary Brookian section is composed, onshore and offshore, of deltaic sediments derived from the Brooks Range to Me south. Geochemical studies from onshore areas show that the Ellesmerian and Brookian sections contain source rocks that could provide significant quan- tities of of! to potential reservoir beds, most of which seem to be in He Lisburne and Sadlerochit groups of the Ellesmerian section. They produce prolifically onshore and are believed to have similar capabilities at various places offshore. The shallower Brookian sequence, which is productive on- shore and in the Canadian Beaufort, is also expected to have gooc! offshore potential. Tens of thousands of Odometers of high-quality seismic surveys avid grid spacings as close as i.6 x I.6 km (! mile x ~ mile) in some areas have been obtained in He province. MMS, for example, had acquired 73,000 miles of common Kept point (CDP) seismic profiles over He area by He end of 1987. This extensive net of seismic control enabled He identification of many structural and stratigraphic traps. Structural traps are common throughout He area and could predominate in He Central Chukchi and North Chukchi basins. Bow fold- and fault-related structural traps are present; some of these are complicated by unconformities (erosional gaps)

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50 OCS DECISIONS: ALASKA in the Ellesmerian and Brookian sections. Stratigraphic traps could pre- dom~nate along the flanks of the Arctic and Chukchi platforms. The first federal lease sales were conducted in the Chukchi province in 1988. Bids for OCS Sales 97 and 109 totaled $~8 and $478 million, respectively. From 1989 through 1991, Shell Oil drilled five wells on structural prospects in the Colville and Central Chukchi basins. Detailed descriptions of the wells, with the exception of the Klondike No. ~ drilled in 1989, have not been released, but there is no report that any of the wells found a commercial quantity of oil or gas. General statements from the industry indicate that, although the wells did not contain commercial accumulations, some oil is present and is effectively trapped in the structures. Source rocks were identified; particularly the Shublik Formation of the Ellesmerian sequence. High-quality reservoir rocks were not as widespread as had been hoped. However, the five initial test wells provide only a very sparse sampling of the stratigraphy of the province, and subsequent wells located with more emphasis on stratigraphy could identify potential reservoir rocks. Results of the first drilling phase are still being evaluated, but they appear to provide encouragement for further exploration of the province. The key elements of oil accumulations have been confirmed and only the finding of better quality reservoir rock remains for discovering commercial accumula tions. Operations in He severe offshore arctic environment are difficult and operational flexibility is necessary for a successful drilling program. Costs are very him and cost-sharing industry partnerships might be necessary. The 1991 OCS Sale 126, in which only $7 million was bid by industry, reflects He difficulties of drilling in the Chukchi province. It also reflects depressed of! prices and opposition to OCS exploration. Nevertheless, all the elements for oil accumulations have been confirmed in the Chukchi province. The next phase of exploratory drilling might find the I-billion-barrel field, considered to be He minimum economic field size that could establish the Chukchi as a prolific of! province. Beaulort Sea The Beaufort shelf is in the offshore area of Alaska between He Canadian border on tile east and Barrow on He west, generally parallel to

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GEOLOGICAL SETTING 51 the coast. It is approximately 560 km long and 96 km wide. It lies off- shore of He Arctic National Wildlife Refuge (ANWR) to He east and He National Petroleum Reserve, Alaska (NPRA), to He west. The area of in- terest is bounded on He soup by He Barrow Arch and on He norm by a shelf edge and slope into the deep Canada Basin (Figure 34a) (Thomas et al., 1991~. The shelf can be divided into two major provinces, separated by a highly faulted Hinge Line (MMS, 1989~: The Arctic Platform lies south of He Hinge Line and the Brookian Basin lies norm (MMS, 1990~. The northern limit for prospecting in He Brookian Basin is the deep water of He Beautort Basin (Thomas et al., 1991~. The province can be divided into six primary centers of sediment deposition: Northeast Chukchi Basin, Nuwuk Basin, Arctic Platform, Arc- dc Basin, Dinkum Graben, and vile Basin. The Franldinian crystalline metamorphic rocks are He seismic and economic basement of He province. Overlying this basement is He Ellesmerian sequence, which provides He source and reservoir rocks of He Pru~hoe Bay and other North Slope fields. The Northeast Chukchi Basin is structurally isolated from the better known Ellesmerian sequence to the east below the Beautort Sea, and the rocks in this basin are so far unproductive. They are considered a separate sequence. The Ellesmenan sequence, denved from a northern source, thins as it laps onto He ancestral landmass to He norm. "Thick wedge-shaped layers of Ellesmerian sequence rocks are present in He southern part of the province; they become thinner to the north and are absent entirely in the northern part" (MMS, 1990~. The sequence is generally present on He Arctic Platform and He Nuwuk and Kaktovik basins, but is missing to He north in the Arctic Basin. Because He Ellesmerian section produces most of the oil in He North Slope fields, He areas where these sediments are present are considered to be the most promising for of} exploration. Uplift of He Arctic Platform in early Cretaceous time terminated deposition of the Ellesmerian sediments; and erosion of the youngest Ellesmerian strata produced an unconformity that truncated the section. Rift zone grabens (fault basins), such as He Dinkum Graben, developed within the Arctic Platform. The rifts were filled avid a Hick Lower Cretaceous elastic section, known as the rift sequence. By He late Cretaceous, Brookian sediments, derived from the Brooks Range to He soudl, were deposited over die Arctic Platform, into tile Nuwuk and Kaktovik basins, and over He Hinge Line and shelf edge to a thickness of 12,200 m in the Arctic Basin to He norm. The province has been covered by tens of thousands of kilometers of

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56 OCS DECISIONS: ALASKA Slope, both onshore and offshore, offer the best opporumides for oil discoveries in the giant and supergiant categories. QU - ITITATIV~ I STIES A relatively small number of assessments of the oil and gas potential in the Chukchi Sea and Beaufort shelf basins were made available to the committee. The benchmark estimates were those prepared by MMS and included in the 1989 report of the Department of the Interior, "Estimates of Undiscovered Conventional Oil and Gas Resources in the United States A Part of the Nation's Energy Endowment" (USGS/MMS, 1989~. MMS's estimates come from continuing studies by the service that use a sophisti- cated computer-based probabilistic method called PRESTO (Probabilistic Resource Estimates-Offshore). MMS's estimates are presented in several forms: risked and unrisked, technically recoverable, and economically re- coverable; and as a range of values reflecting three confidence levels (95 %, arithmetic mean, and 5%~. The 1989 estimates of risked recoverable of} and gas are listed in Table 3-2. Another quantitative estimate of the total oil potential of the Alaska offshore region is contained in a report by Fisher et al. (1992), in which the mean potential is described as 2 billion barrels, assuming advanced technol- ogy and a price of $20/barrel; 4 billion barrels, assuming existing technol- ogy and a price of $27/barrel; and X billion barrels, assuming advanced technology and a price of $27/barrel. One must therefore assume an estimate of an implied unconstrained potential in excess of ~ billion barrels. This number is essentially twice that of the 1989 MMS study, presumably incorporating more recent evaluations by Me industry. The committee also had unpublished presentations made to it by represen- tatives of ARCO, Chevron, and Mobil. Quantitative estimates were provided in the form of a bar chart, from which the committee derived Table 3-3. These numbers suggest Mat at least some companies consider die mean resource potential to be considerably greater clan close estimates contained in the MMS or the DOE studies cited by Fisher et al. (1992~. The ranges

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Table 3-2 1989 Estimates of Recoverable Oil and Gas GEOLOGICAL SEWING 57 Crude Oil, Bbbl Natural Gas TCF 95% Mean 5% 95% Mean 5% Beaulort Shelf 0.49 1.27 3.74 2.14 8.26 12.81 Chukchi Seas 0.00 2.22 7.19 0.00 6.33 16.87 a The approximate 50% discounting of the values for the Chukchi Sea is based on the assigned 0.5% risk that hydrocarbons will not be present in the region. (As oil and gas are discovered in the region, this risk would be removed.) The totals reported for the two basins would be approximately 3.5 Bbbl (billion barrels) and 14.6 TCF (trillion cubic feet) (mean values). Based on the 1989 report about one- third of the undiscovered recoverable oil resources of the United States were estimated to be located in Alaska; 20% of which would exist in the offshore basins. Source: USGS/MMS, 1989. Table 3-3 Quantitative Estimate of Total Oil Potential for Beautort and Chukchi Crude Oil, Bbbl Natural Gas, TCF 5% 5% Mean Probability Mean Probability Beaufort Shelf 11 30+ 15 65+ Chukchi Seas 4.3 21.7 15 73 ~- aThe approximate 50% discounting of the values for the Chukchi Sea is based on Be assigned 0.5% risk that hydrocarbons will not be present in the region. (As oil and gas are discovered in the region, this risk would be removed.) The totals reported for Be two basins would be approximately 3.5 Bbbl (billion barrels) and 14.6 TCF (trillion cubic feet) (mean values). Based on the USGS/hIMS 1989 report about one-third of the undiscovered recoverable oil resources of the United States were estimated to be located in Alaska; 20% of which would exist in the offshore basins. Source: ARCO, Chevron, and Mobil, unpublished data, 1992.

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58 OCSDECISlONS: ALASKA of estimates are also shown to be greater by the much larger 5% values both for oil and gas, pointing out the large uncertainty in all current estimates. It is also noteworthy that in contrast to the MMS estimates, Me potential of the Beaulort shelf is rated by some as being greater potential than that of the Chukchi Sea. The company presentations to the committee provided important insight to the petroleum industry's perspective of the region. The finding of relatively rich, thermally mature rock (a sediment rich in carbonaceous matter is good source rock only after it is heated to convert the organic materials into fluid hydrocarbons; the rock is then called "thermally mature") in the Chukchi Sea and of pooled of} in subeconom~c quantities plus the descriptions of the typical exploration plays in bod1 regions all tend to verify the potential of Be Beaulort shelf and Chukchi Sea regions. The economic difficulty in developing small accumulations of of! also was emphasized. The diversity of the several estimates is not unusual considering the relatively small amount of exploration in the region. As discussed below, the MMS estimates were prepared wig a conservative bias imposed by methodology, and Hey are the only fully documented and published results available. They are science based, Key use properly documented me~odol- ogy, and Hey are derived from a comprehensive data base. The compa- nies' methods were not explained and could have introduced differences in addition to Hose that result from differing geological opinion. ADEQUACY AND ~[LIABILI~ OF [STI~T[S In 1991, He National Research Council (NRC) Committee on Undiscov- ered Oil and Gas Resources produced an evaluation of the Department of the Interior's 1989 assessment procedures used in assessing the nations resources of of} and gas (NRC, 199Ib). MMS's activities in the Alaska OCS were reviewed in Hat document, and the report can be used as a starting point for consideration of the status of information in Alaska. It must be noted that the focus of the 1991 report was not on the mainstream activity of tract evaluation for lease sale purposes, but rawer on He "exploration- play"-leve! assessments that constituted He national assess- ment. Because the same basic methods and programs were used by MMS for kact-evaluation and explorabomplay-level assessments (modified for He

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GEOLOGICAL SETTING 59 larger purpose), many of the observations in the 1991 report are relevant to the task of this committee. The next sections recapitulate some of the 99 ~ report' s observations. Data Base and 52eelonal Studies The Anchorage, Alaska, office of MMS has an excellent data base consisting of modern, high- quality seismic lines and structure maps for most of the area of current interest; data from exploration wells; and regional geological studies. Mapping is continuous, with revisions done by a competent and well-motivated staff. Individual prospects are identified and probable reservoir characteristics are compiled in an orderly fashion. One possible deficiency, common to several MMS offices, was a dearth of geochemical studies related to source rock abundance, organic carbon types, and thermal maturity. Methods The NRC Committee on Undiscovered Oil and Gas Resources found fault with several aspects of the way in which data and geological judgment were incorporated into the PRESTO model that is used to estimate re- sources. The PRESTO software is specifically designed to use prospect data to perform a variety of assessment tasks. Because there is considerable uncertainty associated wig most of the data used as input, geologists must formulate probability distributions of reservoir variables and subjectively estimate several levels of risk. Concerns of the committee included the following: There was an apparent inconsistency in He me~ods used by different geologists and engineers to assign maximum and minimum values to Me distributions. Although forms had been developed to assist in Me compila- tion of data, Were did not appear to be enough training in probability me~ods to ensure adequate results. The assignment of risk appeared to be poorly understood and unevenly applied. The multiplicity of risk levels (including economic thresholds) was considered overly complex, possibly leading to "double discounting" in

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60 OCS DECISIONS: ALASKA some cases. Although guidelines for assigning risk had been developed, the assignments appeared arbitrary in some cases and mechanical in others. No studies of the independence versus the dependence of risk variables had been done. Because risk assignment has such a profound effect on the final resource estimates, additional training was recommended. Several input variables were assigned inappropriate, arbitrary limits. These included limiting the allowable values of prospect areas and vertical fir-up; rejecting prospects from consideration that had less than 30 m of net play, that were at depths of less than 91 m, or that were smaller than one- half a lease block. Prospects that were judged to be subeconomic (if as- signed appropriate risk) were not modeled in the conditional case. Some stratigraphic and conceptual plays were not considered ade- quately. The structural plays dominated the assessment, based on the map- pable prospects. It appeared that "unseen" prospects, too small to be inciu- ded in the existing seismic grid, were largely ignored. There was too heavy a reliance on the use of mean values instead of on descriptions of the full range of estimates that reflect the associated uncertainty in the final reporting of estimates. There also was speculation that the expression of "conditional estimates" could be confusing or misleading to the users of estimates. The Committee on Undiscovered Oil and Gas Resources concluded that the likely effect of the deficiencies in the application of methods was an understatement of the resources, although the committee was unable to verify this conclusion. Industry presentations to the present committee tended to verify Mat MMS's estimates are conservative; this committee did not attempt a detailed comparison. (It may be noted that many of the previously noted shortcomings have been addressed by MMS.) The present committee's charge has a very different focus from that of the committee that reported in 1991. Our focus relates to the adequacy of resource-potential information to support studies of environmental issues and concerns associated win offshore leasing. Specifically, this committee was asked to focus on the adequacy of resource information made available in EISs and SIDs (secretarial issue documents) associated wig lease sales. The committee recognizes Mat Me estimates prepared by MMS and provided in EISs are an adequate, albeit conservative, estimate of Me quantities of oil likely to exist within a given lease area. The EISs, how- ever, do not contain the detailed information Mat was used to generate these

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. GEOLOGICAL SEl l MING 61 "bottom line" estimates, such as the number, magnitude, distribution, or characteristics of the individual areas assessed. There is no information regarding risk factors and economic criteria used in the lease~ecision process. Because the gas resources likely to be present in the area were deemed uneconomic, no measure of this component is included in the ElSs. Presumably, the proprietary nature of some of the input data used in assessment precludes complete disclosure of some elements of the output estimates. This is unfortunate because the very comprehensive of} and gas leasing~ecision process used by MMS generates a lot of data and informa- tion that could be invaluable to those attempting to quantify Be risks associated wig environmental impacts. The practice of resource assessment has matured with the development of programs like PRESTO and others that have led to probability-based estimates now being the "norm" rather than the exception. In most modern estimating procedures, not only the magnitude, but also Be marginal probabilities or risks of occurrence associated with them are quantified. PRESTO effectively considers interrelated risks and input data in a simula- tion process that reflects the needs of industry for exploration in developing an estimate. If environmental scientists are to make comparable analyses, it win be necessary to continue or expand the simulation process to include quantification of both the likelihood and the magnitude of a variety of risks. They then could use the additional data from the assessment process in their analyses. Several of He data elements that could be required by environ- mental scientists include Be following: The degree of concentration or dispersion of the resources. Are Hey likely to occur in numerous small-to-intermediate size fields or in a relatively few large deposits? The anticipated size of a typical deposit, along wid1 some reservoir characteristics, such as field area, depth, temperature, and pressure. Product mix. Is gas likely to be associated or produced with any of! encountered? Risk information. What is He likelihood Hat gas and of} will be en countered in any given exploratory well? Forrnadon fluids. Is there information on the nature of formation flu- ids that could be encountered? The type of drilling or production facility likely to be used. Most of He items listed above are considered, used, or generated in He

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62 OCSDECISlONS: ALASKA assessment process. If a mechanism were devised to provide greater disclosure of resource assessments, it might assist materially in Me develop- ment of better models for environmental studies. [~GI~I~G GEOLOGY Several types of geological engineering studies will be required as sites are selected for exploratory drilling. Even more extensive studies will be necessary if enough petroleum are discovered to warrant development. These studies are required by leasing agreements, follow accepted engineer- ~ng shards, and are mentioned briefly in MMS's final EISs. The selec- tion of the exact sites for exploration and production facilities will, of course, depend on Be petroleum companies' estimates of the distribution of the resources and on Be development plans for producing the fields. Two general types of studies win be required: foundation studies beneath and in the vicinity of the proposed exploration or production facility and studies along possible routes for subsea pipelines to bring the of! and gas to onshore h~sportadon facilities. Because these studies are not only required but also are essential to protect equipment and personnel, industry will pursue them thoroughly. Investigations in and around a drill site or production facility concern foundation stability, including the likelihood of slumping, the presence of subsea permafrost and gas hydrates, and physical properties of the forma- tions. Such studies are required by leasing agreements and are part of cur- rent engineering practice; Hey are mentioned briefly in MMS's final EISs from Beaufort Sale 124 and Chukchi Sale 126. Slumping is a possible hazard in the Chukchi and Beaufort regions, but foundation difficulties can be overcome by proper design of the drilling platform or island. Detailed studies also will be required for tile route of any proposed pipeline. For much of die route, the pipeline will need to be placed below the seafloor and below Be reach of ice scouring, including deep ice keels. The extent of permafrost beneath a veneer of soft sediment and Be local presence of consolidated sediment and rock will require appraisal. If Mere is a choice of routes, studies of Be geology could dictate Be actual paw. Where pipelines come ashore to join shore installations or other pipe- lines, geological conditions will require evaluation. For example, Heir effect on shorelines, beaches, bars, lagoons, and areas of focused ice action

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Ever ~_r~ ~ r SEITING 63 will require study; the route and design of the pipeline will depend on these studies being considered. In 1983, the NRC Marine Board reviewed what was known about Be topics covered by such studies and concluded that there was "no area where lack of seafloor technology would preclude safe operations offshore or delay offshore development" (NRC, 1983b3. The report noted also that the arctic seafloor poses special engineering challenges and that Were are subject areas in which more information is needed. Seafloor conditions that wall greatly influence the design and economics of offshore activities include thaw subsidence (associated with the presence of subsea permafrost), sedimentary erosion and transport, ice gouging of the seafloor, and the soil mechanics of silts. Details and an extensive reference list can be found in the 1983 report. This committee notes that there have been no recent major advances in many of the subjects. Permoirost and Thaw Subsidence Information about the strength of highly saline, warm subsea permafrost and about thaw subsidence is limited. This will undoubtedly dictate conser- vative design of offshore facilities. Subsea permafrost is a significant prob- lem on large areas of Be Beautort shelf where its properties are extremely variable. The subsea permafrost appears to be thinner and limited to within 2 hen of the coast in the Chukchi Sea; it apparently is absent in Be Bering Sea except for the most rapidly retreating coastal segments of Norton Sound. Even in the Beautort, detailed information on Be distribution of subsea permafrost is limited. Recent studies in both the United States and the Canadian portions of Be Beautort have produced advances in electrical and high-resolution seismic methods for mapping subsea permafrost. These techniques will undoubtedly prove useful to future oil development. Sedimental erosion and Transoort Because of the ice content of coastal sediments, rapid coastal erosion and movement of large amounts of sediments are common and highly variable. This is particularly true in the Beaufort Sea, where coastal erosion is a

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64 OCS DECISIONS: ~S~ major problem. Quantitative information on these processes will be neces- sary for regions where causeways or pipeline crossings are anticipated. Sediment transport studies would contribute knowledge also in coastal- erosion problems and Me infilling of ice gouges. (See U.S. Geological Survey Map I-~82-H, USGS, 1992b.) Soll Mechanics of Silts Silt-sized materials are common at many Alaskan OCS sites, and their properties are not understood as well as are those of sands and clays. Site- specific studies will need to characterize Me specific properties of these materials. Another somewhat unusual characteristic of the seabed sediments in the Beaufort is that they are commonly overconsolidated; Hey are more compacted than would be expected. Because the mechanics of overcon- solid~ation are not well understood, it is difficult to predict tile distribution and the behavioral physical reactions of the material. Site-specific studies should pay particular attention to He response of these materials to cyclic loading and to the effects of freeze-and-~aw cycles on their strength and permeability. In most cases, series by MMS and industry have established an adequate framework for preliminary offshore designs of exploration and production facilities. As a result, wid1 the few exceptions mentioned above, additional regional studies of the seafloor of He region are not warranted und} specific drilling production sites are selected. At that time, however, careful, site- specific foundation and pipeline route investigations will be needed. The geology of the Chukchi and BeauLort seas is reasonably well known and adequately discussed in MMS's final EISs. No additional regional stud- ies of the seafloor in die vast Arctic region are warranted und} drilling sites are selected. At Hat time, careful foundation and pipeline- route investiga- tions watt need to be done. This should be ensured by industry for design and safe execution and by government for environmental protection. CO~CLUS10~ AND Q[CO~DAT10~ The specific conclusion and recommendation for this chapter follows. For He general and overall conclusions of this report, see Chapter S.

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- GEOLOGICAL SETTING 65 Conclusion: lithe committee concludes that MMS has developed resource eshrnates based on adequate data and modern techniques that give credible, but conservative, estimates of OCS oil and gas resources. The extensive resources, a significant portion of which remains in He nation, ensure that there will be continued interest in leasing, exploration, and development. The geological and resource-base information developed by MMS can provide a useful foundation for assessing the effects of exploration and de- velopment on Be biological, physical, and human environments. Recommendation: Expand geological and resource base information in ElSs. Additional infonnati~n that would assist environmental scien- tists in quantifying risks should be released arm included in ElSs. Alternative: Call attention to the geological reports that address Me potential size and distribution of of! and gas resources and make Rem readily available.

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