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Unlocking new potentials

Report: Area has significant oil, gas left, 'tremendous' coal

Posted: September 29, 2012 - 9:06am  |  Updated: October 1, 2012 - 8:51pm
Photo by Michael Armstrong; Homer News The Endeavour-Spirit of Independence jack-up rig, hauled by the Kang Sheng Kou, arrives in Kachemak Bay Aug. 24 as it rounds the end of the Homer Spit. Buccaneer Energy plans to use the rig to explore for oil and natural gas in  Cook Inlet. A recent report cites oil and gas deposits as part of of the Cook Inlet region's available energy resources.
Photo by Michael Armstrong; Homer News The Endeavour-Spirit of Independence jack-up rig, hauled by the Kang Sheng Kou, arrives in Kachemak Bay Aug. 24 as it rounds the end of the Homer Spit. Buccaneer Energy plans to use the rig to explore for oil and natural gas in Cook Inlet. A recent report cites oil and gas deposits as part of of the Cook Inlet region's available energy resources.

Though hydrocarbon companies have already tapped many of the Kenai Peninsula’s easily accessible and producible pockets of energy, significant areas of oil, gas, coal and coalbed methane resources remain, officials wrote in a recently-issued state report.

However, those remaining resources are likely spread out in smaller quantities in harder to produce areas that have been overlooked by producers.

About 599 million barrels of oil and 13.7 trillion cubic feet of natural gas remain undiscovered in the Cook Inlet basin, according to United States Geological Survey information contained in the report. Additionally, 4.5 trillion cubic feet of coalbed gas remains undiscovered in the area alongside 1.5 trillion short tons of hypothetical coal and 11 billion short tons of identified coal resources, the report indicates.

State Geologist Bob Swenson said those numbers are significant. But, Swenson said, many of those resources might not be accessible or could be cost prohibitive to produce in the future.

“There has been a lot of talk about the basin running out of oil and running out of gas. What this says is, well, there is probably a lot more gas,” he said. “We can’t put our hand right on the number, but you can say there is a significant amount of resource left in the basin.

“But there are a lot of other factors that are brought into that whether or not it will ever be found, and that includes access. The geology doesn’t care what the surface politics are — who owns the land, whether it is in a wildlife refuge or a national park.”

The report issued in early September identifies fossil fuel and geothermal energy sources for local use across the state divided into specific areas. The idea behind the report is to get the geological information into the hands of decision makers at local levels, Swenson said.

“The big key being that this is a book of possibilities, not a book of answers,” he said. “There are a number of possibilities that will continue to be pursued and having enough information to pursue them is really the key.”

The railbelt region is “very blessed” with a “tremendous” amount of resources and many options, Swenson said, noting that much of the state’s population lives in the area, which benefits energy consumers, gives companies the incentive to explore the area and opportunity to hire locally.

Among the greatest cache of resources are the area’s coal layers, Swenson said. Many layers of coal, rock and mud are stacked on each other at least five miles thick in the area.

The Railbelt is home to the Cook Inlet-Susitna and Nenana coal provinces, which are two of the largest coal provinces in the state. However, most of the bedrock onshore in the province has been buried by glacial and stream deposits, which the report indicates severely restricts coal reserve estimation. On the Kenai Peninsula, coal exploration is further restricted by glacial overburden up to several hundred feet thick in areas, according to the report.

“Of course the only things that are available for mining are the ones that have turned into coal at depth and are brought to the surface by earthquakes and tectonic activity through time,” Swenson said. “That is why we see most of the coal plays being on the peripheries on the west side of the basin and in the Sutton area.”

The Beluga coal field, which includes the Chuitna district, is one of the most studied coal provinces in the Railbelt and is 45 miles west of Anchorage. Coal located in the field is low-grade, has low heating qualities of 7,500 to 8,500 British Thermal Units per pound and high ash content, according to the report.

“But the big positive is, and this is a big positive, is that the sulfur content and mercury content of the coals in Alaska are very low,” Swenson said. “In fact, Healy sells internationally ... and one of the reasons they like the coal coming out of Healy, and Healy has very similar coal to the Cook Inlet ... is that it is so low sulfur and they will mix it with the higher sulfur coals to bring their emissions down.”

Coal onshore in the Kenai district — such as hunks that wash up on lower Peninsula beaches from the exposed bluffs above — has an average heating value of 7,700 btu per pound or less, according to the report.

The large amount of coal in the area is also the reason there is so much natural gas locally both onshore and offshore, Swenson said.

“That is what generates all of the gas that has been discovered in the basin and will be discovered in the basin,” he said.

As coal condenses and decays over time it produces gas, specifically large quantities of methane, Swenson said. That gas will be held within the coal itself or will migrate out into other porous geological layers above or below it.

The gas that remains locked into the coal is called coalbed methane, which is harder to extract than gas that migrates away from the seam, Swenson said.

According to the report, the local potential for coalbed methane is high with an estimated 4.5 trillion cubic feet of gas undiscovered in the Cook Inlet area. Techniques for drilling into coal and unlocking coalbed methane have been used in the Lower 48 for some time, Swenson said, but not yet in Alaska.

“There was a big push to do coalbed methane up in the northern part of the basin, up in the Matanuska Valley area around Wasilla and Houston, but there was a lot of public that said they did not want to see coadbed methane developed for a number of reasons,” he said.

The resource still has many significant questions surrounding it, the report noted.

“Methods for separating methane from produced water and disposal of produced water in the region’s cold climate must be addressed before this resource can be pursued to meet local energy needs,” the report reads.

Gas that migrates out of the area’s coal layers and into sandstone formations is easily produced and that process has occurred where major production facilities already exist including the Kenai Field, Swanson River, North Cook Inlet and Beluga, Swenson said.

“We are talking trillions of cubic feet of gas, in fact there has been about 8.2 trillion cubic feet of gas found in the basin and all of that gas comes from the coals,” he said.

Those developments produce gas from what geologists call “anticlinal structures,” which are peaks in the large, porous geological layers where gas has been pushed up by water and trapped by harder, less porous geological layers, Swenson said.

“Because natural gas and hydrocarbons are much lighter than water they will migrate up those layers that have permeability slowly and when it gets to the crest of that fold, to the top, it can’t migrate any more ... and it stops there,” he said.

So far, the majority of gas found and produced in the area has come from those structures because they are easily seen with even rudimentary seismic data, Swenson said.

“You can see the big folds, that’s really simple — that’s why they were able to find all of that oil and gas back in the 60s with really, really poor seismic data because they stand right out,” he said.

Despite many of those structures being drilled and tested, the folds continue to attract exploration and active industry leases, which suggests the potential for future discoveries, the report indicates. Swenson said many of the area’s large anticlinal structures have all been drilled — new gas and oil will likely come from “stratigraphic traps.”

However, according to the report, those formations are subtle and only lightly explored. A stratigraphic trap is an area where gas has been pushed through a porous rock layer, but stops in an area because the layer is pinched by two non-porous layers, Swenson said.

“Even though all the rocks are inclined up, there is no migration pathway and so it will come into that edge of that reservoir and it will stop there,” he said.

Although gas is found in different layers than oil in Cook Inlet — they are created by different geological processes — both resources ride the same geological structures, Swenson said. Simply put, companies need to drill deeper to locate oil resources, he said.

Stratigraphic traps are smaller, harder to find with seismic data and therefore haven’t been greatly explored, Swenson said. However, newer 3D seismic data gathering, such as those being conducted on the Peninsula currently, can better locate those layers and traps, Swenson said.

“There’s two things at play there — the cost of the gas in the basin, what an explorer can get for gas has dramatically changed, and so if you have really cheap gas and there is a lot of it around, it doesn’t make much sense to go look for stratigraphic-trapped gas,” he said.

The report indicates that continued investment in second and third-cycle projects in large, existing oil and gas fields may be able to meet regional demand in the immediate and near term future. Exploration of the stratigraphic traps could be a longer-term answer, according to the report.

“The next generation of exploration will require an improved understanding of the stratigraphic architecture and distribution of reservoir quality within the Cook Inlet basin,” the report reads. “Continued efforts by geologists at the Department of Natural Resources to publish results of detailed field and subsurface investigations could significantly improve the understanding of the petroleum system.”

More data on those resources and geological formations is “a reduction in risk” itself and could entice additional exploration, according to the report. Swenson agreed.

“That’s why it is important we continue to facilitate with information and data as well as what’s going on in the Inlet right now with incentives to help lower the risks of exploration,” he said.

Brian Smith can be reached at brian.smith@peninsulaclarion.com.

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