Treasures in the basement?
Untested geological formations known as ‘fractured basements’ could be hiding a vast store of hydrocarbons, but explorers need to overcome logistical challenges and industry scepticism
A West of Shetlands play being pursued by Hurricane Energy is entering a production phase that could prove crucial not just for the UK-based hydrocarbons firm, and the Scottish region, but also for industry perceptions of a reservoir type that was for decades derided as unfeasible.
First oil from the fractured basement in Hurricane's Lancaster field, located along the prominent Rona Ridge basement that is home to most of its portfolio, can now proceed this year after the Aoka Mizu floating, production, storage and offloading vessel successfully connected to the early production system on 19 March. If successful, output is expected to reach around 17,000bl/d once the initial start-up phase has been completed and the field is on continuous production.
If the basement reservoir potential is proven and this spurs deeper interest from majors-BP, ConocoPhillips, Shell are already operating there-then the West of Shetlands could become a much more significant strategic resource for the UK.
Published industry figures indicate that there are some 30bn barrels of oil in place in the basement of the Rona Ridge, of which Hurricane is estimated to have 2bn boe in prospective and contingent resources.
However, Hurricane CEO Robert Trice, who has championed the basement prospects of the region and of fractured basements for years, does not feel it is time to crack open the champagne just yet.
"There is too much left to do to start reflecting on this," he tells Petroleum Economist. Indeed, tethering Aoka Mizu to the buoy was a challenging episode, and investors' hearts likely fluttered as roping snags twice caused hook-up operations to be postponed before being it was securely moored. "But if the operation plays out as planned, then it will be a game changer for the UK," he adds.
The operation also comes as the prospects of fractured basements-a geological structure that lies below the softer sedimentary sandstone from which most resources have been recovered-are riding a tailwind. Basement reservoirs have been recognised globally for decades as having potential, but were often disregarded-with wells barely penetrating them-as many oil companies stop drilling as soon as basement rocks are intersected.
Last month, Indonesia announced a fractured basement find that analysts expect will be its biggest gas discovery in almost two decades. The Kaliberau Dalam Well 2X in South Sumatra, found by Repsol and partners Petronas and Mitsui Oil Exploration, has at least 2tn cf of recoverable resources.
Southeast Asia has historically been a big part of the fractured basements story-most of Vietnam's oil production is from a fractured granite basement in the Cuu Long basin with six major oil fields producing primarily from basement. The basin is dominated by Bach Ho (White Tiger), a giant field with recoverable volumes of 1.4bn boe.
Ready to rock
But the UK's section of the North-West Atlantic margin is not the only northern European zone seeing intensified basement interest. Oil deposits in granitic basement rock on the Norwegian shelf had not been considered commercial due to the density of the rock until Lundin Petroleum in August announced good productivity from the Rolvsnes fractured reservoir there.
The momentum contrasts with past decades when fractured basement reservoirs were dismissed as too difficult or just plain non-reservoir.
"People were quite rude and disparaging to me personally and the company even until about 2017," says Trice. "But once we had drilled our second horizontal well in Lancaster and raised $500mn to fund our production system people started to realise that we had de-risked it by quite a material amount. We know that people are watching quite closely from the sidelines to see what the first six months of steady production will show."
Trice credits three key technological advances over the mid-1990s for the current progress: the ability to conduct more accurate 3D seismic surveys; improvements in horizontal drilling technology; and the wider use of bore-hole imaging logs that made it possible to see the fractures.
Source: Hurricane Energy
These technologies can be used to optimise the identification and drilling of targets within the basement and provide the key geological data to give companies the confidence to undertake testing and, thereafter, gain long-term production data.
Tako Koning is a Canadian oil consultant and pioneer of the technique, taking an interest in such reservoirs for four decades, and has worked on basement discoveries in Indonesia, Angola and Uganda. He relates ruefully a learning curve from two past projects: the Beruk Northeast field in Sumatra in the early 1980s, and the Dai Hung (Big Bear) basement in offshore Vietnam in 1993.
After reasonable initial production of 2,000bl/d, Caltex's Beruk Northeast field quickly watered out, producing only 2mn bl of oil and becoming an economic failure. In 1993, BHP won the bid for the Dai Hung field-announcing it had potential reserves of 800mn bl, making it one of the biggest oil fields in south-east Asia, but it consequently left the consortium only four years later because the field was not profitable.
"Dai Hung illustrated the complexities, uncertainties and challenges associated with producing oil and gas from basement fields. However, for oil companies which are deliberately focused on exploring for and developing basement oil and gas fields, the future is very promising" says Koning.
He sees Hurricane's Lancaster as a closer fit geologically to the prodigious Bach Ho in Vietnam: "Lancaster and Bach Ho have similar rock types. Both have extensive near-vertical fracture systems. Both have vertical oil columns. The oil column in Lancaster is a thick 600m of oil. Hurricane has drilled two highly productive horizontal wells in Lancaster, oriented to drill perpendicular to the vertical fractures and the first horizontal well flowed at a stable rate of 9,800bl/d and the second well at a stable rate of 15,370bl/d with no drawdown."
The prominence being placed on the size of the gas find in Indonesia last month hints at a further important evolution of the fractured basements story. Since 10 February, Repsol has been carrying out a production test with an initial result of 45mn ft³, figures that could already disrupt Asian LNG export markets.
For Koning, the search for gas in basement reservoirs is at an incipient stage: "Global gas consumption keeps increasing as is evidenced by increasing gas production via LNG projects. As you know, the deeper you drill into the earth's crust, the hotter it becomes. So at greater depths, the temperatures are too hot for reservoirs to contain oil-you are out of the oil 'window'-but they certainly can contain gas since then you are in the gas 'window', so over time we will likely see more emphasis on exploring basement reservoirs for gas."