88 Energy officially starts shale hunt
88 Energy (ASX:88E) is officially drilling at Icewine-1 as it attempts to prove up a new shale play on the North Slope of Alaska.
Yesterday it told shareholders that it was mere “hours away” from drilling after receiving the final tick from the Alaskan regulators, and true to its word today it gave the word that the drillbit had spud in.
The plan is to drill the well down to a total depth of 11,600 feet (3535m) in 30 days.
The primary target for the well is the HRZ Shale, a formation which the US Geological Survey has in the past bullishly predicted may hold as much as 2 billion barrels of oil.
However, on its patch 88E is a touch more circumspect, with independent assessors Degolyer & McNaughton predicting a gross unrisked figure of 492 million barrels of oil.
The HRZ shale was originally selected using the same techniques used by ConocoPhillips to delineate the famous Eagle Ford shale as a liquids-rich play in the heart of Texas.
Many bites of the cherry
In addition to the shale zone, the well will also go through the shallower Brookian and Kuparuk horizons, both conventional oil targets.
The primary focus is the HRZ shale, but the conventional targets offer 88E a point of difference meaning that the Icewine-1 well is not an ‘all or nothing’ well.
It will also be hoping for data from the upcoming drilling being conducted by private company Great Bear Petroleum over the Alkaid discovery just to the north of Icewine.
The drilling should essentially give 88E a ‘free look’ at the Brookian and Kuparuk horizons, and while it would have been harder in the past to get that data the entry of ASX-listed Otto Energy (ASX:OEL) into the joint venture will be a godsend for 88E.
It means that Otto will have to disclose any promising drilling data to the market under continuous disclosure laws.
Seismic and cores
Along with the drilling of Icewine-1, 88E will also conduct 3D seismic work on the project to get a better technical understanding of both the conventional and unconventional horizons under its feet.
Today, 88E flagged the possibility that this would be done in the near term.
While certain data from the drilling program will be available immediately, the definitive testing of the HRZ shale will come from core analysis, which will take “several months”.
Once 88E has a handle on the drilling data and the 3D seismic data and is able to combine this with the results from Great Bear’s drilling, it will be in a position to decide what form planned follow-up well Icewine-2 will take.
If the conventional horizon is considered prospective, then Icewine-2 may be drilled as a vertical well for easier and cheaper access to oil.
However if the technical data comes back showing promising signs for the HRZ shale, it will likely be drilled as a horizontal well targeting the shale.
This would allow it to take extra data from the shale, ascertain how the rock holds up under horizontal drilling and possibly form the basis for a production test from the shale.
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