North Sea risks rewarded

‘Old Fashioned Geology’ Paid Off

American Association of Petroleum Geologists (AAPG)

Take state-of-the-art technology, season well with “old-fashioned geology,” business savvy and a dash of intuition, and combine in the roiling, hostile waters of the North Sea.

It’s a recipe for success that vaulted Canada’s Oilexco from newcomer status to most active driller and mid-tier producer in the United Kingdom’s North Sea region for five years running.

AAPG member Rod Christensen consulted for the 14-year-old Calgary-based company several years before officially joining the firm in 2004. He currently serves as senior vice president of exploration and development.

Christensen laments that his title means “I now use my hand lens to examine the fine print on contracts instead of geological maps.” But he remains enthusiastic about Oilexco’s future – and passionate about petroleum geology.

A semi-submersible rig, one of the appraisal wells for Calgary-based independent Oilexco at its successful Brenda pool operation in the North Sea.

Photo courtesy of
Oilexco North Sea
A semi-submersible rig, one of the appraisal wells for Calgary-based independent Oilexco at its successful Brenda pool operation in the North Sea. Photo courtesy of Oilexco North Sea
In too many cases, “geologists have suborned our previous leadership,” Christensen said. “We’ve been displaced by geophysics and 3-D seismic.

“Damn it, we’ve got to get off our asses as petroleum geologists and take back the reins from technology-driven ‘experts.’”

Christensen has put his science and Oilexco’s money where his mouth is more than once and been proved right – to the satisfaction of company shareholders.

To Begin at the Beginning

By the late 1990s, the UK’s North Sea leases were held tightly by a few major oil companies; exploration had pretty much ceased.

Hoping to stimulate new activity in what was considered a mature basin, the government devised programs to encourage new entries, Christensen said.

Oilexco saw opportunities, but knew it would take a nimble business, acting in some cases on a new geologic model and incomplete information. The company’s goal was to bring prospects from discovery to production quickly – two years, compared to five or more years by the majors.

Oilexco began looking seriously at the North Sea in 2002, especially areas previously drilled with oil shows, and identified five major areas of interest.

The top prospect had been drilled in 1990, producing 2,690 barrels a day from Paleocene sands with no water. It was interpreted at the time as a small structure, he said.

After looking at results from nearby wells and viewing the core in Edinburgh, “We saw stratigraphic implications,” Christensen said. “We had a top seal and floor seal. A stratigraphic trap was possible – much larger than originally thought.”

Oilexco asked the government to part from past practices of awarding a lease to several companies.

“We said we wanted 100 percent and we’ll find our own partners,” he said. “To their credit, they awarded three of the five leases to Oilexco at 100 percent.”

First Efforts

Bolstered by 1990s 3-D seismic, AVO analysis and other research, Oilexco decided to pursue its new interpretation. The company raised $25 million in 2003 to drill two Paleocene wells with an option on a third, Christensen said.

Oilexco spudded the original Brenda well in December 2003 and successfully cored it the next month. It showed oil in 28 feet of upper Paleocene sand, Christensen said.

Several injectite sands appeared to have been squeezed from the mother sand, he said.

Drill-stem tests on a follow-up well showed oil 43 feet deeper than the original. It was perfed and produced 2,997 barrels a day with no sand or water, he said.

After a dry hole elsewhere, a third Brenda well was spudded a kilometer to the west Feb. 29, 2004.

“We had a beautiful AVO elastic impedance anomaly,” Christensen said, adding that they encountered nearly 70 feet of oil, with the well eventually flowing up to 4,487 barrels a day.

The Brenda prospect was officially the Brenda Pool.

Confounding Seismic

To shore up its interpretations, Oilexco made nine more clustered penetrations, he said.

“Why drill so many wells? Economics,” he said. While one well may cost up to $10 million, an additional directional leg off the original may cost only $1.5 million.

The Shelly pool is a case in point.

It appeared to be similar to Brenda; early wells gave about 2,400 barrels a day and 2,100 barrels of water, but it never was followed up, Christensen said.

Five dry holes forced the company to re-evaluate its original model.

“I began calling it ‘The Incredible Shrinking Shelly Project,’” he said. “We decided it was a stratigraphic trap, but a structure we hadn’t seen.”

Gas escaping from the Upper Jurassic confounded the seismic, making it tough to interpret, Christensen said.

Oilexco was drilling in an area dubbed the “North Sea’s Bermuda Triangle.”

Some old maps even advised ships to steer clear of the area because of gas escaping from the seabed, he said.

After analyzing the gas problem, Christensen voted against abandoning the prospect, and one more well was drilled to the east, “away from where the seismic indicated.”

The result: 3,082 barrels per day, with no water or sand.

“The field was almost invisible” to seismic, Christensen said.

The company acquired an adjacent block and drilled a 14-sidetrack cluster to delineate its findings.

“Seismic was useless – we needed good, old-fashioned geology,” Christensen said.

“It’s an adventure – I’ve found myself arguing with our own geophysicist,” he added. “He just couldn’t believe the seismic would ever lie.”

Stressed for Success

Other factors in Oilexco’s productivity are a willingness to act on “slightly informed decisions” and being ready to succeed.

To avoid being “held hostage” by drilling rig availability, the company signed one, then another, long-term charter one rigs.

“We have to keep them drilling every day,” Christensen said.

“This summer we had a third rig for a 90-day window, and had to keep them all busy constantly.

“That’s not something I want to do again soon. My department has about 20 people and we’re spread pretty thin,” he said.

Christensen said Oilexco and the North Sea venture allowed him to use his training and experience to the fullest.

He recalled a quote from his mentor, legendary oil finder (and AAPG Honorary Member and Distinguished Service Award recipient) John Masters:

“You have to recognize that every ‘out front’ maneuver that you make is going to be lonely. It will give you anxious moments, but if you’re not doing anything that worries you, if you feel entirely comfortable, then you aren’t far enough ahead to do any good.

“That warm sense of everything going well is usually the body temperature at the center of the herd, way back from the front.

“Only if you’re far enough ahead to be at risk – do you have a chance for large rewards.”

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