Oil-in-Shale: Exploration License 1070: Port au Port Bay, Western Newfoundland
Shoal Point Energy Ltd. (SPE) and partners have discovered a thick and extensive oil-in-shale play at Shoal Point in Port au Port Bay (2K39 well), in the shallow offshore of western Newfoundland. The 137,000 acre (~55,000 hectare) play area lies in the eastern part of Exploration License 1070 and can be developed almost entirely by land-based drilling. This play is referred to generically as the "Green Point Shale", although it probably includes most of the organic-rich stratigraphic unit known as the Cow Head Group.
The play has been identified and confirmed through interpretation of well data such as mudlogs, drilling rates, geochemistry and wireline logs in modern wells, petroleum shows and production from historical wells, and from outcrop data. Petroleum seeps have been known within the Green Point Formation for over a century. Regional geological mapping over the last several decades has established the Green Point as a high quality, mature source rock, which, in the new paradigm of continuous resource plays, makes it a potential reservoir as well, and an ideal candidate for horizontal drilling and stimulation. Field geological studies suggest that the highly tectonized nature of the Green Point Formation, by virtue of its position within the Humber Arm Allochthon, may provide natural permeability and conduits for fluid flow.
This play bears strong resemblance to other fractured shale liquids plays which are currently being pursued by majors in North America and elsewhere. The current move into oil-in-shale exploitation is similar, in concept and technology, to the revolution in gas shales which has occurred over the past decade and which has dramatically changed conditions in the gas market in North America.
Development will involve extensive horizontal drilling and specialized completion techniques, such as have proven so successful in other North American, particularly Paleozoic, basins. The technology of horizontal drilling fits well with the concept of developing the area under Port au Port Bay from land sites.
In August 2010, AJM consultants of Calgary completed a report which statistically quantified the possible resource available on EL 1070. Estimates for the discovered, in-place resource range from a P50 case of 1.5 billion barrels, up to a P10 case of 5.2 billion barrels. These estimates are considered conservative as data were restricted to the control point at the 2k39 well at Shoal Point, while placing low weighting on other areas more distant. Results from future wells, which will be situated and purpose-designed to gather rock data and information on the unconventional shale reservoir, are expected to significantly increase the resource potential.
An upcoming drilling campaign, slated to commence in December 2010, is intended to establish proof of concept and lead to application for a Significant Discovery License (long term production license) which will enable long-term development and production of light oil. Product can be readily shipped from western Newfoundland with the installation of transhipment facilities at a nearby deepwater port in Stephenville. Product is expected to be a premium, light, sweet crude of 35-45 degree API gravity. Refineries are accessible along the eastern seaboard of North America.
Geology and Prospectivity of the Green Point Formation
The Green Point Formation belongs to the Cow Head Group, which constitutes the lowest unmetamorphosed sedimentary package within the Humber Arm Allochthon of western Newfoundland. The allochthon includes several structural assemblages which represent the destruction of a marginal basin formed along the borders of the lower Paleozoic Iapetus Ocean, which lay the eastern continental margin of ancient North America or Laurentia. The allochthon was originally emplaced on the continental margin in middle Ordovician times as the first phase of the destruction of the Iapetus Ocean, and probably reached its present position by gravitational collapse and sliding into the foreland basin in Devonian times. The geometry of this deformation is that of a classic tectonic wedge or "triangle zone". This feature is mapped in seismic data along the offshore of west Newfoundland, and allows the areal extent of the Green Point Formation in the offshore to be estimated with some degree of confidence.
The Green Point has been long known in outcrop in western Newfoundland and its type section occurs north of Bonne Bay in Gros Morne National Park. The formation has not been differentiated onshore south of the Bay of Islands and has been included in a unit of Ordovician tectonic "melange" through limited exposures onshore. The formation has been drilled in several historical and modern wells in and around Port au Port Bay, however, and is now recognized by the company as mainly a correlable, fairly competent, very thick package of organic-rich shales and rhythmically layered thin siltstone units, which lies in the oil window wherever it is seen in the borehole. Therefore, although the Green Point can be classified as a continuous resource play, it also appears to have attributes of both unconventional and conventional play types.
This combination of thick, repetitive mature oil-prone source (shale) and reservoir (siltstone, sand) within close stratigraphic association bodes well for the large-scale recovery of oil from these units.
