Licence P2042 Relinquishment Report · 7/7/2016 Licence P2042 Relinquishment Report 5 2) 22/27a-1...

LICENCE P2042 RELINQUISHMENT REPORT BLOCKS 22/22C & 22/27B

JULY 7, 2016

Apache North Sea Limited

Repsol Sinopec Resources UK Limited

7/7/2016 Licence P2042 Relinquishment Report 1

LICENCE P2042 RELINQUISHMENT REPORT

CONTENTS Licence P2042 Relinquishment Report .................................................................................................. 1

Licence Background and Activities .......................................................................................................... 2

Licence Information ............................................................................................................................ 2

Licence Number: P2042 .................................................................................................................. 2

Licence Round: 27th Licensing Round .............................................................................................. 2

Licence Type: Traditional ................................................................................................................. 2

INITIAL TERM: 4 years beginning with the start date ..................................................................... 2

Blocks: 22/22c & 22/27b ................................................................................................................. 2

Work Programme Summary: ........................................................................................................... 2

License Synopsis .................................................................................................................................. 2

Geological Context .......................................................................................................................... 4

Exploration Activities .......................................................................................................................... 4

Seismic Reprocessing ...................................................................................................................... 5

Rock Physics .................................................................................................................................... 6

Seal Capacity Study ......................................................................................................................... 7

Prospectivity Analysis .............................................................................................................................. 8

Existing Discoveries ............................................................................................................................. 9

Millburn Discovery .......................................................................................................................... 9

22/27a-1 Discovery ....................................................................................................................... 10

Upper Jurassic Leads ......................................................................................................................... 10

Source and Migration .................................................................................................................... 10

Reservoir ....................................................................................................................................... 11

Trap and Seal ................................................................................................................................. 11

Resource Summary ........................................................................................................................... 12

Clearance............................................................................................................................................... 14

Figure 1 Index Map................................................................................................................................. 3 Figure 2 Turbidite outline ....................................................................................................................... 4 Figure 3 Marathon MA943F0002 Outline .............................................................................................. 5 Figure 4 Rock Physics Crossplot.............................................................................................................. 7 Figure 5 Vertical Pressure Profile for Commando Area Leads ................................................................ 8 Figure 6 Millburn Trap Interpretations ................................................................................................. 10

Table 1 Millburn Discovery Resources.................................................................................................. 13 Table 2 Upper Jurassic leads: Stochastic Parameters .......................................................................... 13 Table 3 Upper Jurassic Leads: Recoverable Resources ......................................................................... 14


LICENCE BACKGROUND AND ACTIVITIES

LICENCE INFORMATION

LICENCE NUMBER: P2042

LICENCE ROUND: 27TH LICENSING ROUND

LICENCE TYPE: TRADITIONAL

INITIAL TERM: 4 YEARS BEGINNING WITH THE START DATE

BLOCKS: 22/22C & 22/27B

WORK PROGRAMME SUMMARY:

The work programme for Licence P2042 Blocks 22/22c & 22/27b was specified in Schedule 3 of the Licence agreement with a start date of 1 January 2013. The programme included the following:

Firm commitments

The Licensee shall:

(a) obtain and reprocess 155km2 of 3D seismic data; (b) carry out Rock Physics work and undertake a Seal Capacity Study.

Drill-or-drop

The Licensee shall either:

(a) drill one well to 5200m to the Upper Jurassic, or: (b) elect to allow the licence to automatically cease and determine pursuant to Clauses 3 and 6

The Licensee completed the Firm Commitments by reprocessing more than 155 km2 of 3D seismic data and conducting both Rock Physics studies and a Seal Capacity Study.

The Licensee elected to not drill a well, causing the license to be surrendered prior to the end of the initial term.

LICENCE SYNOPSIS

Licence P2042 was awarded to Apache North Sea Limited and Repsol Sinopec Resources UK Limited on 1 January 2013 as part of the awards made in relation to the 27th Licensing Round. Apache North Sea Limited are the designated operator. The original application for the block specified five leads on blocks 22/22c & 22/27b

1) 22/27b G1 Lead: Jurassic Kimmeridge sands, stratigraphic trap;

2) 22/27b G8 Lead: Jurassic Kimmeridge sands, stratigraphic trap;

3) 22/22c & 22/27b G3 Lead: Jurassic Kimmeridge sands, stratigraphic trap;

4) 22/22c & 22/27b G7 Lead: Jurassic Kimmeridge sands, stratigraphic trap;

5) 22/27b Carisbrooke Lead: Upper Jurassic Fulmar Lead, downthrown terrace trap.


In the final award, the acreage containing the Carisbrooke Lead was split off into a separate licence such that the first four leads (G1, G3, G7 & G8) formed the inventory on Licence P2042 (Figure 1)

FIGURE 1 INDEX MAP


GEOLOGICAL CONTEXT

Blocks 22/22c & 22/27b are located in the West Central Graben at the southern end of Quad 22. At the Jurassic level, the blocks are located on a SE plunging structural nose, downdip from the Selkirk discovery (Figure 1). Structural lows along the eastern and southern borders of the Licence separate it from the Jurassic reservoirs of the Kate discovery and the Banff Deep fault panels. Overpressures as high as 8,000 – 9,000 psi have been recorded in the deep portions of the West Central Graben downdip of the Leads, in the 22/28b-2 well. Each of the leads consists of turbidite, sandstone reservoirs, which are embedded within Heather and Kimmeridge shales, and rely on sandstone pinchouts into these shales for critical updip sealing. The leads were identified using seismic reflectivity, relative acoustic impedance and spectral decomposition data, and tied to offset wells that drilled similar facies within the same high-pressure basin. The primary leads are illustrated in the figure below:

FIGURE 2 TURBIDITE OUTLINE

EXPLORATION ACTIVITIES

Prior to the award of the Licence there were two wells drilled within the Licence boundaries:

1) 22/22c-3 & 3Z – The 22/22-3Z well drilled to TD in the Paleocene and discovered hydrocarbons in the Eocene Tay sandstone.


2) 22/27a-1 – This well reached TD at a depth of 16,613 ft. MD (Log Depth), in the Middle Jurassic Pentland formation. The well encountered hydrocarbon bearing reservoirs in the marls and limestones of the Herring formation, and performed a DST (perf. 13,362 ft. – 13,438 ft. MD) that flowed 100 – 500 bopd of 39 Deg. API oil. The well also encountered thick Upper Jurassic, Fulmar equivalent sandstones at 14,746 ft. MD. Oil shows were noted at the top of the sandstone and conventional core was taken from 14,780 ft. – 14,886 ft. LD.

No additional wells were drilled during the term of the Licence.

In fulfillment of the Licence obligations, Apache acquired 600 km2 of the Marathon 1994 survey MA943F0002 (Figure 2) and the data was reprocessed by SIP. A subset of the data covering 222 km2 was selected by the Licence Group for detailed interpretation of the Upper Jurassic turbidite leads identified in the application. Apache also performed a merge of the SIP reprocessed data with existing PGS data (PGSD07) to ensure that the Selkirk discovery wells could be effectively tied into the prospect interpretations on the Licence.

SEISMIC REPROCESSING

The 3D seismic survey (MA943F0002) was reprocessed by SIP using the following work flow:

• Pre-processing – various data issues

• SRME & Peg-leg attenuation (first and higher order)

• Swell noise removal

• Zero phase conversion of source signature

• Regularisation

• AutoImager Velocity and eta analysis

• Phase only Q (reference frequency 10Hz)

• Tsunami Kirchoff 3D PSTM

• Radon, RMO and Stack

• Output:

• Regularised Pre-migrated gathers

• PreSTM gathers (raw & with RMO Radon)

FIGURE 3 MARATHON MA943F0002 OUTLINE


• Raw & final full stack, 4 final angle stacks

• Angle ranges 0-9, 9-18, 18-27, 27-outermute

• RMS velocities, Effective Eta field, RMO field

ROCK PHYSICS

Apache commissioned a rock physics study from SIP based on the existing well log data and the reprocessed Marathon data. Key conclusions from this study were:

1) The log analysis of the three wells indicates that the sandier reservoir intervals are probably best discriminated from background lithology using Poisson’s Ratio, Lambda-Rho and to a lesser extent P-impedance.

2) The log analysis indicates that a pre-stack elastic impedance inversion is likely to yield better discrimination of reservoir versus non reservoir zones than a post-stack acoustic impedance inversion in terms of the derivable attributes.

Apache performed an internal Rock Physics analysis utilising the following wells from its proprietary Rock Physics database:

22/21-8

22/22b-2ST2

22/22b-4

22/22b-5

22/22c-6

22/22c-3Z

22/23c-1

22/23b-5

22/23b-6

22/24e-12

22/27a-1

22/28a-1

22/28b-2RE

22/28a-4

22/29-2Z

22/29-3

In the key offset wells, the following observations were noted:

1) Top Kimmeridge Sand is a decrease in AI 2) Top Kimmeridge Sand shows no contrast in Vp/Vs 3) Top Kimmeridge Sand shows AVO IV (soft getting harder with offset) 4) Top Heather Sand is a decrease in AI 5) Top Heather Sand shows little contrast in Vp/Vs 6) Top Heather Sand shows AVO IV 7) Shale and Sand properties vary by well 8) Locally, hydrocarbon sands appear to have the lowest AI 9) No apparent Vp/Vs contrast between Sand and Shale at 22/22b-2ST2 10) Some Vp/Vs contrast at Kate wells – requires fluid substitution and further analysis

Interpretation of the reprocessed seismic data in conjunction with the rock physics studies resulted in a reasonable level of confidence that the mapped seismic packages for the application leads were


turbidite, sandstone reservoirs. The probability of encountering good reservoir quality sandstones is considered moderate to high, based on the analysis of the offset wells. Seal capacity studies were undertaken after the reservoir work to determine the level of exploration risk associate with both seal presence and seal capacity. A cross plot of the rock physics and how it relates to Acoustic Impedance is shown below:

FIGURE 4 ROCK PHYSICS CROSSPLOT

SEAL CAPACITY STUDY

The leads G1, G3, G7 and G8 are collectively referred to as the Commando prospect. The Commando prospect is located on the SE flank of the Selkirk high, immediately down dip of the Selkirk field. In order to work, the prospect requires updip stratigraphic sealing of Kimmeridge/Heather turbidite sandstones. These sandstones are embedded in Kimmeridge and Heather shales, and the organic facies within these shales are thermally mature source rocks. Seal presence risk is deemed to be very high for the following reasons:

• Petroleum system analysis implies that the reservoirs in the Selkirk field have probably received their charge from the deep basin to the east. The Commando reservoirs are located along this migration pathway, indicating that the Commando area did not trap, or only partially trapped the migrating hydrocarbons.

• The Selkirk field is at maximum mechanical seal capacity and thus the Commando traps must be separated from the Selkirk field reservoir system in order to provide an effective seal (Figure 2). This would require either a fault seal or a stratigraphic/capillary seal. The close proximity of the updip Commando segments to the Selkirk reservoirs, and the lack of visible faults on the seismic mapping make both of these seal types risky.


• Capillary seal capacity of the Upper Jurassic shales was investigated through the use of the Kate Field as an analogue (Figure 1). Analysis of the pressure system in the adjacent Kate field indicates that the Heather and Kimmeridge shales have limited to no capillary sealing capacity. This apparent lack of sealing in the analogue area adds to the seal presence risk in the Commando prospect.

• Stratigraphic trapping on Commando means the updip lateral seal is oriented parallel to bedding. This adds seal presence risk in two areas:

• Thin sub-seismic silt or sand beds at the edges of the turbidite lobes may create “thief zones”

• Since all of the Kimmeridge is in the generation window, highly organic layers may be oil wet and would serve as “wicking” beds with no capillary seal capacity.

Based on the results of this investigation, the seal risk at Commando is high and is modelled to have a chance of failure of 70%-80%.

FIGURE 5 VERTICAL PRESSURE PROFILE FOR COMMANDO AREA LEADS

PROSPECTIVITY ANALYSIS


EXISTING DISCOVERIES

The evaluation of the 2 blocks in the Licence included a review of the existing discoveries in the 22/22c-3Z and 22/27a-1 wells.

MILLBURN DISCOVERY

The 22/22c-3Z well discovered 7 meters of net pay in Eocene Tay sandstones. Detailed mapping of the top reservoir surface on 3D seismic data indicates that the HWC discovered in the well does not conform to structural closure. The key well ties for this mapping were the 22/22c-3Z and 22/22c-6 wells. Petrophysical analysis of the 22/22c-6 well provides evidence for a thin hydrocarbon column at the top of the Tay. The evaluation of this opportunity investigated two trapping scenarios:

1) The lack of closure was interpreted to infer a stratigraphic element to the trap and a volumetric assessment was made based on the mapped surface and a modelled reservoir pinchout.

2) The mapped surface for top reservoir was flexed downward to force a structural closure. A systematic error which might justify the flexing of the top Tay map is a seismic miss pick due to a hard silt sometimes observed above the Tay Formation. If this hard silt was to be present between wells 22/22c-6 and 22/22c-3Z it would cause the top Tay to be picked high. Correction would require flexing the mapped top Tay map downward between the two control wells

Recoverable volumes are low in both of the Millburn cases with the stratigraphic trapping scenario yielding 3 mmbo recoverable and the structural trapping scenario yielding 1 mmbo recoverable. Details of these reserve assessments are included in the “Resource Summary” section of the relinquishment report. The recoverable volume of hydrocarbons in the Millburn discovery is not considered economic.


FIGURE 6 MILLBURN TRAP INTERPRETATIONS

22/27A-1 DISCOVERY

This well discovered hydrocarbons reservoired in Late Cretaceous marls and limestones, and performed a DST (perf. 13,362 ft. – 13,438 ft. MD) that flowed 100 – 500 bopd of 39 Deg. API oil, after acid treatment. The original Comp Log identifies the hydrocarbon bearing interval as being in the Herring Formation, however the written reports refer to the interval as Hod. Maersk operated Licence P1426 which included this well and determined that the Hod did not contain an economically viable accumulation. No additional work has been done on this discovery.

UPPER JURASSIC LEADS

The prospectivity of 4 Upper Jurassic leads was evaluated via the technical work programme for Licence P2042. Each of these leads consisted of an Upper Jurassic turbidite sandstone embedded in Kimmeridge or Heather shales.

SOURCE AND MIGRATION

A petroleum system analysis of the Licence area shows that the Kimmeridge is currently in the generation window, with the NW corner of the Licence (Near Selkirk Field) being at peak maturity and the synclinal areas to the east and south of the block being in the gas window. Kimmeridge shales are interpreted to be present throughout the area and neither source presence nor source maturity are considered a risk. The leads are all located on a SE plunging structural nose with Upper Jurassic hydrocarbons present in wells both updip and downdip of the individual trapping segments of the 4 leads. The leads are considered to be on the structural migration pathway for the basin, and the


individual reservoirs are embedded in mature organic shales. Neither migration nor charge access are considered to be a risk.

RESERVOIR

The seismic interpretations and rock physics evaluation supported the assertion that the properties of the mapped seismic packages for each lead are consistent with the responses expected from sandstone reservoirs, thus reducing the reservoir presence risk. Where the turbidite sandstones are present in offset wells, they range from excellent, porous reservoir to cemented and tight reservoirs. On the basis of these observations reservoir presence risk of failure is considered to be moderate to low and reservoir quality risk of failure is considered to be moderate.

TRAP AND SEAL

The key risk for each of the leads was determined to be the updip stratigraphic seal required at the pinchout edge of each turbidite sand body. Seal risk was assessed through an analysis of three parameters:

1. Mechanical Seal Capacity 2. Capillary Seal Capacity 3. Seal Presence

The interpretation of the available data indicates that the Selkirk discovery is at the crest of a structural trap, and the trap is filled to the mechanical capacity of the top seal. This interpretation is based on two sets of evidence. Seismic mapping of the top Jurassic surface (BCU) confirms that the Selkirk discovery well was drilled near to the crest of a local structural closure on the larger Selkirk high. A vertical pressure profile of the wellbore data predicts that the seal will fail from mechanical seal breach at a depth of 3,800 -3950 meters TVDss (Figure 3). This depth corresponds to the mapped structural crest. This same analysis predicts a Selkirk HWC at approximately 4100 m TVDss. This places the Selkirk HWC at a depth that is roughly equivalent to the updip limits of the Commando fan complex. The implication for Commando is that any reservoirs downdip of Selkirk on the Commando acreage would need to have pressure and fluid isolation from the Selkirk discovery in order to retain a hydrocarbon column. If this isolation is present then there is sufficient effective stress to develop several hundred meters of hydrocarbon column. No structural barriers can be mapped between the Selkirk wells and the Commando fan complex, so within these turbidite reservoirs, pressure and fluid isolation will depend on the presence of capillary seals at the updip stratigraphic edges of the pinchouts for the individual segments.

The pressure data from the Kate, 22/23b-6 well indicate that the Heather and Kimmeridge shales have poor capillary sealing capabilities. The 22/23b-6 well collected good pressure measurements from Fulmar shoreface sandstones, Heather turbidite sandstones and Kimmeridge turbidite sandstones. These pressure points can be interpreted to form a single gradient, indicating that the intervening shales are not sealing. A lack of capillary seal presence at Commando is also supported by petroleum system modelling of hydrocarbon fluids, which indicates that the Selkirk fluids correspond to fluids from deeper in the basin and are not representative of the lower maturity Kimmeridge shales that surround the Selkirk reservoir. This would imply that hydrocarbons have migrated from the deep basin and through the Commando reservoirs in order to reach the Selkirk discovery.

A final consideration in the analysis was more qualitative in nature, but considered that stratigraphic trapping on Commando means the updip, lateral pinchout seal is oriented parallel to bedding. This adds seal presence risk in two areas:


• Thin sub-seismic silt or sand beds at the edges of the turbidite lobes may create “thief zones”

• Since all of the Kimmeridge is in the generation window, highly organic layers may be oil wet and would serve as “wicking” beds with no capillary seal capacity.

When viewed as a whole the supporting evidence for working seals at Commando is weak. The chance of seal failure at Commando is placed at 70%-80%. This level of failure risk on a single parameter makes the prospect a poor drilling candidate and the recommendation was to remove Commando from the inventory and relinquish the Licence.

RESOURCE SUMMARY

The resource summary for the Licence is presented below in the following tables:

Millburn deterministic reserves

Upper Jurassic turbidite leads: Stochastic parameter table

Upper Jurassic stochastic reserves


TABLE 1 MILLBURN DISCOVERY RESOURCES

TABLE 2 UPPER JURASSIC LEADS: STOCHASTIC PARAMETERS

LEAD Mean (1000 Acre)

Minimum (1000 Acre)

Maximum (1000 Acre)

Distribution Type

G1 1.4 0.247 3.21 Ln P10-P90

G3 1.31 0.247 2.97 Ln P10-P90

G7 0.90 0.247 1.85 Ln P10-P90

G8 1.35 0.247 3.06 Ln P10-P90

Common parameters for all leads


TABLE 3 UPPER JURASSIC LEADS: RECOVERABLE RESOURCES

G1

G2

G7

G8

CLEARANCE Apache North Sea Limited and Repsol Sinopec Resources UK Limited hereby give OGA clearance to publish this document. All 3rd party ownership rights have been considered and appropriately cleared for publication purposes.

Licence P2042 Relinquishment Report · 7/7/2016 Licence P2042 Relinquishment Report 5 2) 22/27a-1...

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