Deep Basin Gas - Prospect Evaluation

Deep Basin Gas - Prospect Evaluation and Well Location Report

Bradley Parkes, Denis Ristic, Mike Eaton

Table of Contents

Executive Summary

Introduction

Objectives

Geologic background

Justification for formations selected

Geologic Summary – Notikewin Member, Falher Member and Cadomin Formation

Regional Geological Analysis

Net pay maps of the Notikewin Member, Falher Member and Cadomin Formation

Type log of the Notikewin Member, Falher Member and Cadomin Formation

By-pass pay of the Notikewin Member, Falher Member and Cadomin Formation

Focused Analysis

Net pay maps of Notikewin Member, Falher Member and Cadomin Formation

Structure map

Stratigraphic Cross sections of the Notikewin Member, Falher Member and Cadomin Formation

Conclusion

Proposed well locations

Well prognoses

Appendix

Executive Summary:

This report contains the results of:

In the coming weeks there will be a land sale auction in the Deep Basin region in the area of T67/68-R11/12W6.
The report examines potential prospects to target for exploration and development of the Notikewin, Falher members and Cadomin formation in the deep gas basin.
In the early Cretaceous, there was uplift and erosion of the Cordillera orogeny, which caused a subsidence to the east, forming the Foreland basin into which successive formations were deposited over geologic time.
The deep basin consists of large gas resources in place which we believe are concentrated in the previously mentioned formations.
Notikewin consists of 4 allomembers, base of which is a transgressive wave dominated estuary, followed by three regressive deltaic and barrier bar systems capped by terrestrial sands.
Falher is a series of five prograding shoreface packages, stacked on top of each other separated by terrestrial coals and shales.
Cadomin is an alluvial conglomeratic deposit consisting of series of fluvial and braided river complexes which drained into a larger Spirit River Drainage system.
Included in the report are net pay maps, bypass pay logs and type logs over the four township study areas that help narrow our focus to 20 sections we recommend purchasing.
In our focus area, we have included a structural map, focused net pay maps and cross sections of each formation that help determine three well locations we believe would yield maximum amount of hydrocarbons.
The three well locations chosen are located at 16-68-11W6, 23-68-11W6 and 27-68-11W6.

Objectives:

The objectives of this report are to describe in detail the geological knowledge gained through the study of Notikewin, Falher and Cadomin formations. Big Money Oil Ltd is looking for prospects to attain in the Deep Basin as a result of upcoming land lease sales and the studies were conducted to assess the potential plays that will open up in the near future. The areas we are interested in are Ranges 11 & 12 West of the 6th meridian within townships 67 and 68. This report is a product of detailed analysis of well logs using Geoscout software as well as subsurface mapping of each of the three formations within the defined geographical boundaries.

Geologic Background:

The Spirit River Formation and the Cadomin formation of the Western Canadian Sedimentary Basin (WCSB) are located in Western Alberta, sub parallel to the deformed belt and lie within the Deep Basin. The formations that make up the Deep Basin were deposited during the Lower Cretaceous. During the Albian, of the Lower Cretaceous, a global second order sea level rise was underway; however, with in this global transgressive period there were local regressive periods that lead to the deposition of the Falher and Notikewin Members (Smith 1984).

During the early Cretaceous, Hauterivian interval, the Western portion of the WCSB underwent a period of uplift and erosion while the Deep Basin region of western Alberta and north east BC began to subside and receive sediments shed from the Cordilleran orogeny. During the Barremian, the braid plain and alluvial fan deposits that make up the Cadomin Formation began to be deposited along the eastern margin of the Cordillera (Smith 1984).

Through the Aptian, the trough continued to deepen and this lead to the accumulation of the fluvial deposits of the Gething Formation. The subsidence continued through to the Albian and coincided with a global eustacy period, causing a major transgression of the Boreal Sea and the deposition of the marine sandstones of the Bluesky Formation. The maximum flooding surface was coinicided with the deposition of the Wilrich Member, the lowest member of the Spirit River Formation (Smith 1984).

Due to the continued tectonism of the Cordilleran Orogeny, the transgressive period of the early Albian did not persist and gave way to a local regressive phase and the deposition of the Falher and Notikewin Members of the Spirit River Formation. These two members represent the furthest north advance of the regressive shoreline(Smith 1984).

Following the deposition of the Notikewin and Falher Members, a second transgressive phase occurred in the middle Albian, leading to the deposition of the marine shales of the Harmon Formation. This second transgressive phase also included local regressive periods, and these lead to the deposition of the Paddy and Cadotte Members. The transgressive period lasted until the end of the Albian and this marks the final deposition in the deep basin, gas saturated sandstone and shales (Smith 1984).

Justification for Formations Selected:

The formations have been chosen were based on total estimated gas resource in place and historic gas production. We have chosen the Spirit River Formation, specifically the Notikewin Member and Falher Member, because of the multi-zone potential of the Falher Member, and the thick clean sands of the Notikewin Member. The Cadomin Formation has been chosen due to the large estimated resource in place and its porous and permeable conglomerate package. The study area of Township 67, 68, Ranges 11-12 showed past production from these three formations throughout the region. This has lead to the decision to target the Spirit River Formation and the Cadomin Formation.

Legend

Notikewin Production = Purple

Falher Production = Red

Cadomin Production = Blue

Comingled Production = Black

Stars represent proposed drilling locations

Figure 1. Production Trend Map

Geologic Summary :

Notikewin Member

The Notikewin Member was deposited as the upper most member of the Spirit River Formation in the Late Albian, approximately 100 million years ago (Hayes 1989). During the Albian a global second order sea level rise was underway. (Schmidt 2002). The base of the Notikewin was deposited during this final period of time. The Notikewin uncomfortably overlies the non-marine deposition of the Falher Member, also of the Spirit River. The transition between the Notikewin and the Falher is the transition from non-marine sand deposition to marginal marine and marine sand deposition. The Notikewin is overlain by the Harmon Marine shales (Schmidt 2002).

Within the Notikewin Member there are four distinct depositional environments, transgressive, regressive, tidal flat and alluvial. These depositional environments represent the four allomembers of referred to as T1, R1, R2 and R3(Leckie 1982).

The lower most allomember, T1, is a regressive wave dominated estuarine system and can be broken into three subunits, that are 3-10m thick (Schmidt and Pemberton 2004, P68). The first of these subunits is a pebble conglomerate, that is longshore parallel, uncomfortably deposited on the non-marine sands of the Falher. The second subunit consists of glauconitic sandstone and the third represents a silt, shale and sand interbedded body (Leckie 1985). The top of the T1 unit is marked by a maximum flooding surface (Schmidt and Pemberton 2004).

The first of the regressive allomembers is unit RI, and represents a coarsening upward strandplain that was deposited after the beginning of the sea level fall (Schmidt and Pemberton 2004). RI can be broken into two subunits. The first of these subunits is an interbedded massive shale, sand and siltstone, about 7-18m thick. The second subunit is a coarsening upward strandplain massive sand and is about 10-25m thick (Leckie 1985).

The third allomember and second regressive unit is referred to as R2, and represents a barrier island and tidal flat depositional environment. This unit can be broken into three subunits and is 9-15m thick (Leckie 1985). This unit is the most cored and targeted of the Notikewin allomembers and the bulk of the natural gas is produced from this allomember (Schmidt and Pemberton 2004). The first of the subunits is defined as a medium to fine grained sandstone with shale interbeds approximately 40cm a part. The second subunit is an interbedded silt, shale and sandstone with varying thickness. The siltstone is massive with normal grading. The upper subunit consists of interbedded shale and silt with sandstone stringers (Leckie 1985). The top of this allomember is marked by the transition from marine deposition to marginal marine to terrestrial deposition (Schmidt and Pemberton 2004).

The final allomember R3 represents alluvial deposition on top of the marine deposition of allomembers T1, R1, and R2. R3 consists of siltstone, shale, sand and thin coal beds. This allomember is not broken down into subunits and is about 15-20m thick (Leckie 1985). The depositional environment represents the maximum progradation and the top is determined by the maximum regression surface (Schmidt and Pemberton 2004).

Above allomember R3, comfortably lies the Harmon Formation marine shales and represents the continuation of the major transgression trend of the late Albian (Hayes 1989).

Falher Member

The Falher is a thick member within the Spirit River Formation (Cant and Ethier, 1984). The Falher is a series of prograding Northward delta successions (Smith et al, 1984) and like all prograding environments the depositional environments change with time. Within each prograding cycle we can see a rapid transgression leaving a fining upwards lag deposit followed by a coarsening upwards prograding delta deposit (Smith et al, 1984). There are five mappable cycles within the Falher, these units are named A through E. Sub-members A through D are interpreted as wave dominated prograding deltas (Smith et al, 1984). Flat laminations or swaley cross stratification observed in core are the basis for the wave dominated interpretation (Casas and Walker, 1997). Sub-member E is interpreted as a barrier bar that is later influenced by a river dominated mud delta (Smith et al, 1984). Above each of the sub-members we have capping lagoonal coals (Smith et al, 1984). With the lagoonal coals we have spiky well logs represent flood plain and coastal plain deposits that are aggrading while the shoreface is prograding (Casas and Walker, 1997). The deposition of the Falher was controlled by many factors.

The Falher was deposited in the middle to early late Albian as a result of the continued Cordillera uplift and Alberta basin subsidence (Smith et al, 1984). The cyclic nature of the Falher is caused by varying rates of subsidence, sea level rise, and sediment supply. This cyclic pattern is what produced the five mappable cycles of sub-members A through E (Smith et al, 1984). The uplifted mountains provided a large sediment supply to flow downstream into the epeiric sea (Smith et al, 1984). This large sediment supply led to the progradation of the Spirit River Formation to reach as far North as Dawson Creek by the end of the Notikewin deposition. With this large sediment supply, the unmapped Falher offshore has been known to contain thick packages of coarsening up sandstone upwards of 60+ km away from the mapped coastline. This is due to the epeiric sea being shallow and allowing storms to transport sand a long distance (Smith et al, 1984). The Falher is a thick member of the Spirit River formation that contains plenty of gas.

According to Smith et al. (1984) the Falher contains five important reservoir facies. In Falher sub-member E the barrier bars represent clean sands that contain abundant gas. In sub-members A through D the wave dominated deltaic sandstone are the important reservoir facies. In the wave dominated packages the permeability ranges from .003 to 850 millidarcys which is extremely good. Within the deltaic packages we also have distributary channels that contain very clean good reservoir sand (smith et al, 1984). Others such as Armitage et al. (2004) have agreed the wave dominated upper shoreface and foreshore are the top reservoir candidates as the coarse grained material is well sorted and porous. Armitage et al. (2004) has broken sub-member C down into many facies including four potential reservoir facies. These facies are fining upwards distributary channels, coarse foreshore sands, interbedded sandstone and conglomerate proximal upper shoreface deposits, and proximal upper shore to foreshore conglomerates. Cant and Ethier (1984) believe the best reservoir facies in the Falher are the conglomerates. They have identified three types in order of decreasing reservoir quality are: unimodal granule to pebble conglomerate with no matrix, bimodal pebble conglomerate with fine to medium sand, and pebble conglomerate floating in a fine to medium sandstone matrix. All three are good reservoirs when hydraulic fracturing is used but the unimodal conglomerate has very little to no loss of porosity or permeability due to diagenesis, where as the bimodal and mainly sand conglomerates have lost much porosity and permeability due to cementation around the quartz sand grains (Cant and Ethier, 1984).

Cadomin Formation

The Cadomin formation is a stratigraphical unit of the early Cretaceous age. It is one constituent member of the Deep Basin which is a part of the Western Canada Sedimentary Basin. The Cadomin formation is the lowermost member of the Blairmore Group that directly overlies the regionally extensive Early Cretaceous basal unconformity (McLean, 1977). The lower Cretaceous unit can be regionally correlated on well logs, core and outcrops from the Canada/US border in the south to the Rocky Mountain foothills of the Northeast British Columbia in the north (Mclean, 1977). The formation is an interbedded chert pebble conglomerate with coarse grained sandstone made up of quartzite, chert and other lithic constituents. It is difficult to date the Cadomin formation as the constituent detritus is extra-basinal conglomerate, originating from the eastern margin of the Cordillera during the Columbian Orogeny (Tuffs & Wood). Historically, the Cadomin formation has been an excellent formation to produce gas from despite the changes in reservoir characteristics due to intense compaction. Poor reservoir characteristics are a result of burial below 2000m true vertical depth, nevertheless, the formation still contains abundant pay zones which yield vast amounts of gas.

During the Columbian orogeny there was an extensive up thrust of rock helping to form the Cordillera. These thrusts came in waves which occurred periodically through time. While the orogeny was occurring, many hiatuses were also encountered which allowed for the erosion of the newly formed mountains to the west which deposited detritus into the Foreland basin that was created due to the loading of the lithosphere as a result of the mountain building. A long period of pedimentation accompanied the formation of the Cadomin which removed hundreds of meters of older sediments in eastern areas forming the extensive unconformity upon which the Cadomin deposited. The deposition of the Cadomin formation was a result of proliferation of extensive alluvial fan belt systems that flanked the eastern margin of the Cordillera (See Figure. 2).

The sediment was brought into the foreland basin through a network of braided rivers and other fluvial channels which fed into the Spirit River Drainage Basin that flowed to the northwest, axial to the orogeny. It is believed the Cadomin was deposited in a humid climate (Tuffs & Wood), which would explain the vastness of the lateral deposition because humid conditions are associated with wet climates which aid in erosion of rock. The lateral persistence of the Cadomin resulted in a package thickness between 5-40m (McLean, 1977). In some areas to the west – the foothills – the formation can reach up to 200m thick.

Figure. 2 Depositional environment of the Cadomin (Dumitrescu, 2006)

The Cadomin formation is of interest to us due to the thick conglomeratic packages that were encountered while surveying the prospects. As mentioned earlier, the formation thickness can range from 5-40 meters with a maximum of up to 200m. In the regional study area, the average thicknesses of sand/conglomerate encountered ranges between 11 and 20m with a maximum of 26m in thickness (See Fig. C2 & C3). The formation is comprised of gravel sized clasts which are mainly sub-rounded to well-rounded and have an average size of 1-3cm with a maximum size of up to 40cm (McLean, 1977). Looking at the Regional Net Pay map (See Fig. C1 & C5), a clear depositional trend can be seen which follows the same pattern as the Regional Net Sandstone map (See Fig.C 2 & C3) defining a small portion of the larger Spirit River Drainage System running from south to north. These trends reinforce the interpretation of a regional drainage system which was a product of compounding flows of smaller braided river systems running from the Cordillera eastward. The vast majority of the formation within our study area is within the “Deep Basin Gas Window” (Wright, 2001) which will yield ample hydrocarbons. To determine the gas potential of the Cadomin, a density porosity cut off of 4.5% was used, its useful to note that a range in density porosities were observed between 3 and 6%. Permeability of the Cadomin ranges between 10-12μD based on work done by Apache on the Cadomin in a not too distant area (Nordheimer, 2011). Based on work conducted by Apache, some well stimulation through hydro-fracking is recommended to promote fluid flow and further improve economics (Nordheimer, 2011) of the well. That being said, our three well location picks are based on a comingling of production from the Cadomin, Falher and the Notikewin formations which both overly the Cadomin.

In summary the Notikewin is a marginal marine sand body at the end of a transgressive period through a regressive cycle. The Falher is a period of cyclic prograding shoreface deposits that are capped by terrestrial shales and coals. The Cadomin is a braided fluvial plain with interbedded chert conglomerates and sands. All three formations have extensive production capacity. The following is a more detailed look at the formations in our study area.

Regional Geological Analysis

(Each of the below figures are included in the appendix in the back as well as in the text.)

The following figures represent the geologic overview of the 4 section study area. Included are net pay maps, type logs, and bypass type logs of the 3 study formations

Study Area Net Pay Maps

Figure A1.

Net Pay Map of the R2 allomember of the Notikewin Member, of the Spirit River Formation, over the 4 section township study area, T67-68, Rge 11-12. The R2 allomember represents a barrier bar depositional setting

Net pay map for our four township study area. This map is the payable thickness through the entire Falher based on 60 API cut off and 6% porosity cut off. The Falher has two thick pay zones both in township 68, one in range 11w6 and one in range 12w6. We have chosen to focus on

the t68 r11w6 thick pay zone as it coincidences with a thick package in the Cadomin.

Net pay map shows a thick net pay trend snaking from SE to the NE – interpreted to be a part of the Spirit River Drainage System – another net pay trend seen flowing eastward from WSW – interpreted to be a braided river system coming from an alluvial fan believed to originate from the west.

Notikewin Member Type log highlighting thick clean sands of the R2 allomember. Net Pay was identified using an API cut off of 45 and density porosity of 5%. Note that when density porosity rises above 5% it spikes higher into range of 12-15%.

Figure B2.

Representation of the Falher type log. It is a coarsening upwards package that is shown on the Gamma Log as a lower API. The sand cut off used is 60 API and the porosity cut off is 6%. This log also shows the perforation interval as well as this interval was cored, both of these were factors in choosing this log as our type log.

Type log used to identify the Cadomin formation and associated net pay thicknesses based on a 75 API Gamma Ray and a 4.5% Dphi cutoff (highlighted zones).

Notikewin Member Bypassed Pay log highlighting thick clean sands of the R2 allomember. Bypassed pay was identified by using an API cut off of 45 and density porosity of 5%. Note the thick blocky sands and that when density porosity rises above 5% it spike higher into range of 12-15%.

Figure B3.

Represents a thickening upwards package of deltaic sands that has been by passed by companies in the past.

Figure C7.

Typical bypassed pay well log profile. Only two wells in the study area were bypassed due to the wells being out of the Deep Basin Gas Window.

The regional geology of the three selected formations suggests the Northeast corner of the study area is an ideal prospect for further evaluation.

Focused Analysis

The following figures represent the proposed 20 sections that are to be purchased. Included are the net pay maps within these sections, a structure map that represents the overall structural trend in the 20 sections, as well as cross sections showing stratigraphic traps of the 3 studied formations

20 Section Net Pay Maps

Figure A4

Focused Net Pay map of a barrier bar of the Notikewin allomember R2. Net Pay ranges from 0 to 8.9m.

Figure B4.

Net pay map for our 20 section focus area. This map is the payable thickness for Falher sub-member B. The pay ranges from 0 m in one small northern section of our map up to 9.6m of pay. This is based on 60 API, 6% porosity and 100 ohmm resistance.

Focus net pay map shows a thick net pay zones which are laterally extensive over a range of sections that run to the northeast.

Structure Map of Notikewin

Figure D.

Structural map of the Notikewin. The Northeast to Southwest dip is representative of the general structural trend of all three of our formations.

Stratigraphic Cross Sections

Stratigraphic Cross Section, flattened on the Harmon Formation marine shales, depicting a Notikewin Member, R2 allomember, barrier bar.

Stratigraphic cross section showing the thickness of Falher sub-member B and the shale and coal traps above it. As you can see “B” was deposited flat and is bounded by coal and shale above and below it as well as it has other Falher sub-members above and below it allowing for multiple pay zones as we drill through the Falher.

Stratigraphic cross section of the Cadomin formation running from SW to NE showing the infill of depressions left over by the pedimentation period in which older rock was removed leaving an increased accommodation space for the deposition of the Cadomin in turn giving a large sandstone package behind.

This more focused study of the Notikewin, Falher, and Cadomin has shown a mutli-zoned opportunity in the NE corner of section 16, SW corner of section 27 and the NW corner of section 23. As shown below in figure

Conclusion

Proposed well locations

Production map showing well locations and historical production trends. Prospective well locations are based on historical production trends and have been placed in sections 16, 23, and 27 township 68 range 11 west of 6.

Well Prognosis

Table representing elevations of formation tops, estimated thicknesses and hydrocarbon type found in the formation.

Executive Conclusion

The formations that have been chosen were based on the total estimated gas resource in place and historic gas production. We have chosen the Spirit River Formation, specifically the Notikewin Member and Falher Member, because of the multi-zone potential of the Falher Member, and the thick clean sands of the Notikewin Member. The Cadomin Formation has been chosen due to the large estimated resource in place and it is a porous and permeable conglomerate package.

The proposed well locations are based on the regional geology of the Spirit River Formation, (Notikewin and Falher Members), the Cadomin Formation and historic production trends. The proposed well locations follow a NW-SE trend of gas field deposition seen in the Deep Basin. At the three proposed well locations it is believed that there is an opportunity to produce from multiple horizons. The Cadomin Formation in the NE corner of the four township study area is represented by a thick sand body deposited in response to the Spirit River system of the Lower Cretaceous. Within our 20 section area the Falher Member is represented by a series of prograding deltaic sand bodies (Falher A through Falher E) and the Notikewin, allomember R2, consists of a large barrier bar in the region. The barrier bars of the Notikewin are the most prospective of the four allomembers. Due to these factors the formations and locations proposed are expected to produce gas in economic quantities.

References

Armitage, A.I., Pemberton, S.G., and Moslow, T.F. 2004. Facies succession, stratigraphic occurrence, and paleogeographic context of conglomeratic shorelines within the Falher “C”, Spirit River Formation, Deep Basin, west-central Alberta: Bulletin of Canadian Petroleum Geology, v. 1, p 39-56.

Cant, D.J., and Ethier, V.G. 1984. Lithology-Depenent Control of Reservoir Properties of Conglomerates, Falher Member, Elmworth Field, Alberta: The American Association of Petroleum Geologist Bulletin. v. 68, n. 8, p. 1044-1054.

Casas, J.E., and Walker, R.G. 1997. Sedimentology and depositional history of Units C and D of the Falher Member, Spirit River Formation, west-central Alberta: Bulletin of Canadian Petroleum Geology. v. 45, n. 2, p. 218-238.

Dumitrescu, C and Mayer, F. 2006. Case study of a Cadomin gas reservoir in the Alberta Deep Basin. Devon Canada Corporation. SEG/New Orleans 2006 Annual Meeting. p. 571-575.

Hayes, B. 2006. The Deep Basin Development Entity: Enhancing exploitation of Alberta’s deep basin tight gas resource. Petrel Robinson Consulting Ltd.

Hayes, B. J. R. (1989): Chapter 19 Cretaceous Mannville Group of the Western Canada Sedimentary Basin; in Geological Atlas of the Western Canada Sedimentary Basin, URL <http://www.ags.gov.ab.ca/publications/wcsb_atlas/a_ch19/ch_19.html>, [08/11/2012]

Leckie, D. (1985): The Lower Cretaceous Notikewin Member (Fort St. John Group), Northeastern British Columbia: A Progradational Barrier Island System, Bulletin of Canadian Petroleum Geology, Vol. 33 No. 1. (March), Pages 39-51

McLean, J. R. 1977. The Cadomin Formation; stratigraphy, sedimentology, and tectonic implications, Bulletin of Canadian Petroleum Geology, v. 25 no. 4 p. 792-827

Nordheimer, D and Jones, W. 2011. Extracting More From Less –The Development of the Noel Cadomin Resource Play. 2011 SCPG CWLS Convention. Apache Corp.

Schmidt, G. A. (2002): Ichnology, Sedimentology and Stratigraphic Architecture of the Notikewin Member of the Spirit River Formation in the Wapiti Area of Alberta, University of Alberta

Schmidt, G.A. and Pemberton, G (2004): Stratigraphy and Paleogeography of a Conglomeratic Shoreline: The Notikewin Member of the Spirit River Formation in the Wapiti Area of West Central Alberta, Bulletin of Canadian Petroleum Geology, Vol. 52, No. 1 (March), Pages 57-75

Smith, D.G., Zorn, C.E., and Sneider, R.M. 1984. The Paleogeography of the Lower Cretaceous of Western Alberta and Northeastern British Columbia in and Adjacent to the Deep Basin of the Elmworth Area. In: Masters, J.A (Ed), Elmworth – Case Study of a Deep Basin Gas Field. American Association of Petroleum Geologist, Memoir 38, p. 79-114.

Tuffs, B. and Wood, J. 2003. Exploring for Deep Basin Gas Resources in the Western Canadian Sedimentary Basin: A Case Study of the Cutbank Ridge Cadomin Field. EnCana Corporation.

Wright, C. 2001. Hydrodynamic Evaluation of the Cadomin Formation in the Noel Area of Northeastern British Columbia. Rakhit Petroleum Consulting Ltd.

Appendix

Section A: Notikewin Member