Anchorage, Alaska (Platts)--29Jun2012/210 pm EDT/1810 GMT

Alaska-based independent Great Bear Petroleum is now drilling its first North Slope test well to assess the potential for production of oil from shale formations in the region, similar to the way oil is being produced in the Bakken and Eagle Ford shale formations of the Lower 48 states, the president of Great Bear said Friday.

The company's first well is being drilled about 15 miles south of the Prudhoe Bay field on the North Slope, said Ed Duncan, Great Bear's president. The first core samples will be taken this weekend.

"We intend to take cores from three shale formations the well will penetrate," Duncan said.

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It will take about three more weeks for the well to reach its planned target depth of about 10,500 feet, he said. The company will then move its rig, Nabors 105, operated by Nabors Alaska Drilling Co., to a second location about 3 miles south, then to locations further south, Duncan said.

Normally, North Slope exploration wells are drilled in winter on ice pads but Great Bear is working this summer using previously built gravel pads adjacent to the Dalton Highway, a road connecting oil fields in the area to Interior Alaska.

"Our plan is to drill four wells this year and we believe we can achieve at least three," he said. The company will also do a multistage fracturing of the shale to test the flow of oil, Duncan said.

Halliburton has joined Great Bear as a partner in the North Slope shale test but Duncan declined to describe the nature of the companies' relationship. He did say Halliburton is "participating" in the current tests but that Great Bear is the operator of the project.

The shale formations being tested by Great Bear are the source rocks for the large conventional oil fields a few miles north, including the giant Prudhoe Bay, Kuparuk, Alpine and other fields that are now producing.

If the 2012 tests of the shale are successful, Duncan said the plan for 2013 is to drill several wells in a production pad along with a pilot processing facility. Oil produced would be shipped to Prudhoe Bay by truck and injected into the Trans Alaska Pipeline System.

Robert Swenson, Alaska's state geologist and director of the Division of Geophysical and Geological Survey, said he believes substantial amounts of oil remain in the source rocks.

Paul Decker, chief of the resource evaluation section in the state Division of Oil and Gas, said in a recent presentation that Great Bear must test the brittleness of the North Slope shale to see whether it will fracture like shales in the Bakken and Eagle Ford, and also test the permeability of the rock and how easy fluids can flow.

--Tim Bradner, newsdesk@platts.com
--Edited by Jason Lindquist, jason_lindquist@platts.com

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