South Korea’s East Sea Oil & Gas Exploration Project in the Ulleung Basin: Reserves Yet to Be Confirmed but Could Be Big

     South Korea imports nearly all of its oil and gas. Domestic oil production is just 0.8% of total consumption and domestic natural gas production is just 0.1% of total consumption, according to 2021 data analyzed by the IEA.

The U.S. Energy Information Administration gives some data for the South Korean energy mix and sources, shown below.

      This extreme dependency on imports for oil and gas makes the thought of domestic resource discoveries potentially game-changing. The country’s oil and gas are produced offshore in the East Sea. New geophysical evaluations suggest that there may be larger fields available to tap in that region and that is what the country expects to do. The main area of potential is the Ulleung Basin in the East Sea/Sea of Japan, between Korea and Japan. The area has long been a region of interest for the production of gas hydrates but the technology to produce them has not yet been developed. The targeted area is off Yeongil Bay in Pohang, North Gyeongsang Province. According to the Korean Herald:

“Korea discovered its first gas field in the East Sea in 1998. The Korea National Oil Corp. began the commercial production of the gas field between 2004 and 2010, posting a revenue of 2.6 trillion won {about $1.9 billion) during the period.”

     The South Korean government led by President Yoon Suk Yeol announced in June 2024 that it will pursue exploratory drilling on this promising block in the East Sea. The new drilling will take place in waters over 600 meters deep and has the potential to produce up to 14 billion barrels of oil equivalent. Act-Geo, a top global deep-sea technology consultancy based in the US, pegged the resource potential between 3.5 and 14 billion barrels equivalent. The first round of exploratory drilling will consist of five wells costing up to $73 million each. Global oil companies are taking interest according to officials at the Industry Ministry. The first well is expected to be spudded by the end of this year and results are expected to be reported in the second quarter of 2025. If the reserves are confirmed it will still take time for full project development with 2035 given as a target date. That is a long time from now but deepwater projects commonly have timelines of about a decade. The reserve estimates are expected to be 75% natural gas and 25% oil.

     In October 2024 the Korea National Oil Corp (KNOC) named S&P Global as the adviser for the project. They will assist in attracting investment for the project. It was also reported that ExxonMobil, Saudi Aramco and Italy's Eni have expressed interest in the project. KNOC also announced that Schlumberger will provide mudlogging services “to analyze the rock and gas composition.”

“The state-run oil company earlier said it has found seven potential locations for oil and gas reserves, with an estimated success rate of around 20 percent, meaning 1 out of every 5 holes drilled would be successful.”

     According to KNOC’s website:

“Since KNOC had been established in 1979, it began working on the shelves continuously and has acquired 116,549 L-㎞ of 2D seismic data and 7,519 ㎢ of 3D seismic data and has drilled 47 wells so far.”

“Block 6-1 was first explored by Royal Dutch Shell Oil in 1971. The company drilled a first exploratory well in offshore of Korea, although not tested, encountered a number of gas shows. KNOC has paid attention to Block 6-1 after 1983. Since then, it has conducted numerous seismic surveys and 24 wells drilling campaigns. These efforts resulted in thirteen minor discoveries of gas and two major discoveries of economically producible gas reserves in 1998, 2005 as described above (see Donghae-1, Donghae-2 section below for further information).”

“KNOC and Woodside Energy Limited which hold a 50% working interest, respectively signed the concession contract with Korea’s Ministry of Trade, Industry & Energy(MOTIE) to explore deepwater blocks, Block 6-1 North and Block 8, in 2007. During 10 years contracting period, two exploration wells, Jujak-1 and Hongge-1 were drilled in 2012 and 2015, respectively and confirmed the presence of gas in deepwater region. KNOC and Woodside started to explore same area again in 2019 with a new concession contract and acquired new 3D seismic data during the 1st exploration period. Woodside decided not to enter the 2nd exploration period and KNOC took over their working interest and operatorship. Now KNOC is soley operating the project in the 2nd exploration period.”

     If the reserves predicted are at the high end, they could result in meeting 29 years of the country’s natural gas demand and 4 years of its oil demand.

Ulleung Basin Geology

     Geologically, the Ulleung Basin is a Neogene back-arc basin influenced by the motion of three tectonic plates. A thick sequence of sedimentary clastic rocks has been deposited in the basin. Despite seismic surveys, the tectonic history of the basin is not well understood and there is some disagreement about it. Back arc basins in general are not well understood. A 2019 paper in Basin Research divides the tectonic history of the Ulleung Basin into four stages:

“In Stage 1 (late Oligocene through early Miocene), syn-rift sediment supplied to the basin was restricted to the southern base-of-slope, whereas the northern distal part of the basin was dominated by volcanic sills and lava flows derived from initial rifting-related volcanism. In Stage 2 (late early Miocene through middle Miocene), volcanic extrusion occurred through post-rift, chain volcanism in the earliest time, followed by hemipelagic and turbidite sedimentation in a quiescent open marine setting. In Stage 3 (late middle Miocene through late Miocene), compressional activity was predominant throughout the Ulleung Basin, resulting in regional uplift and sub-aerial erosion/denudation of the southern shelf of the basin, which provided enormous volumes of sediment into the basin through mass transport processes. In Stage 4 (early Pliocene through present), although the degree of tectonic stress decreased significantly, mass movement was still generated by sea-level fluctuations as well as compressional tectonic movement, resulting in stacked mass transport deposits along the southern basin margin.”

     The basin experienced periods of rifting, basin subsidence, terrigenous deposition, and later compressional tectonics resulting in thrust faulting and folding. According to a 2002 paper in Geosciences Journal:

“The sequential effects of this tectonic event include local and regional angular unconformities, progradation-dominant shelf-margin depositional system and frequent triggering of large-scale mass-failures in front of the thrust belt. Since the early Pliocene, the basin has progressively subsided again, forming aggradation-dominant shelf-slope system.”

 

 

References:

 

Korea bets big on gas, oil prospects in East Sea: Buried natural resources could be worth over $1.6tr: industry minister. Kan Hyeong-woo. Korea Herald. June 3, 2024. Korea bets big on gas, oil prospects in East Sea (koreaherald.com)

S. Korea picks Schlumberger to analyze rock, gas in East Sea project. Kang Yoon-seung. Yonhap News English. October 19, 2024. S. Korea picks Schlumberger to analyze rock, gas in East Sea project (msn.com)

'Major global oil companies interested in joining East Sea oil, gas field. Baek Byung-yeul. The Korea Times. June 19, 2024. 'Major global oil companies interested in joining East Sea oil, gas field project' - The Korea Times

S. Korea picks adviser for oil, gas exploration in East Sea. Yonhap. Korea Herald. October 15, 2024. S. Korea picks adviser for oil, gas exploration in East Sea (koreaherald.com)

E & P. worldwide. Korea. Korean National Oil Corporation. Korea National Oil Corporation (knoc.co.kr)

Tectonostratigraphic framework and depositional history of the deepwater Ulleung Basin, East Sea/Sea of Japan. Kyoung-Jin Kim, Dong-Geun Yoo, Nyeon-Keon Kang, Bo-Yeon Yi. July 2019. Basin Research. Tectonostratigraphic framework and depositional history of the deepwater Ulleung Basin, East Sea/Sea of Japan - Kim - 2020 - Basin Research - Wiley Online Library

Tectonic history of Ulleung basin margin, East Sea (Sea of Japan). S. K. Chough; E. Barg. Geology (1987) 15 (1): 45–48. Tectonic history of Ulleung basin margin, East Sea (Sea of Japan) | Geology | GeoScienceWorld

Evolution of sedimentary basin in the southwestern Ulleung Basin margin: Sequence stratigraphy and geologic structures. S. H. Yoon, S. J. Park, and S. K. Chough. January 2002. Geosciences Journal 6(2):149-159. Evolution of sedimentary basin in the southwestern Ulleung Basin margin: Sequence stratigraphy and geologic structures (researchgate.net)

Country Analysis Brief: South Korea. Last Updated: April 2023. Next Update: February 2025. Energy Information Administration. Country Analysis Brief: (eia.gov)

Korea. Oil. International Energy Agency. Korea - Countries & Regions - IEA

Korea. Natural Gas. International Energy Agency. Korea - Countries & Regions - IEA