The impending oil renaissance in Alaska's North Slope is going to be even more massive than previously projected. The oil lurking under the surface of the historically oil rich region is enough to turn the state's economy around and reinstate it as a major player in the oil industry, according to new research from IHS Markit, a London-based global information and analytics provider. The study shows that the North Slope's crude output could increase by as much as a whopping 40 percent in the next eight years, more than regaining its place as one of the major powerhouses of the United States.
The North Slope region, previously considered as a mature basin, is now being touted in the media as the once and future "super-basin" thanks to an estimated 38 billion barrels of oil equivalent (BOE) in remaining recoverable resources. The report IHS Markit Plays and Basins: Alaska North Slope (ANS) Basin; Resurgence in an Arrested, Late-emerging Super Basin analysis cites that 50 trillion cubic feet (TCF) of gas, and 28 billion barrels of oil remain untapped. IHA Markit has predicted that the estimated total ultimate recovery (EUR), the sum of the remaining resources and the 16.8 billion barrels extracted up to this point, for the North Slope Basin is a staggering 54.8 billion BOE.
The North Slope attraction does not end with these stunning figures--the region now has fewer bureaucratic barriers to begin exploration for operators, making it more competitive, and recent advancement in drilling technologies will make extraction more efficient and cost-effective than ever.
This study is just the latest development in a resurgence of production in the North Slope that's been a long time in coming. Even before this development, Big Oil was already eyeing the North Slope for its major comeback potential. Earlier this month the Alaskan government released a huge cache of valuable oil data in order to get the oil industry's attention. The data dump included figures gathered over decades of Alaskan oil exploration by a number of different Alaskan agencies, and if collected today would take many months and cost hundreds of millions of dollars to put together. Related: Brazil's Opposing Energy Views
At this time last year Oilprice was already reporting on a coming revitalization in the North Slope thanks to shifting, more fossil-fuel-friendly legislation and leadership under the Trump administration and the recent discoveries of new oil fields in the region, such as the massive Pikka Field, much to the chagrin of Alaskan environmentalists. Last August ConocoPhillips had already begun drilling at a new site in the area, even when most of Big Oil had left it for dead.
The last few decades have been quite a roller coaster for Alaskan oil. In 1977 Alaska was responsible for almost a fourth of US oil. In 2017, the state was over 1 billion dollars in debt, oil prices were hitting historic lows, and drilling operations in the North Slope were facing thousands of layoffs. Now, finally, gas prices are on the rise and there is an official, quantitative light at the end of the tunnel for Alaskan oil.
Foreign investors have already been returning to the North Slope, and now we can reliably expect a veritable black gold rush thanks to the recent reports and "super-basin" headlines. In addition to the North Slope, we will probably also see interests picking up in the National Petroleum Reserve in Alaska (NPR-A), Area 1002 of the Alaska National Wildlife Refuge (ANWR) and the Central Slope, where IHS Markit has estimated that an additional 9.5 billion BOE are likely to be found.
Alaska already has the infrastructure for oil production on a mass scale, and an economy full of skilled workers hungry for an influx of oil jobs. Put simply, Alaska is more than ready for a comeback for the history books.
By Haley Zaremba for Oilprice.com
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Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the… More
Comments
Royal Dutch Shell pulled out of the Arctic after spending $7 billion and producing zero barrels of oil. I don't doubt the reserve figures, but what does it cost to extract each barrel of oil, move it, and what is the break-even cost ? Finally, what is the IRR and ROE ?
Lots to answer before companies commit tens of billions in Alaska.