Upbeat article on the North Slope from this weeks Petroleum News
Bodes well for OEL/gb bringing in a cashed up partner to get the Central Block Prospects drilled.
IHS dubs North Slope a ‘super basin,’ oil output to grow 40% in 8 years; ConocoPhillips wins $2B
Kay Cashman
Petroleum News
Albeit a bit late, IHS Markit has taken a hard look at the resurgence of oil exploration and development on Alaska’s North Slope and on Aug. 21 released the results of research that calls the North Slope a late-emerging-phase ‘super basin,’ rather than a mature basin.
“The Alaska North Slope … is poised to re-emerge as a major source of U.S. energy production, with crude oil output potentially increasing as much as 40 percent during the next eight years,” IHS said in a press release announcing its analysis. The firm classified the North Slope as “an arrested, late-emerging-phase ‘super basin,’ rather than a mature basin.”
Kareemah Mohamed, associate director, plays and basins research at IHS and lead author of the firm’s analysis, was quoted as saying, “Previously thought of as a mature basin, recent large discoveries made in the shallow Nanushuk and Torok formations indicate this basin has a lot of room left to grow beyond the Endicott and Ivishak formations, which are the reservoirs from which the giant Prudhoe Bay and Endicott fields produce. This is why we refer to this basin as being in the late-emerging-phase, because it still has such significant resources to offer.”
IHS said the estimated ultimate recovery for the North Slope is 54.8 billion barrels of oil equivalent, which includes the 38 billion boe in remaining resources combined with the 16.8 billion barrels of oil produced to date from the Slope.
According to IHS analysis, “despite the geologic potential of the ANS, potential investment risks include needed service-sector expansion to support expected production growth, uncertainty over whether the state of Alaska will maintain its tax-incentive program, infrastructure access for new entrants, and the potential application of unconventional technology in a complex operating environment,” Mohamed said.
Although IHS’ analysis comes after the initial Nanushuk discoveries were first announced by Armstrong and Repsol in 2016, which triggered the revival of exploration and development on the North Slope, its analysis is accurate - or as one North Slope player said, “IHS Markit gets it.”
For example, Mohamed said that aside from the new discoveries, the basin warrants attention from prospective operators because the Slope now has fewer barriers to entry for operators, making it more competitive. He also referred to “advances in new drilling technologies that help reduce operating costs, efficiencies from economies of scale, state-level incentive programs for accelerated permitting, and infrastructure investment make this largely onshore conventional basin worth considering anew.”
Not all reports from Outside Alaska researchers pick up on all of these factors.
“We anticipate increased bidding activity and farm-ins as established operators expand their presence, and new entrants seek to gain early mover advantage by leveraging low acreage prices to enter newly opened areas,” IHS said.
New production in the short term will largely come from ConocoPhillips, ExxonMobil and Oil Search, IHS said, also noting operators such as Eni chasing onshore reservoir trends into the shelf area in the Beaufort Sea. This is likely a reference to Eni’s wildcat well at Nikaitchuq North.
“This activity is a leading indicator of an approaching wave of near-field exploration” on the North Slope, Mohamed said.
Oil Search is the operator of much of Repsol and Armstrong’s acreage in the initial discovery area, which is west of the central North Slope in what is referred to by Alaskans as the billion-dollar fairway.
Mohamed’s comparison with Alaska’s competitors: “For onshore light-oil opportunities in a stable country with a positive investment outlook, the ANS provides a viable alternative to the competitive Lower-48 unconventional basins, where acreage prices are an order of magnitude greater, and have transportation and raw material constraints, even if they are temporary.”
In its press release, IHS said it “defines super basins as basins that have multiple reservoirs and source rocks, diverse play types across numerous geologic horizons, infrastructure with access to markets, and established service sector and supply chains. Additionally, to achieve ‘super basin’ status with IHS, basins must hold at least 5 billion boe in conventional remaining reserves and have already produced at least 5 billion boe.
Note: Referring to Armstrong and Repsol’s huge North Slope discovery, Mark Myers told Petroleum News on Feb. 14, 2016, “the proven contingent oil reserve number makes the discovery the largest since the Alpine field, the probable contingent reserve number the largest since the Kuparuk field, and the possible contingent number makes the discovery the largest since Prudhoe.”
Myers, who at the time was commissioner of the Alaska Department of Natural Resources, called the Armstrong-operated Pikka unit find “amazing” and was “very excited” to see the development moving forward.
The Nanushuk pool, initially referred to as the Qugruk discovery, had a 650-foot-plus oil column, good porosity and 150-foot thick net pay, he said.
- KAY CASHMAN
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