Spanish oil company Repsol announced what it is calling “the largest U.S. onshore discovery in 30 years,” according to a March 9 press release.
Repsol, and its partner Armstrong Energy discovered what they believe is approximately 1.2 billion barrels of recoverable light oil from Alaska’s North Slope in the Nanushuk play.
Repsol isn’t new to Alaska. The company has been exploring there since 2008, with several North Slope discoveries since 2011.
According to Alaska Public Media, Armstrong is hoping to start designing Nanushuk’s central processing facility. Development of this facility is crucial to Alaska’s oil industry, since it would prepare oil to send down the pipeline. The Trans-Alaska Pipeline System has seen a significant decline in the amount of oil running through it. Alaskan oil output has dropped from 2.1 million barrels a day in 1988 to about a fourth of that, 520,000 barrels a day, in 2016. So Repsol’s discovery is considered a “game changer” for the slumping Alaskan oil industry.
Repsol and Armstrong aren’t the only companies interested in the revitalization of Alaska’s oil industry. Alaska Dispatch reported yesterday that Paul Basinski, the geologist who helped discover the Eagle Ford in Texas, is involved in a venture called Project Icewine, which has gained 700,000 acres inside the Arctic Circle. He believes this area could hold as much as 3.6 billion barrels of oil, similar to the reserves in the Eagle Ford.
Can you frack in the cold?
One of the reasons that Alaska’s oil industry declined was the difficulty to utilize hydraulic fracturing in frigid temperatures, says the Dispatch. Drilling in the Arctic can cost three times what it costs in the rest of the United States, especially in the Permian Basin where oil seems to flow like water these days. In addition, imaging technology that could accurately pinpoint shale oil reserves below the permafrost didn’t exist until recently, when 3-D seismic imaging technology allowed geologists to better evaluate what’s below the surface.
In 2016, BlueCrest Energy began a large scale fracking endeavor on the North Slope. At the time, only 25 percent Alaskan oil and gas wells were hydraulically fractured. Alaska also has stricter fracking rules than many other states, requiring pre-fracking water testing and disclosure of fracking fluid constituents online. Plus, the state also has the discretion to require post-fracking water testing to determine whether or not contamination has occurred (testing for methane, dissolved solids, and other contamination indicators). Drillers also must hive notice to all landowners and operators within a quarter of a mile of the well’s path before fracking occurs.
However, advancements in fracking safety as well as accuracy make horizontal drilling and fracking in Alaska much easier and more economical that it was even 5 years ago, and despite the difficulty of transporting millions of gallons of water and sand to facilitate fracking, oil companies, like Repsol, see potential for a big payback if they can figure out how to do it all in a cost-effective way.