ConocoPhillips is coming off of an incredible exploration season, reportedly the best they’ve had in over a decade, and they have Alaskan oil to thank for it. The company stuck big in the National Petroleum Reserve-Alaska (NPR-A) this winter, successfully finding oil at all six of their test wells (three exploration and three appraisal), which means chances are good that the trans-Alaska pipeline system could soon be seeing a lot more (much-needed) action.
The Houston-based supermajor has estimated that there are at least 300 million barrels of recoverable oil in its "Willow Discovery" along Alaska's Western North Slope, and these appraisal wells seem to strongly support that projection. More importantly, this discovery could represent just a fraction of the available reserves along the North Slope, and ConocoPhillips plans to keep exploring the area over another busy exploration season next year, starting with a recent $400 million deal to buy all of Anadarko Petroleum Corp.’s North Slope assets.
Over the next five years, it is projected that ConocoPhillips will be adding 100,000 barrels a day to the trans-Alaska pipeline for a total 650,000 barrels a day, an 18 percent increase. This is great news after years of dwindling volumes--to put today’s 550,000 barrels per day in perspective, when the pipeline peaked in 1988 it was funneling 2.1 million barrels of oil per day through Alaska, an economy that relies heavily on oil revenues but has been seeing volatile returns in the past years.
ConocoPhillips’ “Willow Discovery” is also a glimmer of hope for Alaska’s long-suffering North Slope. Once the powerhouse of the country, many of its once-abundant fields have been sucked dry. Onetime major fields like Prudhoe Bay, the Kuparuk River and the Alpine are now nearly tapped. Now companies like ConocoPhillips are breathing new life into the region, picking up speed since several major oil fields were discovered there over the past few years.
Related: Is Saudi Arabia Losing Its Asian Oil Market Share?
The newfound interest in Alaskan oil is not limited to ConocoPhillips, however. Investors and developers from as far-flung places as Papua New Guinea (PNG) have moved in to get a piece of the action. Last month a PNG-based company called Oil Search took over operations with a $400 million stake in the Nanushuk field. The field is part of the massive Pikka unit, reportedly the state’s third largest with an estimated volume of 1.2 billion barrels of oil (some sources have even reported up to 3 billion barrels). Oil Search bought a large stake in the field from Denver-based Armstrong Oil and Gas, while Spanish-based Repsol owns another significant portion.
Alaska’s State Department of Natural Resources Commissioner Andy Mack told the Associated Press saying that Pikka alone could reverse the extended decline in the trans-Alaska pipeline. Oil Search is equally bullish about the prospects, saying that the first planned development could account for an investment in the range of $4 billion to $6 billion, with a goal to have their oil flowing through the trans-Alaska pipeline by 2023.
Related: A Natural Gas Giant Like No Other
Now, the Trump administration is pushing ahead with legislation that will allow drilling in the vast Arctic National Wildlife Refuge, with a 60-day review to sell oil and gas leases in the pristine 19.6-million acre region. A divisive issue to say the least, the fate of the region has been bounced back and forth between political platforms since the Clinton administration, and critics point out the delicacy of the region and the threat drilling would pose to its population of migratory birds and the caribou on which the indigenous Gwich’in people depend.
The Alaskan government, however is likely extremely please, after fighting to open the refuge for years for their state which heavily depends on the wellbeing of the oil industry. In fact, the good news just keeps piling up for Alaskan oil after years of oil debts and economic decline. While not everyone is thrilled about the prospect of Big Oil’s comeback in Alaska, few can deny that the winds of change are about to blow in a lot of cash.
By Haley Zaremba for Oilprice.com
More Top Reads From Oilprice.com:
- Canada’s Oil Patch To Turn Profitable In 2018
- China To Double Shale Gas Output
- Oil Markets: The Calm Before The Storm