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Alaska’s Reserves Ripe for Extraction Despite Low Barrel Prices

Offshore

Proven reserves in Alaska’s North Slope could be tapped despite low barrel prices, increasing the United States’ footprint in international energy markets, according to a new report by MarketWatch.

Currently, foreign firms are partnering with American companies to scope out opportunities in the northern state.

In March, Spanish oil firm Repsol SA announced the largest onshore oil discovery in the U.S. in three decades —a 1.2-billion-barrel find on Alaska’s North Slope. Repsol has been actively exploring in Alaska since 2008 and finally hit a big one with partner Armstrong Oil & Gas. First oil is expected by 2021.

The past five years have led to oil discoveries in the North Slope that have increased proven reserves by 14 percent. Another noteworthy find was made by Dallas-based Caelus Energy, which claimed that the shallow waters of Smith Bay held 10 billion barrels of light oil, with one-third recoverable at a $50-barrel price.

President Donald Trump’s team is set to review applications for companies like Eni, which aims to restart drilling in the Nikaitchuq Unit in state waters of the Beaufort Sea. The Department of Interior presides over applications to extract oil from federal waters in the area. Eni’s authorization to drill there was not automatically cancelled by President Barack Obama’s ban, because the Italian company’s contract predated the restrictions.

Related: Georgia Is Giving Up On Gazprom

The White House will likely approve the application for Eni to restart drilling based off of Trump’s campaign promises to remove hurdles for oil and gas companies to work in federal lands and waters. But the new government has limited authority to approve new ventures in the northern reserves.

Before leaving office, President Obama formally blocked offshore oil and gas drilling in most of the Atlantic and Arctic Ocean through 2022, responding to a call from environmentalists who say the government needs to do more to prevent drilling in environmentally sensitive areas of U.S.-controlled oceans.

By Zainab Calcuttawala for Oilprice.com

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  • Jack on April 15 2017 said:
    The Caelus find is optimistic at best. They literally drilled only two wells, they've done no flow tests, and the find is both offshore and far from existing infrastructure. I'll be shocked if it's developed within 10 years and reaches even half of their estimates.

    The Conoco find is entrenched in infrastructure so that will certainly be the cheapest. And the Repsol announcement has had so many test wells that it's likely the most accurate in assessment, and though probably more expensive to produce, not nearly as difficult as Caelus's.

    So I think we can safely count on 2 of 3 of these. $50 break-even sounds as likely as the low break-evens that have been fudged in the shale regions. $60-65 sounds like a safer bet. Maybe $75 for Caelus.
  • Earl Richards on April 15 2017 said:
    The oil prices are not low, because it costs less than $5 to produce a barrel in Iraq.

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