The North Slope Shale Potential has already garnered interest from the US Geological Survey. Why is this important? USGS estimates historically help energy companies convince banks and investors to loan money for exploration. Take the Bakken for instance, at this time the industry is fairly certain the recoverable reserves are well above the USGS estimates of 4-6 Billion barrels of recoverable oil. However, the industry has pleaded with the USGS to do another assessment so that their larger estimates would have more credibility when verified by the USGS. If the USGS agrees with the industry, the new study should help E&P’s gain the capital needed to drill out the Bakken.
If the USGS assessment is encouraging for Alaska, this could open up a wave of investment to explore the North Slope’s source rock for shale production potential. The Petroleum News has an excellent article relating to the upcoming USGS assessment of the North Slope Shale here.
The article summarizes the process for USGS’s assessment as:
“mapping the disposition of the source rock in the subsurface; estimating the area of source rock that each production well might be able to access; and estimating the total ultimate recovery of oil from each well. By then calculating the total number of wells needed to access the entire area of the source rock and multiplying the number of wells by the per-well ultimate oil recovery it is possible to estimate of the total quantity of oil that might be produced”
What this basically says is that they need to understand the thickness of the formation, the amount of oil trapped in the rock, how much one typical horizontal well may produce with current fracturing technology, and how many wells will be needed to drill out the source rock area.
These are exciting developments for Alaskans. Not long ago, there was a lot of press about the declining volumes of oil in the Alaskan pipeline and that the flow had been slowed significantly. A Tesoro Refinery in Washington was so concerned about the declining pipeline volume that it built a rail terminal to receive shipments of Bakken crude from North Dakota! However, if the North Slope Shale play is economical, that may be a worry of the past. Recently, Great Bear Petroleum and Halliburton announced they were teaming up to explore the source rock potential along the Dalton Highway. The article referenced goes on to say that if exploratory wells are successful, Great Bear could drill up to 200 additional wells per year. 500,000 acres is a HUGE lease for a shale play. Again, comparing to the Bakken, there could be the potential for 1500+ wells on this acerage alone if the development plan is similar.
Stay tuned for more updates on this exciting shale play on the North Slope of Alaska!