With high expectations, Alaska’s petroleum reserve should see ‘unprecedented’ exploration this winter

A federal geologist said Thursday there are dozens of potential oil pools in just one corner of the Alaska petroleum reserve where the Trump administration recently expanded access for the oil industry.

A geological prospect around that northeast section of the National Petroleum Reserve-Alaska should see "unprecedented" exploration this winter, said David Houseknecht, the U.S. Geological Survey's lead geologist for oil and gas resources in Alaska.

Seven exploration wells are planned within that corner and just outside the reserve. ConocoPhillips plans five and Armstrong Oil and Gas plans two, he said.

"There's never been this kind of activity in the Nanushuk," Houseknecht said Thursday.

Nanushuk is a relatively shallow reservoir that was overlooked by drillers for decades, until Armstrong announced the large Pikka discovery there two years ago.

Discoveries tied to that geological prospect, including ConocoPhillips' Willow, could rank among the largest oil discoveries in Alaska, Houseknecht said, speaking to the Resource Development Council.

Nanushuk is a hot prospect, said John Hendrix, chief oil and gas adviser to Gov. Bill Walker. Production there could help reverse Alaska's sagging economy with new royalty income and other benefits, he said.

In May, President Donald Trump's Interior Department ordered an update of the 23-million-acre reserve's petroleum potential. The USGS is collaborating with other agencies to review three-dimensional seismic data and other reports, he said. The assessment is focused on the Nanushuk and the related Torok reservoir.

In October, Interior offered a record number of NPR-A tracts for lease to bidding companies, almost doubling the previous record at 10.3 million acres. The bid-opening is Dec. 6.

[For first time, all available tracts up for lease in NPRA]

Oil Search, an Australian company with oil and liquefied natural gas assets in Papua New Guinea, announced Tuesday it will buy part of Armstrong's discoveries for $400 million.

The money can support development, leading to production, Hendrix said.

"It's great news for the state and for Armstrong," Hendrix said. "They are basically able to bring a new player to Alaska with hundreds of millions of dollars at their disposal."

NPR-A has seen limited exploration, Houseknecht said.

In the northeast section where Willow sits, federal geologists reviewing the newly available data have identified features that could support dozens of potential oil pools, he said. Those prospects have never been tested by companies. The corner is roughly 12 percent of the reserve.

Houseknecht highlighted one prospect as "absolutely huge," possibly supporting 300 million barrels of oil.

"If there's oil in there at all, right? Because we never know until that prospect is drilled," Houseknecht said.

Uncertainties include whether Nanushuk's rock quality will limit future large discoveries in northeastern NPR-A, he said. Geologists also want to know whether the petroleum potential drops off in lesser-explored areas of the reserve.

Houseknecht said Pikka and Willow are economically viable, with access to roads reducing costs. But their true oil potential won't be known without further drilling.

"We're at the point of the blind man holding the elephant and we're not sure whether we have a hold of the trunk or tail yet," he said.

The NPR-A update is expected to completed by early next year.