Federal report finds ‘huge’ increase in North Slope oil potential

The Trump administration Friday heralded a "huge" increase in the North Slope's oil potential as it released an updated geological assessment of a large region that factors in big, recent oil discoveries and other new data.

The area assessed centers around the giant National Petroleum Reserve-Alaska, and is estimated to contain a mean of 8.7 billion barrels of undiscovered oil that can be produced using existing technology.

That is a sharp jump from a 2010 assessment of the same area that pegged the estimate at 1.5 billion barrels, the Interior Department said Friday.

"New discoveries have changed our geologic knowledge of the area – and these assessments show that the North Slope will remain an important energy hub for decades to come in order to meet the energy needs of our nation," Interior Secretary Ryan Zinke said in the statement.

Since the U.S. Geological Survey's 2010 assessment, ConocoPhillips has announced the Willow discovery within the reserve's boundaries. Just to the east on state land, Spanish multinational Repsol and other oil companies are pursuing the large Pikka discovery.

Those two discoveries alone could produce some 220,000 barrels of oil daily, the companies have said. That amount would sharply boost the roughly 550,000 barrels of oil flowing through the trans-Alaska pipeline.

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The report also takes into account another new, large discovery, this one offshore in Smith Bay and announced by Caelus Energy Alaska.

The discoveries are associated with geologic formations that are generating new interest for their oil potential. The formations are known as the Nanushuk and Torok.

The oil potential in the region associated with the 23-million-acre reserve is "significantly higher" today primarily because the two geologic formations "host recent oil discoveries that are larger than anticipated," Interior's statement said.

The agency released the news the same day President Donald Trump signed into law a sweeping tax bill that, for the first time ever, allows oil drilling within the coastal plain of the 19-million-acre Arctic National Wildlife Refuge, also in northern Alaska.

Gov. Bill Walker said in a statement the message is clear: "Alaska is open for business, and our resources are world-class."

'Robust assessment'

David Houseknecht, USGS lead geologist for oil and gas resources in Alaska, said three-dimensional seismic studies that were newly available to the agency were crucial to the update. It's the first time such high-quality seismic studies have been used in a USGS oil and gas assessment on the North Slope, he said.

Past studies have utilized two-dimensional seismic data that provides a murkier picture of geological formations.

"I consider this the most robust assessment we've ever done on the North Slope," Houseknecht said Friday.

Houseknecht said the updated estimate counts undiscovered resources. The oil at new discoveries, such as Willow, is not counted in the oil estimate.

He said some of the newly available seismic data was released by the state. Also, an information-sharing requirement implemented this year under the Trump administration allowed the agency to review seismic reports held by other agencies.

Houseknecht said the most oil-rich area in the assessment is in the reserve's northeastern section.

There, much of the land is off-limits to leasing to protect environmentally sensitive Teshekpuk Lake.

However, Zinke has ordered a review of the Obama-era plan that placed about half the reserve off-limits to drilling. That plan also doubled the size of the protected area around the lake.

'Some areas are just too important'

Conservation groups fear the administration will use the report to roll back protections in that plan.

"No amount of oil will change the fact that some areas are just too important to wildlife to develop," said Susan Culliney, Audubon Alaska's policy director.

She said Teshekpuk Lake provides habitat for waterfowl, shorebirds, caribou and polar bears, and the Trump administration has a legal responsibility to protect those resources.

"Any attempt to use this assessment to dismantle protections to expand oil development would be a disservice to the American people and would be strongly opposed by the conservation community," said Nicole Whittington-Evans, Alaska regional director for The Wilderness Society.

Interior's statement Friday called the increased estimates of oil and gas potential in Alaska "huge."

The agency also provided an updated assessment of Arctic waters off Alaska's northeast coast. The Bureau of Ocean Energy Management now estimates undiscovered, technically recoverable resources in the Beaufort Sea Outer Continental Shelf Planning Area at 8.9 billion barrels of oil and 27.7 trillion cubic feet of gas.

That is an increase of nearly 700 million barrels of oil from a 2016 estimate. Industry interest in that federal offshore region faded after oil giant Shell abandoned its multibillion-dollar Arctic exploration program in 2015.

Kara Moriarty, president of the Alaska Oil and Gas Association, said Interior's announcement helps confirm that significant pools of oil are yet to be discovered in Alaska.

Rep. Don Young said more oil discoveries in the refuge will promote "energy independence" in the U.S.

Houseknecht said he has seen proprietary data suggesting, as companies have indicated, that the Pikka discovery is larger than originally thought. A single, massive pool of oil could extend well to the south, to an exploration well called Horseshoe.

Further drilling planned by companies this winter will help verify that, he said.