Exploration analysis suggests another billion-barrel oil prospect on Alaska’s North Slope

A junior Australian outfit that has been exploring the North Slope for years has likely hit more than 1 billion barrels of oil in a formation that has quickly become the go-to target in the basin.

88 Energy has tapped into a reservoir estimated to hold more than 1.6 billion barrels of light oil with its Merlin-1 well drilled last winter in the southeast corner of the National Petroleum Reserve-Alaska, according to an independent analysis of the well conducted by Australian firm ERCE.

Drilled last winter to a relatively shallow depth of 5,267 feet, the Merlin well intersected several oil-bearing sequences of Nanushuk sands, the long overlooked formation first identified in 2014 by the Repsol-Armstrong Energy partnership in the large Pikka project now being developed by Oil Search.

The recoverable oil resource is currently estimated at 652 million barrels

ConocoPhillips has also repeated the Nanushuk success in the NPR-A, as the formation is the basis for its now-stalled $6 billion Willow project and several other satellite prospects in the area.

88 Energy Director Ashley Gilbert said in an Aug. 16 statement that the company is thrilled by the results of the well warranting further seismic exploration as well as a nearby appraisal well on tap for next winter.

88 Energy officials have dubbed their work in the NPR-A Project Peregrine, which is located about 40 miles south of ConocoPhillips Willow prospect. The general location of the small explorer’s work in the NPR-A is representative of the mostly north-south trend of Nanushuk plays, according to North Slope oil experts.

The latest announcement also builds on statements the company made in April, shortly after the drilling was complete but before a thorough analysis of the well samples could be conducted.

“This is the best well we’ve drilled on the North Slope of Alaska to-date, with light oil detected in the Nanushuk across three separate horizons. Whilst we have a lot more work to do, the Merlin-1 well has confirmed an active petroleum system in the Peregrine acreage,” Gilbert said.

88 Energy holds more than 247,000 acres on the North Slope — including through its subsidiaries — mostly around the edges of other industry activity. The company has participated in drilling several exploration wells on the southern portion of the Slope in recent years with mixed results.

The Merlin-1 well intersected 41 feet of net pay with light oil contacted across three sandstone intervals, according to the company.

The target for appraisal well scheduled for early next year is likely to be drilled east of the first Merlin well where 88 Energy has identified the shelf break for the play and thicker and higher quality reservoirs are expected.

Umiat

While 88 Energy leaders are eager to better delineate their Peregrine prospect with another Merlin well next winter, they said in a statement earlier this month that Bureau of Land Management regulators had approved a request to defer drilling in the nearby long-dormant Umiat Unit.

The 24-month drilling deferral approved by BLM officials who manage the NPR-A will allow 88 leaders to study ways to integrate development of the field with the Peregrine project and the company’s other Icewine and Yukon prospects to the east near the Dalton Highway, according to a company statement. It will also allow the company to utilize more data from the nearby Merlin well and consider a tie-in to ConocoPhillips Willow facilities — if and when they are developed — according to 88 leaders.

The revised schedule calls for 88 to drill at least one well into the field by September 2023 instead of a deadline of Aug. 31, 2021, for the work.

Adjacent to the southern edge of the Peregrine acreage, the Umiat prospect for decades has been known to hold oil but its extremely remote location far from other North Slope oil fields has hampered the economics of development.

The Umiat leases that have changed hands were formally put in unit status in September 2019 at the request of former owners Malamute Energy and Renaissance Umiat, who sold it to 88 subsidiary Emerald House in January.

Alaska Oil and Gas Conservation Commission officials on Aug. 19 issued a $40,000 civil fine to Emerald House for changing its work plan to plug and abandon the Umiat-18 well last spring.

According to the AOGCC enforcement order, Emerald House leaders acknowledged to the state regulators that they deviated from the work plan approved by the three-member commission, but did so because of operational challenges due to the COVID-19 pandemic and communications challenges stemming from the remote location, among other unspecified problems.

Emerald House leaders could not be reached in time for this story.