Alaska North Slope to re-emerge as major U.S. oil producer

By Staff | August 21, 2018

The Alaska North Slope (ANS) Basin—a prolific source of U.S. oil production previously limited by a number of barriers to entry—is poised to re-emerge as a major source of U.S. energy production, according to Houston-based IHS Markit, a global analytics firm. New energy research from the company shows that ANS crude output could potentially increase as much as 40 percent in the next eight years.

Based on recent discoveries, the “IHS Markit Plays and Basins: Alaska North Slope Basin; Resurgence in an Arrested, Late-emerging Super Basin analysis” estimates that the basin offers 38 billion barrels of oil equivalent (BOE) in remaining recoverable resources (50 trillion cubic feet of gas and 28 billion barrels of oil).

IHS Markit said the estimated ultimate recovery (EUR) for the ANS Basin is 54.8 billion BOE, which includes the 38 billion BOE in remaining resources combined with the 16.8 billion barrels of oil produced to date in the ANS. IHS Markit classifies the ANS Basin as an arrested, late-emerging-phase ‘super basin,’ rather than a mature basin, according to its research criteria.   

“Previously thought of as a mature basin, recent large discoveries made in the shallow Nanushuk and Torok formations indicate this basin has a lot of room left to grow beyond the Endicott and Ivishak formations, which are the reservoirs from which the giant Prudhoe Bay and Endicott fields produce,” said Kareemah Mohamed, associate director, plays and basins research at IHS Markit, and lead author of the IHS Markit analysis. “This is why we refer to this basin as being in the late-emerging-phase, because it still has such significant resources to offer.”

IHS Markit said the basin has previously produced 16.8 billion barrels of oil to date, but in 2017, recoverable reserves increased six-fold in previously ignored shallow Cretaceous formations—the Nanushuk and Torok—which total an estimated 5 billion barrels.

IHS Markit also said there is an estimated 9.5 billion BOE of yet-to-find volumes in the National Petroleum Reserve in Alaska (NPR-A), Area 1002 of the Alaska National Wildlife Refuge (ANWR) and central Slope combined.

Aside from the new discoveries, the basin warrants attention from prospective operators because the Alaska North Slope now has fewer barriers to entry for operators, making it more competitive, Mohamed said. Advances in new drilling technologies that help reduce operating costs*, efficiencies from economies of scale, state-level incentive programs for accelerated permitting, and infrastructure investment make this largely onshore conventional basin worth considering anew.

Mohamed said that despite the geologic potential of the ANS, potential investment risks include needed service-sector expansion to support expected production growth, uncertainty over whether the state of Alaska will maintain its tax-incentive program, infrastructure access for new entrants, and the potential application of unconventional technology in a complex operating environment.

“Cost efficiencies from advances in drilling and operational practices will require the right kind of operator expertise,” Mohamed said. “For example, ConocoPhillips has employed learnings from its Lower-48 unconventional assets to lateral drilling in their Alaska North Slope CD-5 development located in the NPR-A.”