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Players eye North Slope shales

Big potential for unconventional reservoirs

Gas and liquids-rich shale formations in the continental US have hogged the limelight, but it seems Alaska may have its own high-potential unconventional reservoirs. Two operators hope to open new plays on the North Slope, which hosts Prudhoe Bay, the largest conventional oilfield discovered in the US.

Privately held Texas independent Great Bear Petroleum – formed last year solely to exploit the North Slope’s unconventional potential – dominated the Alaska state lease sale in October. It tabled more than $8 million in bids for North Slope acreage – racking up 92% of the total high bids at the sale. To meet state regulations, Great Bear was later forced to pare back its holdings to 500,000 acres.

The assets, in what company officials call the heart of the unconventional play fairway, contain three sizable shale formations – the Hue, Kingak and Shublik – stacked on top of each other.

The next big shale-oil play

Great Bear chief operating officer Ed Duncan told an Alaskan Senate resources committee hearing that the state could host North America’s next big shale-oil play. To develop its leases, Great Bear intends to apply the same technologies – hydraulic fracturing and horizontal drilling – that have enabled production from the Bakken and Eagle Ford shales in the Lower 48 states.

Great Bear’s development plans call for drilling two pilot wells in 2012 and then about 200 wells annually for 45 years, at a cost of about $10 million each. Production would start in 2013, reach 200,000 barrels a day (b/d) in 2020, peak at 600,000 b/d in 2056, then level off at 450,000 b/d and continue producing until 2074.

The company’s primary target, the Shublik formation, is the oldest and deepest of the three plays. Similar to the oil-prone Eagle Ford Shale of south Texas, it’s “one of the richest source rocks in the world”, Duncan claimed.

Great Bear is not alone in seeing potential in the North Slope’s unconventional plays. Brooks Range Petroleum, an Alaska-based joint venture that is one of the most active players on the North Slope, also has leased around 100,000 acres.

If these operators are successful, their output could further the state’s goal of increasing throughput on the Trans-Alaska Pipeline System to 1 million b/d in the next 10 years. Flow through the ageing infrastructure has plummeted more than 50% since it peaked at 1 million b/d in 1988.

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