New contingent resource estimate of 1.2 billion barrels of oil for acreage on Western North Slope
On March 9, Repsol announced the largest conventional onshore US discovery in over 30 years, news that comes on the heels of ConocoPhillips’ Willow discovery earlier this year, according to Wood Mackenzie.
In the latest report, Wood Mackenzie analysts discuss what other discoveries will be found on the North Slope and whether these new fields will generate returns and move forward at current oil prices.
Alaska exploration is off to a strong start in 2017. Conventional exploration is heating up, and Repsol is the third company to announce a significant discovery on the North Slope in the last six months.
Horseshoe was drilled in early 2017 and is located about 20 miles (35 km) south of the Pikka Unit, where the partnership has drilled 16 exploration and appraisal wells since 2012.
Horseshoe-1 and Horseshoe-1A encountered net pay of 100 and 150 feet (30 and 45 meters), respectively, in the same interval of the Nanushuk formation as was encountered in the Pikka discovery.
Based on this information, the partnership released a new contingent resource estimate of 1.2 billion barrels of oil for this acreage on the western North Slope.
While exploration results have been excellent, there are no fields currently producing from the Nanushuk on the North Slope.
The Nanushuk and the Torok, which received significant attention last year following Caelus Energy’s Tulimaniq discovery, are the same geological age; however, the Nanushuk is a top set delta formation with higher porosity than the Torok, which is basin floor fan formation.
We expect the Nanushuk, more so than the Torok, to play a vital role for future greenfield development on the North Slope.
Permits are in the works for a three-pad development at the Pikka Unit, but we don’t anticipate they’ll be complete until the second half of 2018.
This delays construction to winter 2019 at the earliest due to planning time and seasonal restrictions on construction, which must be carried out when the ground is frozen.
Wood Mackenzie estimates 500 mmbbl of commercial reserves for the Pikka Unit, which will be the first to produce from the Nanushuk play, and value the field at US$1.3 billion.
Together, the Pikka Unit and Horseshoe could revitalize the North Slope as we come out of the downturn.