Repsol reports major find in Alaska

16 March 2017, Week 10, Issue 449

Spain’s Repsol, together with US partner Armstrong Energy, has announced a major conventional oil discovery on Alaska’s North Slope – a region has long been seen as being in severe decline.

In a statement, Repsol said that 1.2 billion barrels of recoverable light oil had been found at its Horseshoe prospect near the village of Nuiqsut, a figure that would make it the largest onshore discovery in the US in 30 years.

The find came after drilling two wells with Armstrong, which acquired the lease in 2001. Repsol said the Horseshoe-1 and 1A wells, drilled during the 2016-17 winter campaign, confirmed the Nanushuk formation as a “significant emerging play”.

The Horseshoe discovery extends the Nanushuk play more than 20 miles (32 km) south of the existing discoveries made by Repsol and Armstrong in the same interval within the Pikka Unit during 2014-15.

“The successive campaigns in the area have added significant new potential to what was previously viewed as a mature basin,” Respol said. “Additionally, Alaska has significant infrastructure which allows new resources to be developed more efficiently.”

This includes the Trans-Alaskan Pipeline System (TAPS), which stretches almost 1,300 km from the Arctic Circle to Valdez on Alaska’s southern coast. Declining output from the North Slope means current throughput is around 500,000 bpd, well below the pipeline’s total capacity of 2 million bpd. 

Commenting on the discovery, Alaska Governor Bill Walker said that the Horseshoe find would be an enormous boost for the local economy, with the potential to revitalise the state’s struggling oil industry.

“This is great news for the State of Alaska,” he said. “We must all pull together to fill an oil pipeline that’s three-quarters empty.”

Speaking to CNNMoney, Repsol spokesman Kristian Rix was optimistic about the project, saying: “the interesting thing about this discovery is the North Slope was previously thought to be on its last legs. But this is a significant emerging find”. 

Under initial development plans, Repsol anticipates starting production from the adjacent Pikka field in 2021, with target output of 120,000 bpd.

Repsol holds a 25% working interest in the Horseshoe discovery and a 49% working interest in the Pikka Unit. Armstrong owns the remaining working interest and is currently the operator.