A small Texas oil company could be leading the way toward Alaska's next big oil boom, an "unconventional" oil play that lawmakers are hoping could fill up the pipeline and the state treasury for decades to come.
Oil fracking, the highly controversial drilling technique being used Outside, appears headed for the North Slope in a big way. Great Bear Petroleum LLC, of Austin, Texas, has been the star of the legislative show in Juneau in recent days, with power points and promises of a new drilling program that could soon boost oil flow through the trans-Alaska pipeline considerably -- even to 1 million barrels a day if the state or other investors wanted to help finance more wells than Great Bear can currently afford.
"Spectacular," "extraordinary" and "amazing" are words echoing through the Capitol since Great Bear's presentation on Saturday, a meeting that kept committee members in their seats for nearly three hours.
"I think it's potentially huge," says Sen. Bill Wielechowski, vice chair of the Senate Resources Committee which hosted the presentation. "It's one of the biggest developments in the Alaska oil fields in years."
Alaska's high hopes for Texas oilmen
Earlier last week, the committee also heard from state Department of Natural Resource officials including petroleum geologist Paul Decker who cautiously acknowledged that oil fracking projects on the North Slope "could be quite a whirlwind." Decker noted that the new drilling technology and its potential to reach vast untapped resources is something the department is only just beginning to study.
But the company, like others in the Lower 48, is moving fast. In October, Great Bear surprised state officials and industry observers by scooping up 500,000 acres at a North Slope lease sale. The company paid more than $8 million for exploration rights to about 92 percent of the acreage being offered that day. ConocoPhillips bought one tract, and another private investor bought a handful more.
Great Bear President Ed Duncan and vice president Bob Rosenthal are veterans of the Alaska oil fields, having worked for BP and Exxon for years. The two along with other business partners formed Great Bear specifically to focus solely on Alaska oil production, Duncan told the Senate Resources Committee on Saturday.
What Duncan and his partners are hoping to get at is some of the billions of barrels of oil that remain trapped in the "source rocks" that have already fueled Prudhoe Bay, the largest oil field in North America and one of the largest in the world.
Duncan, who didn’t return a call to his Texas office for this story, told the committee that Great Bear hopes to pump 2 billion barrels of oil and 12 trillion cubic feet of gas from the leases they bought last year. And they plan to do it in fairly short order -- he said the company could be "selling oil into TAPS" by the summer of 2012.
According to Duncan, who says he has more than 30 years experience as a petroleum geoscientist and business development manager, there is still a tremendous amount of oil and gas deep in the Earth, trapped in geologic formations that have been far from fully tapped by the major oil producers at Prudhoe Bay.
In fact, he told lawmakers, only about 20 percent of the oil from the source rocks has been pumped, and that is oil that had migrated to areas where it flowed relatively easily when conventional wells were drilled.
But 80 percent of the resource is still there, stuck in the rock, Duncan believes. The challenge is how to get it out both from an engineering standpoint and an economic one.
In just the last few years, breakthroughs have been made in drilling technology, most notably with hydraulic fracturing, or fracking, as it's come to be called. It's considered unconventional because the engineering risk is greater and the resource doesn't flow naturally so "massive stimulations" are needed to recover the oil or gas, geologists say.
Patti, At what depth is the oil bearing oil shale that they expect to produce? If Shale was the source rock for Prudhoe Bay, for example, that would be well below 9000 ft.
I wonder when they will be coming to the legislature asking for a hand out.
Alaska is not the S48 and one cannot just back up a drilling rig and drill with pipeline infrastructure nearby.
Again, I wonder when they will be coming to the legislature asking for a hand out.
Remember, the weavers of magic invisible golden cloth that bamboozled King.
Will the legislature have the guts ask “ what share are you going give to the State in return?”. Doubtful the legislature has not shown that kind courage to date and it has cost the State of Alaska and the Permanent Fund billions of dollars.
When I hear that the new shale oil developers have leased drilling rigs and are in the business of producing oil and the majors are willing to let them use the Majors oil processing facilities without raping them, then I’ll get on the shale oil band wagon but for now the ball is in the legislature court.
The legislature must pass laws to bring access to North Slope oil processing facilities under a regulatory commission not only for shale oil but also so for the small oil reservoirs which the independents want to produce. To date, the Majors have been screwing over the smaller companies and playing keep away. This obstruction is one of the reasons there is not more oil in TAPS today.
There is long way to go but it starts with legislature acting to guarantee fair access to oil processing facilities, TAPS and the Valdez terminal.
Then the next question is what are they going to do with the produced gas? The gas should not be flared. And the greenies should ready to sue to prohibit the flaring of North Slope gas but to date that is more than the greenies can wrap their minds around.
The logical thing, is gas reinjection for greater oil production, but I do not know if gas functions as well as gas reinjection does in reservoirs like Prudhoe Bay. I do not know of any reason why gas reinjection would not be beneficial to maximizing shale oil production like gas injection does in other oil reservoirs .
If gas reinjection is not beneficial to shale oil production then the shale gas should be injected into Prudhoe Bay or some other oil reservoir. Shale gas would also be useful for the necessary gas pressure maintenance (10,000 plus psi) of the Point Thomson when it is produced. Exxon’s current plan for point Thomson is to try to get away with “gut and run” which puts at risk rendering Point Thomson marginally producible with lost billions of BOE. AOGCC 2007 legislative gasline hearing in Anchorage.
If the shale gas is injected into Prudhoe Bay that means the shale gas would be displacing the recycling of Prudhoe gas which means less oil production because less actual Prudhoe Bay gas is being recycled and that is the gas that produces Prudhoe Bay oil.
The solution to being able to inject shale gas (or any other additional gas) is to add more gas injection infrastructure for the shale gas. (BP has been obstructing the development of Gas Hydrates because they did not want to displace the recycling of Prudhoe gas).
Additional gas injection would increase oil production and /or increase the reservoir gas pressure which will not only slowly increase current oil production oil but also maximize over all oil recovery and extended the production life of Prudhoe Bay. Most of you will be dead and long since gone before Prudhoe is shut in. That additional oil recovery would be in the future and so enters the time value of money into the oil production equation.
The Majors will bock at having to pay for more gas injection infrastructure. (I’ll add here -- the spooks who buy into the Majors claptrap that TAPS is going shut down soon should go obtain an intelligence and gullibility tests.) It is the oil companies’ duty to lie to you and peddle you anything you are ignorant, stupid and gullible enough to believe which furthers the oil companies bottom line. Oil is world biggest poker game and if you do not have gray matter to play in the game, get out. It is not for the namby-pamby.
More gas injection infrastructure for Prudhoe is where the State comes in and takes advantage of the difference in the time value of money between the oil companies and the State. The State should front end funding of the additional gas injection equipment for receiving a percentage of the action. It is a Win, Win and Win situation for all concerned.
However, it should be remembered that Majors will yowl and whine like a cut cat but then that is their corporate obligation to do anything they can to maximize their bottom line. It just part of their negotiation strategy to ‘wind up’ all of their camp followers .
Again, the ball is in the legislature’s court and the legislature needs to act. It will be interesting to see how much effort the Majors will put into obstructing and sabotaging the legislative process if the legislature turns to addressing the Majors obstruction and raping of the smaller oil companies.
Great if it works and the environment isn't damaged. There is so much hype about fracking as a process that it is hard know what concerns are justified and what is just hyperbole and fear-mongering. I wish we could get a balanced analysis.
I have read studies on fracking in Oklahoma oil fields that have been dead for forty years and they are now producing more oil than during their first production phase. If they can revive production in Oklahoma with fracking---imagine the potential on the North Slope?
I also just read an article (Wall Street Journal) that notes that the price of oil has gone up 133% since Obama took office.
If that trend continues, both the federal and state governments would be well-served to open up production in ANWR and the NPRA. We must have sufficient and affordable energy or everything else grinds to a halt.
Fracking is not new and has been used extensively on the Noth Slope for 20 years or so to enhance production in some wells. There may be new technology making it more effective. The sand used is man made ceramic, nearly perfect spheres, sieved into various sizes for use in various formations. Schlumber Dowell has been one of if not the primary 'fracker' pumping 100s of thousands of tons of sand under high pressure into Noth Slope wells. I really hope the new technology can breathe new life into the industry. Could create a lot of jobs. It's nice to see a smaller player maybe make good!
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