Since the 1968 discovery of Prudhoe Bay, North America’s largest conventional oilfield, operators have been drawn to Alaska’s remote and mysterious North Slope in search of other giants. The discovery of the Alpine Field in 1994 fueled interest in stratigraphic traps, and the region continues to yield significant discoveries, such as the 2013 Pikka Field, just east of the National Petroleum Reserve – Alaska.
Considering all the territory that stretches north of the Brooks Range, one area – the Arctic National Wildlife Refuge – has remained off-limits to exploration since its creation in the 1980 Alaska National Interest Lands Conservation Act. Despite decades of heated debate between the industry and environmentalists on whether to allow exploration of the area – which is widely believed to be rich in hydrocarbons and a major step toward energy independence – it has remained closed.
Until now.
On Aug. 17, U.S. Secretary of the Interior David L. Bernhardt signed a record of decision approving two lease sales on the 1.56 million-acre coastal plain of ANWR, known to many in the industry as the 1002 Area (roughly 8 percent of ANWR). The 1002 Area, which is the most prospective of ANWR’s 19.3 million acres, was never given the highly protected “wilderness” designation because of its energy potential. However, it was declared off-limits to the oil and gas industry until Congress authorized its opening.
For years, many believed opening the 1002 Area in an era of partisan politics would never happen. Yet, when Congress passed and President Donald Trump signed into law the Tax Cuts and Jobs Act in 2017, the way was paved to this historical leasing program. The legislation requires the secretary of the interior, acting through the Bureau of Land Management, to hold at least two lease sales in the 1002 Area – no less than 400,000 acres each – with one taking place before Dec. 22, 2021 and the other no later than Dec. 22, 2024.
Unlike other lease sales across the country and in Alaska, this legislation mandates that the secretary of the interior grant the rights-of-way and easements necessary for successful exploration, development, production and transportation of oil and gas resources. “Clearly Congress intended that successful implementation of the mandated oil and gas program should not be frustrated by an unavailability of necessary access,” stated the ROD.
In an Aug. 17 publication of E&E News, Bernhardt said the first sale “certainly” could take place before the end of this year.
Have the Stars Finally Aligned?
Many geologists who have spent their careers mapping Alaska’s North Slope might admit they never expected exploration of the 1002 Area in their lifetimes.
Gil Mull, one of the most highly regarded geological experts of the North Slope who served as a wellsite geologist when Prudhoe Bay was discovered, once told the EXPLORER, “My overall feeling is that this is such an emotional issue and it has been for so long that it’s very unlikely to get through Congress.”
While Mull, now retired, could not be reached for comment, he would no doubt be surprised by recent events.
Will Mull and others who have spent decades on the North Slope – mapping outcrops from the Canadian Border to the Chukchi Sea to put together a respectable geologic framework – see one of the last pieces of the Alaskan petroleum puzzle fall into place?
Estimates by the U.S. Geological Survey of the 1002 Area include a wide range of uncertainty from 4.3 to 11.8 billion barrels of recoverable oil. The large range exists because there simply is not enough data to be more precise. Until recently, the USGS was limited to fuzzy 2-D seismic data shot in the 1980s and several nearby wells that had been made public by 1998, the date of the most recent assessment.
Despite the enormous potential that has beckoned North Slope operators and geologists for decades, current oil prices could cause hesitation for investors.
“These leases could be cheap if there is not a lot of interest from deep-pocketed people, but even if you get it for a dollar, why would you do it if it’s going to cost you billions before you know oil is there?” said Larry Persily, an Alaska-based industry columnist to E&E News on Aug. 18.
In a previous interview with the EXPLORER, USGS Senior Research Geologist David Houseknecht said, “It is clear there is potential for stratigraphic traps to produce hundreds of millions or even billions of barrels of oil, but these traps are very subtle seismically. Using 2-D seismic makes it impossible to identify and map these stratigraphic trap geometries.”
Over the past several years, the USGS has reprocessed the vintage 2-D seismic data and conducted field work in ANWR to get a clearer picture of its geology, yet it remained unclear at press time how much new knowledge it could disclose.
As stated in the Leasing Environmental Impact Statement, “… there is tremendous uncertainty regarding future potential exploration and development of the Coastal Plain. Any development scenario at this point is highly speculative because: it is unknown whether or where leases will be issued, it is unknown whether or where exploratory drilling may occur under such leases, and it is unknown whether or where commercially developed oil and gas discoveries may be made.”
The ROD explained that “… given the limited geophysical information that currently exists for the Coastal Plain, making the entire program area available for leasing ensures that the areas having the highest potential for the discovery of oil and gas can be prioritized for offering in the first two lease sales.”
The BLM plans to accept nominations for lease locations within the 1002 Area in the immediate future and subsequently make public the particular tracts available for lease. It is believed the tracts will be larger than those in NPRA but will not exceed 60,000 acres.
So far, Conoco-Phillips appears to be a possible contender among the majors, owning the majority of leases in NPRA. Responsible for the 2017 Willow discovery (which is estimated to contain 400 to 750 million barrels of oil equivalent) and advancing other current projects in NPRA, the operator could tap into the 1002 Area. Earlier this year, BP sold its assets on the North Slope just before Chevron pulled out of the region, according to E&E News.
SAExploration, a Houston-based seismic company that had a pending application for seismic exploration in the 1002 Area, filed for bankruptcy in August – perhaps a sign of how the industry’s drawn-out downturn may play out on the North Slope.
Furthermore, if U.S. Sen. Joe Biden is elected president, there is talk that his vehement opposition to drilling in the 1002 Area may stall the leasing program indefinitely.
And, as expected, there are the plethora of lawsuits already being filed, including the Gwich’in Steering Committee that represents Native Americans in Alaska and Canada, that also could slow exploration in one of the most underexplored areas in the world.
Protections and Precautions
While environmentalists have long opposed drilling in the 1002 Area, the government has developed a detailed plan for protecting wildlife, subsistence activities and the land after taking into consideration roughly 1.8 million comments that collectively conveyed 8,000 unique and substantive points of view, according to the ROD.
Agencies that weighed in include the U.S. Fish and Wildlife Service, U.S. Environmental Protection Agency, the state of Alaska, North Slope Borough, Native Village of Kaktovik and the Native Village of Venetie Tribal Government, to name a few.
The leasing program also will take into account other refuge purposes, including conservation of fish and wildlife, wildlife populations and habitats, allowance for continued subsistence use, and protection of water quality and quantity necessary to meet fish and wildlife conservation needs.
The leasing program mandates that 23 percent of the 1002 Area (mainly within barrier islands and important aquatic habitats) be subject to no surface occupancy stipulations, and that 46 percent of the 1002 Area be subject to operational timing limitations in the primary calving habitat area for the Porcupine caribou herd, among other species of concern such as polar bears and migratory birds. These partially overlapping lease stipulations cover more than 60 percent of the 1002 Area.
While many detractors of the program, such as the Gwich’in, claim it could harm subsistence activities, the federal government made a point to remind the public that the industry has helped Native Americans for decades by allowing them to tax above-ground oil and gas infrastructure.
The ROD pointed out that “… much of the economic and community development that has occurred in Native communities on the North Slope of Alaska has been a direct result of North Slope oil and gas development, which provides job opportunities and substantial property taxes and other funding for community infrastructure development such as new schools, healthcare centers, roads, and drinking water, wastewater, and other utility systems.”
Harry Brower, Jr., mayor of Alaska’s North Slope Borough and an Inupiat whaling captain, has said that “North Slope Borough residents recognize the importance oil and gas to our local economy and the ability of our borough and city government to provide public services.”
Ever aware that throughput in the Trans-Alaska Pipeline System is steadily declining along with production from the Prudhoe Bay oilfield, a giant successor – or a group of semi-giant successors - is needed not only for continued operations of the pipeline, but for the state of Alaska and the nation as a whole.
Alaska Gov. Michael Dunleavy recently commented to Bloomberg that he believes the lease sale “will lead to the responsible development of Alaska’s abundant resources, create new jobs, support economic growth and prosperity.”