The company with the largest stake in future development of shale oil on the North Slope says a decision on whether to proceed with work there will not be made for another year.
Great Bear Petroleum surprised the state’s oil industry a year ago when it leased – for shale exploration — approximately a half-million acres just south of the Prudhoe Bay and Kaparuk fields. On Tuesday morning, President Ed Duncan told the House Resources Committee that the company has spent about $1 million in getting permits – and plans to drill its first exploratory wells this winter. He says the project is in its “Proof of Concept” phase.
“While we’re all optimistic and all very excited, until we get these wells drilled, tested and flowed back and actually calibrate the rocks – the rocks will tell us what they’re going to be able to do for us – much of what we talk about is well-founded theory, but nothing in hand,” Duncan said.
The theory he refers to could lead to drilling about 200 small, shallow shale oil wells per year for 10 years. He said it would take a workforce of thousands of people trained to use the new equipment. And he says their output would feed directly into the TransAlaska Pipeline System from the North Slope to Valdez.
Shale oil and gas have earned a national reputation for using controversial methods to produce energy. But the state’s Director of Oil and Gas Bill Barron says a Parnell administration task force from several different executive branch departments is looking at all the elements of extraction – and trying to prepare now for dealing with it if the exploration advances. He indicated there are other companies in line for shale behind Great Bear.
“If we can figure out a way to work with the various companies, to have common roads, common gathering lines, a common delivery point into TAPS, common and shared power facilities, we can minimize the overall impact to the environment. And that’s the thrust that we’re trying to embrace,” Barron said.
The House committee told Barron and Great Bear’s Duncan that the legislature expects to be a part of the development of regulations of the new industry. Co-Chairman Paul Seaton pointed to several sensitive aspects of shale oil and gas extraction that will have to be settled. At the top was pollution of water sources near other U.S. deposits. Duncan said the company plans to recycle small supplies of otherwise unusable water that is below the surface throughout the North Slope.
“That’s a really good thing for Alaska. And it’s unique, in fact, in the major shale resource play developments in North America. That we have a non-potable water source – limitless is a very big word, but we’ll use it – it’s an extremely large volume of recoverable, brackish water from the subsurface that may be ideal,” Duncan said.
The committee will follow the work by Great Bear and others, with further hearings planned during the session that begins in January.
CORRECTION: A story that ran on Alaska News Nightly – and later APRN programming — on November 1, 2011, incorrectly referred to Shale Oil wells as being “small” and “shallow.” The Division of Oil and Gas within the Department of Natural Resources says the reference is potentially misleading. An e-mail from the division staff says “Shale resource wells will be drilled to a depth of approximately 8,000 feet to 13,000 feet vertically depending on their location from north to south. For reference, wells to the Ivishak formation in the Prudhoe Bay field reach approximately 8,800 feet vertically; in the Kuparuk area, 5,400 feet with 3-1/2 to 4” diameter completions.”
While the diameter of the wells will be about the same as current, conventional wells on the North Slope, the production capacity of a well producing shale oil is expected to be less than that of a conventional well.
APRN will be covering any future discussions on Shale exploration, permitting and production in the coming months and is happy to correct any misunderstanding along the way.