Canada may have its Albertan oil sands, and North Dakota has its Bakken oil formation. But don’t count Alaska out when it comes to producing unconventional oil.
Alaska, which has fallen behind North Dakota in oil output and whose Prudhoe Bay oil fields are waning, is exploring the possibility of extracting oil from the source rock on the state’s North Slope. The state has leased more than half a million acres of its land to exploration companies, and even some environmentalists believe that the shale oil development could be the best way to increase output with relatively modest damage to the environment.
As in shale developments in Texas, North Dakota and elsewhere in the lower 48 states, the key to unlocking Alaska’s shale oil is a combination of horizontal drilling and hydraulic fracturing, a method of injecting a mix of water, sand and chemicals at high pressure to free up captured oil and gas.
As in Canada and North Dakota, a pipeline is playing a key role in the public debate over this new technological frontier. But whereas a new pipeline — the Keystone XL extension — is needed to get oil to markets in the lower 48, the quandary in Alaska is how to fill the existing Trans-Alaska Pipeline System. That pipeline is operating at less than one-third of its total capacity, as the Prudhoe Bay fields decline.
“We’ve had a close eye on the unconventional play in Canada and North Dakota, and to some extent, we’ve been viewing it as competition,” said Dan Sullivan, Alaska’s Department of Natural Resources commissioner. “But we view it less as competition, and more as an opportunity.”
For the moment, it remains unclear whether Alaska can replicate the shale oil boom that is reshaping North Dakota and parts of Texas. The U.S. Geological Survey issued its first assessment of the North Slope’s shale rock resources in February, estimating that the region contained between zero and 2 billion barrels of technically recoverable oil, along with between zero and 80 trillion cubic feet of gas.
The wide range of uncertainty in the estimate stems from the fact that companies are just beginning to collect data on whether shale oil operations would be profitable.
“It is really an unknown whether that oil can be recovered from the source rock, and can that oil be recovered at a rate and volume per well that would be economically viable,” said David W. Houseknecht, the USGS project chief for petroleum studies in Alaska, who conducted the agency’s recent North Slope assessment.
Houseknecht added that while the region — particularly its Shublik Formation, which extends beyond state land into the National Petroleum Reserve in Alaska — has “good potential.” But it generally contains less organic matter than the Bakken and is not geologically overpressured like the North Dakota formation, which has more than three times more estimated recoverable oil per unit area.
However, Ed Duncan, the president of Great Bear Petroleum LLC, is optimistic that the same source rocks that helped make Prudhoe Bay oil-rich can generate oil if the shale is fractured. Duncan, whose company previously had leased nearly 498,000 acres of state land and expects the state to issue leases on 45,000 additional acres this fall, said it is just a matter of connecting the fact that the source rocks for the North Slope could produce oil.
“It’s bringing technology to Alaska to unlock the oil from the source rock,” Duncan said. ”We believe the stage is set to develop quickly, assuming the rocks will produce at adequate commercial rates.”