Alaska has seen a steady decline in crude oil production since 1991, and it’s expected to continue the downward trend through 2040. Nearly 75% of all production comes from Prudhoe Bay and Kuparuk River fields in the central North Slope. The variable climate and limited time without ice coverage has made for a challenging environment for oil production.
However, Royal Dutch Shell recently gained conditional approval to begin exploratory drilling in the Burger prospect in the Chukchi Sea. This may help to offset future declines in crude oil production from other state and federally managed resources in the region if they are successful. Currently, Alaska oil and natural gas activity is concentrated in three regions: The North Slope Offshore, Central North Slope, and South Alaska. The North Slope Offshore encompasses the Chukchi and Beaufort Sea, where most of the production is located. The Bureau of Ocean Energy Management estimates that the Chukchi Sea, off the northwest coast of Alaska, contains 2 to 40 billion bbl of unproved technically recoverable crude oil resources and 10 to 210 Tcf of unproved technically recoverable natural gas resources.
Technically recoverable resources include oil and natural gas that can be produced based on current technology, industry practice, and geologic knowledge. More than half of Alaska’s unproved technically recoverable crude oil resources are in the North Slope Offshore. The recoverable crude oil resources are comparable to what is found in the Bakken formation, and more than twice the unproved crude oil resources in the Eagle Ford formation.
With the anticipation of Shells findings, many companies are watching this area very closely. Even in a down market, planning stages must ramp up for the expected findings. Lone Tree looks forward to this new frontier, and hopes to provide comfort to the explorers in the area.