(MENAFN- Baystreet.ca) New discoveries in Alaska by an Australian independent could provide hope for bigger oil finds yet to come in the country's National Petroleum Reserve. Australian independent oil firm 88 Energy has been making strides in its Alaska project in recent weeks announcing an oil discovery in its Merlin-1 exploration well in the southeast National Petroleum Reserve-Alaska. Further testing will show the full extent of the discovery.
88 Energy is predicting a potential 650 million barrels of oil at Merlin-1 based on its current information. This would mean the oil-bearing geologic formation, Nanushuk, is much larger than originally thought.
Alaska Peregrine Development Company, or "APDC" has been largely funding 88 Energy operations, providing the first $10 million for the drilling project. Initial drilling reached 1,512 feet, or 460 metres with a prospective oil target at 6,000 feet, or 1,829m.
The Australian firm also announced a share subscription agreement with ELKO International LLC this month, issuing 360 million shares at a share price of 1.8 cents, meaning an input of $6.48 million (US4.92m) into the project.
ConocoPhillips (NYSE:COP) is already planning the development of its 'Willow' discovery in the north of the Merlin well, which could hold an anticipated 750 million barrels. And New-Guinea producer, Oil Search, is developing 'Pikka', to the east of the well. Production is expected from both discoveries by 2026.
hese discoveries are all based in the Nanushuk formation in Alaska's National Petroleum Reserve. But Alaskan oil expands well beyond this. In December 2020, Shell Offshore Inc.'s application to form the West Harrison Bay unit in the shallow state waters of the Beaufort Sea was approved.
Shell's plan of exploration in the 81,000-acre unit was filed last June, aiming to drill two wells over the next five years. The area encompasses both the Nanushuk and Torok formations.
Elsewhere in Alaska, its North Slope, which could hold tens of billions of barrels of heavy oil, is being explored. A study, costing $9.6 million, by Hillcorp Alaska and the University of Alaska Fairbanks is testing the potential of injecting a synthetic polymer to help recover the heavy oils.
However, Biden's suspension of new leases on federal lands and in federal waters threatens new discoveries in the Alaskan region. Even if existing exploration projects prove successful, Biden's suspension and aims to speed up climate change policies could mean a huge proportion of Alaskan oil remains untouched.
Alaska was one of 13 states to call for an end to Biden's pause on new oil leases through a lawsuit this month. The state relies heavily on oil production for employment and its economy as a whole. Alaska has enjoyed $180 billion in oil revenue since its statehood, with one-quarter, or 77,600, of Alaskans employed in the sector.
Alaska Gov. Mike Dunleavy's issued a statement stating, 'We fear that President Biden's attack on federal oil and gas leasing has only begun, and the State must be involved to protect the interests of all Alaskans in the responsible development of the bountiful natural resources contained within Alaska,' said Dunleavy, in the statement'.
With significant new finds in Alaskan waters and pressure on the government to balance environmental policies with the future of U.S. oil and gas, the state could prove hopeful for the substantial extraction projects of both light and heavy oil over the next decade.
By Felicity Bradstock for Oilprice.com
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