Armstrong says oil prospect could double in size

  • Armstrong Energy CEO Bill Armstrong talks about the major find he and partner Repsol have made on the North Slope during a Sept. 9, 2016, interview with the Journal. (Photo/Michael Dinneen/For the Journal)

Spanish oil major and North Slope explorer Repsol excited Alaskans last Thursday with a promising but ambiguous press release that hinted about success in the company’s joint drilling program this winter.

Titled, “Repsol Makes the Largest U.S. Onshore Oil Discovery in 30 Years,” the statement substantiated previous estimates that its in-permitting Nanushuk prospect holds at least 1.2 billion barrels of light oil recoverable at a rate up to 120,000 barrels per day.

It also notes the discovery made by the Horsehoe-1 exploration well recently drilled by Repsol’s majority Nanushuk partner Armstrong Energy “extends the Nanushuk play more than 20 miles south of the existing discoveries achieved by Repsol and Armstrong.”

Bill Armstrong, founder and CEO of his namesake company, said Friday in an interview with the Journal the Horshoe-1 and -1A sidetrack well results indicate the Nanushuk prospect “has the potential to be significantly more, possibly double” the 1.2 billion barrels of established recoverable reserves.

The Horseshoe wells, drilled 21 miles south of the partnership’s previous exploration drilling point to an oil field — still needing full appraisal — that is about 34 miles north to south and about 3 miles wide with significant net pay zones, according to Armstrong.

“This really established this new Nanushuk play. It’s a big deal. It’s extremely cool,” he said.

Armstrong added that the Nanushuk zone is shallow, straightforward, conventionally recoverable oil pools.

“This is old school; real porosity, real permeability. It responds to water floods really well,” he said of the reservoir’s characteristics.

The Repsol release states the 6,000-foot Horeshoe-1 well hit a net Nanushuk pay zone of 150 feet.

Armstrong said the holes also encountered other oil zones traditionally found on the North Slope.

He noted further the 120,000 barrels per day and 1.2 billion barrels of reserves estimates for the appraised Nanushuk project in the Pikka Unit are safe estimates as well.

A Repsol spokeswoman said the 1.2 billion barrels of oil figure in the company’s release referred to confirmed reserve totals.

Repsol is a publicly traded company and as such has been conservative in the few public statements it has made about its work with Armstrong on the North Slope.

The Nanushuk project the companies have been working on since 2011 is held by Armstrong with a 51 percent majority since the two swapped working interest-operator positions in the venture in 2015. It is in the early stages of the federal environmental impact statement process. First production from the field is targeted for 2021.

A host of Alaska politicians lauded companies for their work after the Thursday Repsol release, even if the specifics about exactly what they were offering congratulations for were a little unclear.

Some surmised the Nanushuk project was on track to produce upwards of 400,000 barrels of oil per day.

Armstrong said it is too early to say how much the daily production number for the project could grow, which is dependent upon many factors.

Gov. Bill Walker noted in a statement from his office that the state’s Fall 2016 North Slope lease sale was one of the most active in 20 years, generating about $17 million in winning bids and lending credence to the Slope’s continued oil potential.

“I applaud the announcement by Repsol and its partner, Armstrong, on their Horseshoe wells discovery,” Walker said Thursday.

“We must all pull together to fill an oil pipeline that’s three-quarters empty — and today’s announcement shows measurable results of that hard work.”

Former Gov. Sean Parnell wrote in a Facebook message that Armstrong “told us years ago this find was entirely plausible, great job!”

To that, Armstrong said he was generally surprised at how many prominent Alaskans thought the state’s oil prospects were played out and there was little left to do but “wring the towel out of the big fields” such as Alpine, Kuparuk and Prudhoe Bay when he brought his company back to Alaska to explore with Repsol.

Armstrong had the belief there was a lot more oil to find on the North Slope.

“Now we’re starting to prove it,” he said.

In January ConocoPhillips announced its Willow oil discovery, with about 300 million recoverable barrels, to the west of the Pikka Unit in the federal National Petroleum Reserve-Alaska. The Willow project is a similar reservoir play and North Slope geologic experts insist it could be additionally repeated across the Slope.

Elwood Brehmer can be reached at [email protected].

09/28/2017 - 12:42pm