New data, old well add up to major North Slope find
With one unique North Slope oil discovery already in hand, a small group of explorers claims to have found another prospect on par with one of the state’s largest oil fields that is worth developing even at near rock-bottom prices.
Leaders of London-based Pantheon Resources said in an interview with the Journal that a modern evaluation of an old exploration well along with information gleaned from recent nearby drilling gives them the confidence to say they have a roughly 1.8 billion-barrel discovery south of Prudhoe Bay along the Dalton Highway and Trans-Alaska Pipeline System corridor.
Pantheon CEO Jay Cheatham said the prospect, dubbed Talitha, could ultimately produce approximately 500 million barrels of oil with peak production nearing 90,000 barrels per day, which would make it comparable to ConocoPhillips’ large Alpine field to the northwest.
If the resource estimates prove out, Talitha would be the latest in a series of big North Slope oil discoveries over roughly the past five years, which has led many within the industry to conclude there is a “renaissance” occurring in what was once the country’s premier oil basin.
However, while the economics of large North Slope prospects are routinely challenged by remote locations and a lack of infrastructure, Talitha and Pantheon’s nearby Greater Alkaid project avoid those multibillion-dollar hurdles, according to Cheatham.
ConocoPhillips and Oil Search, two of the companies advancing major new North Slope oil projects, recently announced a collective $270 million pullback of previously forecasted investments.
“We are so advantaged because of our location — being able to be right there along the Dalton Highway,” Cheatham said.
The company has estimated the Greater Alkaid prospect, which is believed to hold 76 million barrels of recoverable oil, could produce up to 30,000 barrels per day.
The Alkaid-1 well was drilled in 2015 by Anchorage-based Great Bear Petroleum, Pantheon’s predecessor firm on the project. It is just east of the Dalton and about 20 miles south of Prudhoe.
Pantheon bought Great Bear and its roughly 200,000 acres of North Slope leases in January 2019.
Results from the Pipeline State-1 exploration well drilled by Arco in 1988 also helped form the basis of geologic data that led Pantheon leaders to conclude they have a very large resource.
The Pipeline State well is also just east of the haul road and about 6 miles south of the Alkaid prospect. Pantheon Technical Director Rob Rosenthal, a founding member of Great Bear, said the well data from Greater Alkaid was combined with the old Pipeline State well test results and data from a modern 3D seismic shoot of the whole area to give a better picture of what lies beneath.
“It’s essentially in the same rocks, in the same stuff, in the same play,” as the Alkaid well, Rosenthal said of the Talitha prospect.
He added that even though the 10,000-foot vertical Pipeline State-1 well has a roughly 2,200-foot oil-bearing column over four reservoirs, with the technology and oil prices of the late 1980s it did not add up to a viable prospect at the time.
“There would have been no call back at $10 oil to go out and shoot 300-400 square miles of 3D (seismic), but today with the drilling technology, the completion technology, we can make this commercial,” Rosenthal said.
Pantheon is so far focusing on the shallowest reservoir.
Cheatham stressed the “dual advantage” that being adjacent to the haul road and TAPS provides the company. First, it allows Pantheon to avoid the massive up front costs of installing miles of remote gravel roads, drilling pads and pipelines and the corresponding multi-year environmental reviews that North Slope operators routinely face. It also makes it much easier for Pantheon to produce oil — and cash flow — early to help support full development of Talitha.
“It’s not like you’ve got to put in your whole facility. We can get (the wells) online virtually as we drill them,” Cheatham said.
Rosenthal added that the location also allows Pantheon to work year-round, while other companies are forced to limit appraisal drilling and early project development to the ice road season.
It all adds up to projects that are viable at oil prices in the $30 per barrel range, according to Cheatham.
The price for Alaska North Slope crude hovered near $30 per barrel in the second week of April as Saudis and Russian officials worked to end their production and price war that added downward pressure to oil markets already flooded with supply after the severe COVID-19-induced drop in demand started a month ago.
Full development is currently envisioned as about 170 wells split roughly evenly between water injectors and producers, a high-level plan similar to what was used to develop Alpine, he said.
Company leaders are hopeful development could begin in 2022 or 2023 if the global pandemic and subsequent economic shutdown do not persist for many months.
Cheatham and Rosenthal told the Journal in January that they planned to drill one or two more wells this year around Alkaid-1 and initiate a long-term production test, but that work is on hold at least until travel restrictions ease.
They acknowledged that Pantheon will need to find a partner to help finance large-scale development and that is challenged right now as well.
However, when Pantheon begins in earnest its search for financing for its projects, Rosenthal said he does not believe the company will be hampered by the decisions numerous investment banks have made in recent months to stop funding Arctic oil developments because Greater Alkaid and Talitha aren’t in sensitive or otherwise controversial areas.
“When they say ‘Arctic’ they mean offshore or ANWR or things like that,” Rosenthal said. “I don’t think there’s necessarily a blanket ‘we’re not going to fund anything in Alaska,’ but it’s up to us to send out a positive message about what we’re doing.”
Cheatham said the project economics — and again, location along existing infrastructure — will be the ultimate deciding factor in whether or not Pantheon gets the money it needs for its work.
“We are economic really at prices that are so low that if any large projects get new funding we believe that ours would be right at the top of the list,” Cheatham said.
Elwood Brehmer can be reached at [email protected].