Alaska's offshore leases spark oil industry's interest

Posted: Wednesday, July 20, 2005

ANCHORAGE - There are signs of renewed interest in exploration off of Alaska's Arctic coastline.

John Goll, Alaska regional director for the U.S. Minerals Management Service, said the agency is thinking of holding regular Chukchi Sea lease sales in response to increasing industry interest in the area.

"We hope to be ready when the industry is, so we're going to try to continue with regular sales," Goll told Petroleum News. He said the U.S. Secretary of the Interior has to make a decision on whether to start a sale program. At the moment, there's no specific timetable, he said.

Shell's purchase of leases well north of the coastline in the March 2005 may be another indicator of a resurgence of industry interest in the offshore Arctic areas of Alaska.

The Minerals Management Service estimates that about 7 billion barrels of oil and 32 trillion cubic feet of gas can be recovered from under the Beaufort Sea. The corresponding estimates for the Chukchi Sea are 15 billion barrels of oil and 60 trillion cubic feet of gas.

The situation resembles the Barents Sea off Norway and Russia, where development of gas fields some distance offshore is already under way. However, much of the Barents Sea has icebergs and drifting ice rather than the ice sheets that present challenges in offshore Alaska.

"It's pretty much open water for the most part - that's the big difference," Goll said.

But, on the other hand, the Beaufort Sea lies next to a well-developed oil infrastructure.

"Right now they don't have the infrastructure, whereas we do in the central Beaufort," Goll said.

Although companies have been picking up known discoveries and good prospects in the Beaufort Sea, Goll said the lack of well information in the area is a significant issue.

"What we need is for someone to go out and really poke more holes - we only have about 30 up there in the Beaufort," he said.

There's international interest in technologies for developing offshore oil and gas in the Arctic. Thirteen countries are currently involved in a project to develop an international standard for Arctic offshore structures.

"They're working on pulling all of the Arctic offshore standards together in one document," MMS petroleum engineer Dennis Hinnah said.

He said they're hoping to have a draft standard out by the end of this year.

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