ANCHORAGE - As part of his plan to close the state's fiscal gap, Republican candidate for governor Frank Murkowski is touting what he says is a new North Slope oil field that could pump hundreds of millions of dollars into the state treasury within the next few years.
For more Juneau Empire coverage of the November 5 general election, please visit the Juneau Empire Elections Guide.
"It's a field we hope will come in with as much as 300,000 barrels a day and which would provide the state with as much as $400 million a year by 2006," Murkowski told a statewide television audience from Fairbanks last week.
The next day, in Anchorage, Murkowski repeated the reference. This time he said it could bring $200 million.
However, no one knows whether the McCovey prospect has any oil.
The site, 28,000 submerged acres in the Beaufort Sea seven miles north of the North Slope, has not been thoroughly explored. Industry executives and state officials don't know where Murkowski got his figures.
"I have no idea, none, about where he's getting these numbers," said Ken Boyd, a consultant to Calgary-based oil company EnCana. The company holds a roughly one-third interest in the prospect along with partners Conoco Phillips and Chevron. EnCana plans to drill an exploration well at McCovey this winter.
Kevin Meyers, president of Phillips Alaska Inc., declined to comment on Murkowski's speculation about McCovey.
"It's not been explored. It would be premature to say anything," he said.
Murkowski, who is a longtime member of the Senate's Energy Committee and is well-versed in the oil business, would not say where he got his information.
"There's a lot of oil there. It's got great potential," Murkowski said.
But Dudley Platt, who compiles the state's oil production forecast, said, "Any discussion of McCovey is pure speculation. It would be reckless for any legislator or candidate to count on oil from there."
Further, if there is a huge find at McCovey, how much money it would bring to the state is uncertain. About 30 percent of the prospect sits in federal waters. On the federal leases, the state gets 27 percent of the royalty. The exploration well being drilled this winter is in the federal section, Boyd said.
Three wells were drilled in the McCovey area during the late 1970s and early 1980s. None found commercial quantities of oil.
The Beaufort Sea area holds billions of barrels of oil, according to state and federal assessments. But finding large commercial reserves has been tough.
Many North Slope Borough residents oppose oil development in the Beaufort Sea because of the dangers oil spills and exploration pose to bowhead whales.
When Phillips proposed to drill at McCovey two winters ago, the borough planning department refused to issue a permit. Local officials were concerned the company's road across the sea ice to the exploration site could buckle in the wind and current. Lawsuits have been filed questioning plans to clean up an oil spill at the site.
Without a needed state permit, and facing the uncertainty of the lawsuits, Phillips dropped its exploration plans.
Last year, Phillips turned over operations at McCovey to its new partner, EnCana. The company has moved a drilling platform to the site and plans to begin drilling next month, Boyd said.
Boyd said that, given the possible time delays and the inherent high cost, the companies are looking for a large field. "That far offshore, you've got to have big expectations," he said.
McCovey owners have advanced geologic assessments of the area similar to those used to predict oil deposits in the Arctic National Wildlife Refuge. Such assessments can provide an indication of the size of a possible deposit but say nothing about whether there's oil.
Development would have to proceed unusually quickly to come on line by 2006 as Murkowski predicted, state officials said.
And McCovey would have to be a giant discovery to meet Murkowski's 300,000-barrel-a-day target. Only the 13 billion-barrel Prudhoe Bay and the 2.6 billion-barrel Kuparuk, the two largest producing oil fields on the continent, have ever produced that much.