Norway’s Statoil plays down risks ahead of Arctic drilling

25 Apr 2017   Arctic, Norway

Norway’s Statoil on Monday played down concerns that drilling in the Arctic is risky, days before it kickstarts its drilling campaign in the Barents Sea, where the country believes around half of its remaining resources could be located. Despite opposition from environmentalists, the company plans to drill five wells in the Norwegian sector of the Barents Sea, including Korpfjell, which will be the world’s northernmost well and in a formerly disputed border area with Russia “We will start drilling the first well, Blaamann, during May … followed by Kayak, Gemini (Nord), Korpfjell and Koigen (Central),” said a Statoil spokesman, adding each might take about a month to drill. All the wells are in areas free of sea ice thanks to the warm Gulf Stream, with sea and wind conditions similar to the […]

Alaska Needs Much Higher Oil Prices To Reverse Its Oil Fortunes

19 Apr 2017   Arctic

This year marks Alaska’s 40th anniversary of the Trans Alaska Pipeline Systems (TAPS)—an 800-mile-long crude oil route that runs from the North Slope to Valdez, the northernmost ice-free port in North America. However, Alaska’s declining oil output in recent years has not only stretched the state’s budget, it has also added a challenge to the functioning of the pipeline—decreased throughput means the pipeline is now about three-quarters empty, and crude oil flows are slower. The peak of oil flow through the pipeline was at 2 million barrels per day in 1988. Last year, throughput was 517,500 bpd, a 1.8-percent increase from 2015. This was the first annual increase since 2002, but still a far cry from the days of peak flow. Pipeline operator Alyeska is adding heat to keep the crude oil warm and to prevent water from freezing in the line. It also uses so-called cleaning pigs to […]

BP says crews brought leaking Alaskan well under control

18 Apr 2017   Arctic

Signage for a BP petrol station in London, July 29, 2014. BP Plc said workers on Alaska’s North Slope had brought under control a company-operated well that spewed oil and gas over the weekend. The leak was discovered on Friday and a team from BP, the Alaska Department of Environmental Conservation (ADEC), U.S. Environmental Protection Agency and local government was brought in to coordinate efforts. The team halted the well leaks overnight, BP said in a statement on Monday. The volume of the leak was not disclosed. A BP spokesman said details of what caused the loss of control were not available. The oil producer had retained Halliburton Co’s well control specialists to kill the well, the spokesman said. ADEC earlier said in a statement that well pipe had temporarily “jacked up” or risen vertically about 3 feet to 4 feet, causing a pressure gauge to break off. BP […]

BP North Slope Well Leaking Gas After Crude Oil Spray Stops

17 Apr 2017   Arctic

Two leaks found from well in Prudhoe Bay on Friday morning Volume of the leak is undetermined, cause still unknown A well operated by BP Exploration Alaska Inc. on Alaska’s frigid North Slope is no longer spraying crude oil after leaks were discovered Friday morning. The crude spray onto the well pad, which occurred while the well in the Greater Prudhoe Bay area was venting gas, had stopped by Sunday afternoon. A second leak at the well was emitting gas at a reduced rate, the state’s Department of Environmental Conservation said in a statement . Well pressure was monitored through the night and excess pressure was bled off to keep it within a safe range. The volume of the leak hasn’t been determined and the cause of the release is unknown, the department said. There have been no injuries and no reports of harm to wildlife. Based on aerial […]

Pipeline Built to Survive Extremes Can’t Bear Slow Oil Flow

15 Apr 2017   Arctic, USA

Trans Alaska carrying just a quarter of its peak volume The lower the flow, the higher the risks from Arctic cold Here at the top of the world, January brought a glimpse of the anxious future facing Alaska’s once-mighty oil pipeline. The 800-mile Trans Alaska Pipeline System was built for extreme conditions. But as the state’s oil production declines, the pipeline faces a new challenge: flows so sluggish operators worry the line may become unusable, cutting off access for hundreds of North Slope oil wells. With the mercury dipping as low as -60 Fahrenheit, workers in January fired up heating units across the system. It worked, but if the brutal cold had lasted or the oil flow had slowed further, the pipeline would have been in uncharted territory. Four decades after it opened, Alaska’s pipeline — once a symbol of independence for an oil-strapped nation — is facing a […]

Russia tapping deeper into Arctic oil basin

14 Apr 2017   Arctic

Russian oil company Gazprom Neft said it finished drilling a new production well at one of its flagship fields above the Arctic Circle. The company said it finished the well in part of the Novoportovskoye field. The new prospect is currently at a rate considered commercial and “is expected to deliver approximately 25 percent of all oil produced at the Novoportovskoye field over the next three years, and more than 10 percent of all oil produced at Novy Port over the course of its productive life,” the company said in a statement . The field is located above the Arctic Circle and far away from any pipeline infrastructure. Pilot projects were completed in 2014 and shipments facilitated by an […]

Russia Can Wait for $70 Oil Before Returning to Arctic Waters

29 Mar 2017   Arctic, Russia

Russia can wait for a sustained recovery in oil prices before drilling again in Arctic waters, relying for now on less costly regions even as rival producer Norway accelerates development of its northerly fields. “We estimate production costs for the Russian Arctic offshore in the range of $70 to $100 a barrel,” Energy Minister Alexander Novak said by email. These reserves “are our backup stock,” he said before the International Arctic Forum in Russia’s Arkhangelsk, which starts Wednesday. While crude is languishing at around $51 a barrel — less than half the price of mid-2014 — analysts at Morgan Stanley forecast a rebound to $70 by the end of 2019 as bloated global stockpiles decline. As Russia waits, Norway’s Arctic waters may host a record number of wells this year following recent discoveries, new government license awards and efficiency gains. Russia plans to boost exploration in the Arctic Barents […]

There’s almost zero rationale for Arctic oil exploration

24 Mar 2017   Arctic

Drilling the Arctic region for oil cannot be justified against the background of the major shift in the global oil production paradigm, Goldman Sachs’ lead European commodities equity specialist said on Thursday. “Overall the idea that we have to go into the Arctic to find new resources I think has been dispelled by the enormous cheap, easier to produce and quicker time-to-market resources in the Permian onshore U.S.,” Michele Della Vigna, commodity equity business unit leader in EMEA at Goldman Sachs, told CNBC’s Squawk Box on Thursday. “We think there is almost no rationale for Arctic exploration,” he asserted, noting that while certain areas, such as the Russian Arctic, potentially have workable elements given that the location is much closer to the coast and easier to explore, other areas, such as Alaska, can fairly be considered more in the vein of vanity projects. “Immensely complex, expensive projects like the […]

Professor Tad Patzek on Oil in the Arctic

24 Mar 2017   Arctic

[Shell spent 10 years and $7 billion before withdrawing from exploring the arctic because the oil and gas reserves they found were too meager. The company needed “a multi-billion barrel discovery” to “justify going ahead,” Shell chief executive Ben van Beurden said in an investor call last January. Instead, the Berger J well yielded reserves “not sufficient to warrant further exploration,” according to a company statement (full article here ). ] Tad Patzek. 29 Dec 2012. Oil in the Arctic . LifeItself blog. Tad Patzek is a Professor and Chairman of the Petroleum and Geosystems Engineering Department at The University of Texas at Austin. Here are some of the difficulties with drilling and operating offshore oil and gas wells in the Arctic, west and north of Alaska: Gas vs. oil. Natural gas is not oil. Gas price and remoteness of the Arctic make offshore gas production and transport unprofitable. […]

Trump Weighing Eni’s Arctic Drilling Bid in Post-Obama Pivot

17 Mar 2017   Arctic

The Interior Department is weighing Eni SpA ’s request to explore for oil in waters north of Alaska, giving the Trump administration a chance to reverse course from former President Barack Obama’s attempt to curtail Arctic drilling. Eni’s exploration well would be in an area it previously leased from the federal government, and so it isn’t covered by the executive order Obama issued in December to block the sale of new drilling rights within huge swaths of the Chukchi and Beaufort seas. As the Trump administration considers ways it could reverse Obama’s directive, approving this plan could encourage more oil companies to consider Arctic exploration. Although some oil companies have abandoned plans to launch expensive quests for crude off Alaska’s coast, recent discoveries have fanned interest in waters near the shoreline that can be drilled at a lower cost. The Bureau of Ocean Energy Management is conducting an initial, […]

The Monumentally Expensive Quest to Pull Off an Alaskan Oil Miracle

15 Mar 2017   Arctic

Caelus Energy and Jim Musselman are braving polar bears, bitter cold and harsh economic reality. It’s hard to tell where the world ends here on the Alaska North Slope. In the subzero twilight, when the Arctic winds snarl, snow and cloud stretch to every horizon in a seamless vault of spectral white. Beyond the tundra, five miles out on the frozen sea, oil workers from a tiny outfit called Caelus Energy have welded the drilling rig shut against trespassing polar bears. Musselman at the Caelus Energy headquarters in Dallas. “Spooky,” one of them says into the whiteness, and he’s right. The North Slope in February is beautifully, impossibly spooky. This is where Jim Musselman hopes to save Alaska, or at least make a fortune trying. In a shallow […]

U.S. companies claim largest onshore oil discovery in 30 years

11 Mar 2017   Arctic

Energy enterprises Repsol and Armstrong Energy say they made the largest U.S. onshore oil discovery in three decades in Alaska. The conventional hydrocarbon oil was found in the Horseshoe-1 and 1A wells initially drilled during the 2016 to 2017 winter campaign in the Nanushuk, an area located in Alaska’s North Slope. Repsol currently holds 25 percent working interest in the Horseshoe discovery. Armstrong holds the remaining interest, and is listed as the operator. According to a statement by Repsol , the contingent resources identified in the region comprise approximately 1.2 billion barrels of recoverable light oil. Repsol has been exploring Alaska for oil reserves since 2008, and began drilling multiple consecutive discoveries in 2011 in the North Slope with its partner Armstrong. The […]

How Tillerson Could Fuel A Russian Arctic Drilling Boom

24 Jan 2017   Arctic

It’s now clear to nearly everyone that U.S. President Trump intends to seek warmer U.S. relations with Russia, while putting China and Iran relations in the deep freezer. Trump has made no secret of this major shift in policy. It’s also clear that he sees China, very much like Obama, as a major threat to U.S. global leadership. Trump has often stated that he thought the Obama sanctions on Russia was catastrophic for the U.S., resulting in only pushing Russia into an alliance with China, a fear that many noted policy experts have echoed. For Russian energy companies, it means the doors are cracking open again for business. Russia is again a hot topic on nearly every news site. And the topic has become even hotter with the U.S. election of a Putin-friendly president, who seems ready to share responsibilities with Russia for organizing the world’s response to global […]

Arctic-Drilling Fever Roars Back as Republicans Target Preserve

23 Jan 2017   Arctic

Far above the Arctic Circle, one of the longest-running controversies in US oil drilling is about to reignite. (Bloomberg) — Far above the Arctic Circle, one of the longest-running controversies in U.S. oil drilling is about to reignite. Bouyed by Donald Trump’s election, Republicans are pushing to allow oil exploration in the Arctic National Wildlife Refuge, the frigid wilderness in northern Alaska that’s been a political battleground for drillers and conservationists for decades. The prospects for industry look better than they have in years, with Republicans in control of Congress and Trump vowing to boost U.S. energy production. There’s just one catch. No one really knows how much oil actually lies beneath the refuge, or how much producers like Exxon Mobil Corp. and ConocoPhillips care about it in a world awash in cheap oil, from Texas shale to offshore Africa. While the government estimates the area could hold 12 […]

Expert warns of Arctic drilling risks

20 Jan 2017   Arctic

A highly acclaimed Oxford professor who’s considered an expert on energy research has thrown cold water on Norway’s hopes for a new oil era in the Arctic. Dieter Helm doesn’t think oil prices will rise much higher and are more likely to fall, making costly oil investments in the Barents Sea unprofitable. Environmental activists have been at the forefront of warning about the risks of Arctic oil exploration and production. An Oxford professor and energy expert claims the economic risks are high as well. PHOTO: Greenpeace Helm, addressing an annual gathering of top oil industry officials in Sandefjord this week, said that an oil price of USD 50 a barrel is in fact high in historical perspective, even though it’s half of what it was just a few years ago. He thinks the current level of around USD 54, which has doubled in the past year but remains far […]

Big Oil May Finally Get to Drill in the Arctic, But Is It Worth It?

20 Jan 2017   Arctic

Far above the Arctic Circle, one of the longest-running controversies in U.S. oil drilling is about to reignite. Bouyed by Donald Trump’s election, Republicans are pushing to allow oil exploration in the Arctic National Wildlife Refuge , the frigid wilderness in northern Alaska that’s been a political battleground for drillers and conservationists for decades. The prospects for industry look better than they have in years, with Republicans in control of Congress and Trump vowing to boost U.S. energy production. There’s just one catch. No one really knows how much oil actually lies beneath the refuge, or how much producers like Exxon Mobil Corp. and ConocoPhillips care about it in a world awash in cheap oil, from Texas shale to offshore Africa. While the government estimates the area could hold 12 billion barrels of crude, making it one of the biggest untapped reserves in the U.S., no one’s sunk a […]

The Arctic Drilling Ban: Much Ado About Nothing?

24 Dec 2016   Arctic, USA

Outgoing President Barack Obama is about to invoke a 1953 law in a bid to protect the Arctic and Atlantic shelf of the United States from the claws of the oil and gas industry, but below the surface it may just be theoretical. The Outer Continental Shelf Land Act, and more specifically its provision 12(a), has only been invoked a few times since the passing of the legislation and has always, until now, concerned discrete areas. This time will be the first when the provision is invoked to protect such large regions of the country’s shelf and it’s looking like the invocation will be more of a symbolic gesture to the environmentalist lobby than anything of practical significance going forward. On the face of it, Obama’s move would interfere with President-elect Donald Trump’s energy policy priorities, where drilling for oil and gas in the Arctic and Atlantic shelf features […]

U.S., Canadian voices chime in on drilling ban

22 Dec 2016   Arctic, Canada, USA

U.S. and Canadian voices debated the wisdom of the indefinite ban on oil and gas work in some of its territorial waters, the Arctic in particular. As part of a joint move with the Canadian government, outgoing U.S. President Barack Obama used his authority under the Outer Continental Shelf Lands Act to ban oil and gas work in the Chukchi and Beaufort Seas off the coast of Alaska, as well as Atlantic coast areas. Dale Marshall with Environmental Defense Canada said the indefinite ban on Arctic oil and gas in particular was welcome news for a nation looking to strike a balance between coastal resources and aboriginal and environmental concerns. “The Arctic holds a precious, yet sensitive ecosystem that is vital to Indigenous livelihoods and culture in the north,” he said in a statement. “Increasingly, governments need to be taking steps to remove the […]

Obama Banned Arctic and Atlantic Offshore Drilling and Big Oil Isn’t Happy

22 Dec 2016   Arctic

President Obama has announced what amounts to a ban of offshore drilling in huge swaths of continental shelf in both the Alaskan Arctic Ocean and Atlantic Ocean, a decision which came after years of pushing by environmental groups. Using authority derived from Section 12(a) of the Outer Continental Shelf Lands Act , the White House banned drilling in a 115 acre area making up 98 percent of federally owned lands in the Alaskan Arctic and a 3.8 million acre stretch of the Atlantic extending from Norfolk, Virginia, to the Canadian border. By taking this route, rather than issuing an Executive Order, Obama made it legally difficult for Republican President-elect Donald Trump’s administration to reverse this action. Environmental groups and Democratic senators have praised the decision, while Republican congressional members and industry groups have denounced it. “Today … the United States is taking historic steps to build a strong Arctic […]

US, Canada designate nearly all Arctic waters off limits to drilling: White House

21 Dec 2016   Arctic

The US and Canada agreed Tuesday to designate the majority of their Arctic waters off limits to oil and natural gas drilling. The US is also permanently withdrawing areas of its Atlantic waters from future oil and gas leasing as well, according to the US Department of the Interior. In a statement, the White House said the “vast majority” of federal US waters in the Chukchi and Beaufort seas and all Arctic Canadian waters would be “indefinitely off limits” to offshore oil and gas leasing. The leasing prohibitions on Canadian waters would be reviewed every five years through a “climate and marine science-based life-cycle assessment,” the White House said. Article continues below… Introducing Platts Well Economics Analyzer Platts Well Economics Analyzer provides information and analytics to help you make confident investment, exploration and drilling decisions. With access to S&P Global Platts data, our proprietary IRR model and our analysts’ […]

Could Tillerson Open Up The Russian Arctic For Exxon Again?

19 Dec 2016   Arctic, Russia, USA

If the ExxonMobil CEO is confirmed as the new U.S. Secretary of State, the evolving relationship between Russia and the United States will take an interesting turn. Rex Tillerson could be in a position to hand his former company a major victory if he helps orchestrate a removal of U.S. sanctions on Russia. The close ties between Exxon’s Tillerson and the Kremlin – and Russian President Vladimir Putin specifically – have raised concerns in a few corners of Washington, which could complicate Tillerson’s nomination. While some Democrats are outraged that the CEO of one of the largest oil companies will be put in charge of U.S. international climate policy, many more have suddenly taken up an anti-Russian stance to oppose Tillerson’s nomination, likely in order to land a blow against Trump. Hawkishness against Russia is typically the purview of the Republican Party, and indeed a handful of hawkish Republicans […]

Russian oil producer pushes deeper in Arctic

29 Nov 2016   Arctic, Russia

Russian oil producer Gazprom Neft said it was starting sea trials for a vessel meant to support oil work, including spill response, in extreme Arctic climates. The company said the vessel Alexander Sannikov was formally launched in preparation of sea trials for late season 2018. It’s one of two icebreakers designed to operate in temperatures as low as 22 degrees below zero Fahrenheit. “The main purpose of the vessels will be ice-breaker tanker support, assistance in mooring and loading, rescue operations, vessel towing, firefighting, and oil-spill response,” the Russian company said in a statement. Work is slated to support operations meant to bring oil out of the Novoportovskoye, or Novy Port, field in northern Russian waters. Greenpeace has objected to […]

More reserves uncovered in Barents Sea

23 Nov 2016   Arctic, Norway

Swedish energy company Lundin Petroleum said Tuesday it made an oil and gas discovery in a frontier area near an existing field in the Barents Sea. The company’s Norwegian subsidiary said it confirmed an oil and gas discovery while drilling a wildcat well, one drilled in a region not previously known to hold hydrocarbons. The well in the Neiden exploration area was drilled about 37 miles northeast of the Alta discovery in the southern waters of the Barents Sea. “The total gross resource estimate for the Neiden discovery is between 25 and 60 million barrels of oil equivalents,” the company said in a statement. The Norwegian Petroleum Directorate confirmed the discovery , putting the preliminary estimate […]

Obama Scraps Arctic Drilling Ahead Of Trump Presidency

22 Nov 2016   Arctic

The Obama administration is rushing to get a flurry of priorities done before Donald Trump takes office. One of those items was a five-year lease plan from the Department of Interior, for the years 2017 through 2022, which includes territories the federal government plans on auctioning off for oil and gas drilling on the outer continental shelf. On November 18, Interior released its plan , and notably absent from the plan was acreage in the Arctic and Atlantic Oceans, a sign that President Obama wants to wall off those areas from future development. The proposed five-year plan includes 11 potential lease sales across four areas – three in the Gulf of Mexico and one in the Cook Inlet in Alaska, which is off of Alaska’s southern coast; the Chukchi and Beaufort Seas off of Alaska’s northern coast – the areas the oil industry hopes to eventually drill – were […]

‘Things are getting weird in the polar regions’

22 Nov 2016   Arctic

A collage of melting sea ice in the Kane Basin between Greenland and Canada’s Ellesmere Island.  As extraordinarily warm temperatures continue in the Arctic — temperatures tens of degrees Fahrenheit above normal for this time of year in some locations — Arctic sea ice, a key indicator of the overall state of this system, seems to be responding in kind. It is kind of unbelievable: On Nov. 19, the extent of Arctic sea ice was nearly 1 million square kilometers lower (8.633 million vs 9.504 million) than it was on that date during the prior record low year of 2012, according to data from the National Snow and Ice Data Center. On Nov. 20, the gap widened further, with 8.625 million square kilometers in 2016 versus 9.632 million in 2012. This is happening in a time of year […]

Obama’s Offshore-Oil Plan Forces Drillers to Focus on U.S. Gulf

19 Nov 2016   Arctic, Offshore

Five-year schedule of lease sales leaves out Arctic, Atlantic Environmentalists have pressed for permanent protections The Obama administration’s decision to forgo auctions of new oil and gas drilling rights in U.S. Arctic waters deals a blow to energy companies seeking to lock up new territory beyond the long-explored Gulf of Mexico. Interior Secretary Sally Jewell said the move, announced Friday, strikes the right balance, by sustaining oil and gas development in the Gulf, while blocking the activity in remote and fragile Arctic waters that could be devastated by an oil spill. “The plan focuses lease sales in the best places — those with the highest resource potential, lowest conflict and established infrastructure — and removes regions that are simply not right to lease,” Jewell said in a statement. “Given the unique and challenging Arctic environment and industry’s declining interest in the area, forgoing lease sales in the Arctic is […]

The North Pole is an insane 36 degrees warmer than normal as winter descends

18 Nov 2016   Arctic, Climate

Political people in the United States are watching the chaos in Washington in the moment. But some people in the science community are watching the chaos somewhere else — the Arctic. It’s polar night there now — the sun isn’t rising in much of the Arctic. That’s when the Arctic is supposed to get super-cold, when the sea ice that covers the vast Arctic Ocean is supposed to grow and thicken. But in fall of 2016 — which has been a zany year for the region, with multiple records set for low levels of monthly sea ice — something is totally off. The Arctic is super-hot, even as a vast area of cold polar air has been displaced over Siberia. Image obtained using a climate reanalyzer. (Climate Change Institute/University of Maine) At the same time, one of the key indicators of the state of the Arctic — the extent […]

Trump May Open Up Arctic Drilling

14 Nov 2016   Arctic

TAPS pipeline Much has been made about President-elect Donald Trump’s plans to dismantle environmental regulations and streamline regulations that could lead to the construction of more pipelines . But there are a few other controversial energy issues that President Trump might ram through a Republican Congress, which would hand the oil and gas industry new areas for drilling that have long been off limits. No other place has been more contentious, more fought over, than the Arctic National Wildlife Refuge (ANWR), a large swathe of territory in northeast Alaska, east of Prudhoe Bay where much of the state’s drilling is located. As its name suggests, the refuge is home to scenic mountains, rivers and lakes rich in wildlife and biodiversity. But it is also thought to hold large volumes of oil and gas reserves, and has been the subject of heated debate since the late 1970s over whether or […]

Billions Of Barrels Of Undiscovered Oil May Lie Under Barents Sea

14 Oct 2016   Arctic

Barents sea oil The latest 3D seismic surveys suggest that there may be billions of barrels of undiscovered oil in the Barents Sea, according to a geology and geophysics expert in an interview with Norwegian broadcaster NRK. “If all the projections are correct and all uncertainties turn out positive so we are talking about billions of barrels,” Kristian Kråkenes, VP Geology & Geophysics at Kuwait Foreign Petroleum Exploration Company (KUFPEC), was quoted as saying. KUFPEC, a subsidiary of Kuwait Petroleum Corporation, operates in Norway with minority stakes in four fields. The 3D data gives a much better picture than previous two-dimensional images, the expert said. Several large and reasonably shallow areas may contain oil, including the area close to the Norwegian-Russian delimitation line in the southeastern part of the Barents Sea, the expert noted. In May of this year, Norway – which had not offered exploration licenses for new […]

Russia Nears Completion Of First Floating Nuclear Plant

11 Oct 2016   Arctic

Russian company Zapsibgidrostroy (it’s a mouthful, yes) has begun the construction of the docks that will carry the world’s first floating nuclear power plant to its location off the Chukotka coast. From there, the NPP will supply power to the coast and to the offshore oil and gas platforms pumping crude in Arctic waters, starting in 2019. Work on the 21,000-ton NPP, named Akademik Lomonossov, has been in progress since 2007, and the plant itself is already complete and undergoing tests. With two low-enriched uranium reactors with a combined installed capacity of 75 MW, the plant, once operational, should be able to produce enough electricity to supply a city of 200,000, along with 300 MW of heat that will save 200,000 tons of coal annually. Civil power and heating supply aside, Akademik Lomonosov could turn into just the first step towards a whole fleet of floating NPPs that will […]

Oil Clout Ebbs in Alaska as Billions in Tax Credits Are Cut

7 Oct 2016   Arctic

A section of the Trans-Alaska Pipeline in the northern Brooks Range, Alaska. A $3.5 billion budget gap prompts tough action by lawmakers Drillers say the changes threaten North Slope momentum Four decades after unlocking America’s biggest oilfield, Alaska and its drillers are drifting apart. Facing a $3.5 billion budget gap, state lawmakers narrowly voted in June to trim tax subsidies that have saved oil and gas explorers almost $1 billion a year since 2007. Governor Bill Walker followed that by freezing $430 million in rebates, and proposing more stringent cutbacks that could be approved as early as next year. State officials say they have little choice, given the drop in oil prices and a flagging state economy. Drillers on the North Slope, the vast Arctic expanse that once led U.S. oil production and still generates a half-million barrels a day, say the policies threaten a nascent turnaround for the […]

New Mega Oil Discovery In Alaska Could Reverse 3 Decades Of Decline

7 Oct 2016   Arctic

A small company just announced that it has made a “world-class” oil discovery in Alaska, which could be the largest find in the state in years. Caelus Energy LLC, a small company backed by private equity, says that it has discovered oil on Alaska’s northern coast. The field could hold as much as 6 billion barrels of oil, with about 1.8 to 2.4 billion barrels considered to be recoverable. If that is the case, the discovery would instantly raise Alaska’s statewide recoverable oil reserve base by about 80 percent. But producing the oil will not be easy. Drilling must take place in the winter. To drill the field, the tentative plan would be to build manmade islands to drill through. Oil produced in the shallow water of Smith Bay will need to be moved somehow. Caelus will have to build an $800 million pipeline that travels 125 miles, connecting […]

Alaska gushes over new oil discovery in the North Slope

6 Oct 2016   Arctic

With a state pipeline system on empty, Alaska’s governor optimistic about a new oil discovery in the state’s North Slope region. Photo by Heather Snow/Shutterstock Alaska Gov. Bill Walker said commitments to the state energy sector have paid off in the form of a major oil discovery in the state’s North Slope region. Described as potentially one of the larger discoveries ever made in Alaska, Caelus Energy said the two wells it drilled into Smith Bay this year led it to believe there may be up to 6 billion barrels of oil in place in the region it holds under a lease. “With an oil pipeline that is three-quarters empty, this is good news for the state of Alaska,” the governor said in a statement . The four-week average to Sept. 23 show total Alaskan crude oil production at around 450,000 barrels per day, down about 4 percent from […]

Caelus Claims Large-Scale Oil Find on Alaska’s North Slope

6 Oct 2016   Arctic

Caelus Energy Alaska makes an oil discovery of 6 billion barrels of oil in place off Alaska’s North Slope. Caelus Energy Alaska LLC reported Tuesday it has made a light oil discovery of 6 billion barrels in place off Alaska’s North Slope. The estimate is based on the results of two wells Caelus drilled earlier this year on its Smith Bay state leases, and 126 square miles of existing 3D seismic data, Caelus said in an Oct. 4 press release. Gross hydrocarbon columns of more than 1,000 feet were encountered in both the Caelus-Tulimaniq No. 1 and step-out Caelus-Tulimaniq No. 2 well, with respective net pay of 183 and 223 feet. Seasonal time constraints prevented the company from flow testing the well, but Caelus said that extensive sidewall coring and subsequent lab analyses confirm the presence of reservoir-quality sandstones containing light oil ranging from 40 to 45 degree API […]

Alaska Oil Known Reserves May Have Just Grown 80% on Discovery

5 Oct 2016   Arctic

Caelus discovers about 6 billion barrels at Smith Bay Field could one day produce as much as 200,000 barrels a day Alaska’s oil reserves may have just gotten 80 percent bigger after Dallas-based Caelus Energy LLC announced on Tuesday the discovery of 6 billion barrels under Arctic waters. The light-oil reserves were found in the company’s Smith Bay leases between Prudhoe Bay and Barrow along the Arctic shore, according to a statement from Caelus. As much as 2.4 billion barrels is estimated as recoverable, according to a release issued by the company. That compares with the state’s proved reserves of 2.86 billion barrels in 2014, almost 8 percent of the U.S. total, Energy Department data show. “This discovery could be really exciting for the state of Alaska,” Caelus Chief Executive Officer Jim Musselman said in the statement. “It has the size and scale to play a meaningful role in […]

Oil Explorer Claims Major Alaskan Find

5 Oct 2016   Arctic

A little-known energy exploration company said on Tuesday that it has made a world-class oil discovery in remote Alaska, potentially breathing new life into the state’s declining North Slope. The company says it expects to be able to extract between 1.8 billion and 2.4 billion barrels from the discovery, probably using barges built along the Gulf Coast, then towed to Alaska and permanently sunk in the bay to create man-made drilling islands. “It is not going to be easy, but we’ve had projects like this around the world,” said Caelus Energy Chief Executive James Musselman. He previously led Kosmos Energy Ltd. KOS -4.77 % and the former Triton Energy, exploration firms that made giant finds off the west African coast. Caelus said it planned to build an $800 million, 125-mile pipeline that will carry the oil underneath state-owned waters to connect with existing pipelines. That idea likely will generate […]

Norway Forced To Cancel Arctic Drilling Plans

12 Sep 2016   Arctic, Norway

Offshore oil Norway has pushed the oil and gas boundaries further north in recent years, opening up the Arctic for drilling. But low oil prices and environmental opposition are forcing a rethink in the Arctic nation. Norway’s government retreated on a plan to open up new parts of the Arctic for exploration. Environmentalists and local fisherman beat back a proposal to allow drilling near the Lofoten Islands, a picturesque area that is crucial to fish spawning and has the largest cold-water coral reef in the world. The government had previously left out the Lofoten Islands from any exploration plans, so the decision to push forward sparked outrage. Norway’s oil minister, in the face of opposition, recently scrapped those plans in order “to create calm,” as the FT reports . Johnny Berfjord, chairman of the Norwegian Fishing Vessel Owners Association, in an interview with the FT, described his anger about […]

North Slope gas producers support switch to state-led Alaska LNG project

27 Aug 2016   Arctic

Cost estimates for the Alaska LNG Project have been shaved 20% or more, but the project is still not economic, its managers told state legislators in hearings that ended late Thursday. Based on that, three North Slope producers who are now part of Alaska LNG — BP, ConocoPhillips and ExxonMobil — will not proceed further with the project as it is currently structured, all three companies told a combined meeting of the House and Senate Resources Committee on Thursday. A fourth partner, the state of Alaska, is investigating alternative project structures, including state ownership, and will continue development. The producers support that effort, they told legislators. Article Continues below… LNG Daily is essential reading as LNG supply dynamics continue to change in big markets like Japan, China, India and the U.S. This premier independent news publication for the global LNG industry gives readers information on every aspect of the […]

Why Arctic Oil Is Crucial For Russia’s Future

24 Aug 2016   Arctic, Russia

The Arctic – a cold wasteland that has shattered the expansion dreams of many an oil company by proving to be too difficult and too expensive to tackle. And, of course, Arctic exploration is the target of major environmentalist opposition to any intervention in this wasteland that is in fact home to unique and very fragile eco-systems. Neither cost, nor environmentalist opposition, however, has stopped Gazprom Neft from making the first steps in Arctic oil and gas exploration. Its Prirazlomnaya platform, producing oil from a field of the same name in the Sea of Pechora, is the first active Russian oil and gas Arctic project, but it will certainly not be the last. Russia is currently the largest crude oil producer in the world , though sometimes it swaps places with Saudi Arabia. It’s also the world’s second-largest gas producer, after the U.S. About half of Russian […]

Performance versus prescription in new US Arctic rules: Fuel for Thought

15 Aug 2016   Arctic

In its new rules for oil and gas drilling in the Arctic, the US has taken the biggest step yet toward a performance-based system that sets clear standards, but allows industry flexibility in how to meet them. That’s a big difference from most US offshore regulation, which is prescriptive in nature, specifying in almost minute detail how operators must comply and leaving little room for deviation. It’s an important development, both in the evolution of offshore safety since the devastating 2010 Deepwater Horizon disaster, and in how regulators approach an industry that is using more complex technology to tackle increasingly dangerous frontier environments. While there are many reasons why operators might return to US Arctic waters, the shift to performance-based standards could help. Prescriptive rules are sometimes derisively referred to as “checklist” regulation, reflecting their reactive nature that relies on inspectors checking the boxes during inspections. Performance-based rules, […]

Alaska North Slope crude shipment leaves Valdez bound for South Korea: cFlow

2 Aug 2016   Arctic

A shipment of Alaska North Slope crude is making a rare voyage across the Pacific Ocean to South Korea, according to cFlow, Platts trade flow software. The Bahamian-flagged Suezmax, Tianlong Spirit, which was chartered by BP, first entered Valdez, Alaska, on July 28 and set sail on Saturday. On Monday, the tanker was located in the North Pacific Ocean off the coast of Alaska. The ship’s destination is listed as Gwangyang, South Korea, and it is set to arrive there around August 12, according to cFlow data. A BP spokeswoman declined to comment on the individual cargo or the destination of the tanker Monday. However, in July she confirmed that the company had chartered the Tianlong Spirit to move ANS out of Valdez. Article Continues below… The Industry Leadership Award for Midstream is looking for companies storing, transporting or facilitating trade of energy that have made an industry-wide impact. […]

Costs of new US Arctic regulations may cool offshore oil production plans

1 Aug 2016   Arctic, USA

The Obama administration unveiled final regulations for drilling in US Arctic waters, but questions remain about the future of oil production there. Will the Arctic be pulled out of the administration’s upcoming five-year leasing plan, and will environmental opposition and unfavorable economics hinder development offshore Alaska for a decade or more? And how will the outcome of the US presidential election effect the Arctic’s oil and gas future? Senior editor Brian Scheid interviews Mike Levine, Pacific senior counsel at Oceana, and David Holt, president of […]

The Trans-Alaska Pipeline Will Dry Up Without New Oil

1 Aug 2016   Arctic, USA

Anchorage, Alaska For nearly four decades, the Trans-Alaska Pipeline System has served as Alaska’s economic artery while providing the rest of the U.S. with a reliable supply of domestic oil from Alaska’s North Slope. Even with lower oil prices and the shale revolution increasing domestic production, TAPS, as we Alaskans call it, remains a key component of the national energy infrastructure. But the pipeline needs more Arctic oil to sustain its contributions to Alaska’s economy and America’s energy security. As president of the Alyeska Pipeline Service Co., which was formed in 1970 to build and operate TAPS, I’ve seen firsthand how essential the pipeline is to Alaska’s economy. One-third of all jobs in the state are tied to the oil and gas industry, and oil companies are, by far, the largest contributors to state revenues. Even more important are the people who make the industry work. Thousands of Alaskans […]

API Lobbies For Arctic Drilling To Remain On the Table

25 Jun 2016   Arctic

The American Petroleum Institute (API) and other energy industry groups are urging the U.S. government not to remove Arctic offshore drilling from the table through 2022, despite strong opposition over ecological issues. In a letter to the U.S. Department of Interior , the oil industry group—which includes the API and the Independent Petroleum Association of America—insists on the importance of the Arctic for American energy sustainability. “Access to oil and natural gas resources in the Alaska [outer continental shelf] under balanced and science-based regulations is an essential part of the nation’s long-term economic and energy security,” the letter reads. “Our state’s oil fields have matured over the years, and it is vital that new arenas and development opportunities are realized for the future economic security of our state.” The group said this move is supported by the Alaska-based business and labor organizations. Advocacy group Oceana warns […]

Why The Arctic Oil Dream Is Not Over Yet

23 May 2016   Arctic, Norway

The race to discover oil and gas in virgin Arctic waters is now on, as Norway offered oil majors a lifeline on Wednesday by opening up what experts say could be home to 15 percent of the world’s undiscovered oil and 33 percent of the world’s undiscovered natural gas. Norway officials on Wednesday awarded 10 new oil and gas licenses to explore the untapped area of the Arctic Barents Sea, an area that until 2011, was disputed for almost 40 years with Russia. The drilling licenses consist of 40 blocks that were awarded to 13 oil companies. Of the licenses granted, 13 companies were offered participating interests, and five were offered operating licenses. Related: The Newest Metric For Gauging Stock Performance In The Oil Patch Norway has not offered exploration licenses for new acreage in over twenty years, and this new acreage is particularly appealing to […]

Big Oil Pulls The Plug On Arctic Oil, Relinquishes Drilling Rights

12 May 2016   Arctic

The prospect of producing oil from the U.S. Arctic looks increasingly remote as the oil industry walks away from drilling leases. After Royal Dutch Shell pulled the plug on its drilling program in the Chukchi Sea last autumn, there had been little chance that the industry would return to the region anytime soon. But several companies officially forfeited their rights to drill in the Arctic on May 1, having declined to pay the U.S. government to renew licenses, according to a Freedom of Information Act request filed by the environmental group Oceana. Shell, Eni, Statoil, and ConocoPhillips all decided against paying to hold onto those drilling rights in recent weeks. “Hopefully, today marks the end of the ecologically and economically risky push to drill in the Arctic Ocean,” Michael LeVine, senior regional counsel for Oceana, said in a statement emailed to UPI. Bloomberg reports that collectively […]

Oceana sees imminent end to Arctic drilling

11 May 2016   Arctic

With energy companies relinquishing their holdings, advocacy group Oceana said the end may be near for drilling in the Arctic waters offshore Alaska. Oceana said it’s found through a Freedom of Information Act request that companies ranging from ConocoPhillips to Italy’s Eni have released their leases in the Chukchi Sea. Shell, which Oceana said is holding on to one lease, has a problematic track record offshore Alaska. A drillship suffered mechanical issues in 2012 and, in July, a breach was discovered in the hull of a vessel meant to carry the safety equipment to the region. Michael LeVine, the senior regional counsel for the group, said that, […]

Just How Much Energy Lies Beneath The Artic

19 Apr 2016   Arctic

The Arctic has been the fascination of many people for centuries. Hundreds of years ago, the Europeans saw the Arctic’s frigid waters as a potential gateway to the Pacific. The region has also been home to many unique native cultures such as the Inuits and Chukchi. Lastly, it goes without saying that the Arctic is unsurpassed in many aspects of its natural beauty, and lovers of the environment are struck by the region’s millions of acres of untouched land and natural habitats. However, as’s Jeff Desjardins notes , the Arctic is also one of the last frontiers of natural resource discovery, and underneath the tundra and ice are vast amounts of undiscovered oil, natural gas, and minerals. That’s why there is a high-stakes race for Arctic domination between countries such as the United States, Norway, Russia, Denmark, and Canada. Today’s infographic highlights the size of some of these […]

Oil search in Arctic is safe claims Statoil

24 Mar 2016   Arctic, Norway

Ice, extreme temperatures and a vulnerable environment are all surmountable challenges as drillers set out to hunt for oil in a new area of Norway’s Arctic Barents Sea, according to Statoil and other explorers. Studies by Statoil and 15 other companies such as Shell show there have been only a “few days” of sea ice in the northernmost blocks since 2003, and south of that even less, said Aashild Tandberg Skjaerseth, chair of the Barents Sea Exploration Collaboration, a venture set up by the companies. It’s also unlikely that any spill would reach the polar ice cap as oil and sea ice tend to drift in the same direction, she said. “Our main conclusion is that there is no health, environmental or safety challenge that is so significant that it can’t be appropriately mitigated,” Skjaerseth said. The findings were handed over to authorities this week and will be distributed […]

Russia pulls 10 millionth barrel of oil from Arctic north

23 Mar 2016   Arctic, Russia

Russian oil company Gazprom Neft said it reached a milestone with production at its Arctic Prirazlomnoye field with its 10 millionth barrel of oil. “The 10-millionth barrel of oil is a major landmark, proving that oil production on the Arctic Shelf can be both safe and viable,” Gennady Lubin, the company’s executive director for operations on the Russian continental shelf, said in a statement. Advocacy groups like Greenpeace have been critical about oil operations in the extreme climates of the Arctic north, saying an oil spill in the region would be catastrophic and difficult to control. Gazprom Neft said a stationary rig at the site is designed specifically to ensure the risks of a spill are minimized to the […]