Not enough exploration for long-term production growth on North Slope

The challenge is to see enough exploration on Alaska’s North Slope for long-term production growth, Mark Myers, director of the Alaska Division of Oil and Gas, told the Resource Development Council’s annual conference in Anchorage Nov. 20. The state has almost 5 million acres under oil and gas lease, he said, more than ever before, but not enough exploration wells are being drilled.

While some exploration on the North Slope is expected this winter — in the National Petroleum Reserve-Alaska, near the Kuparuk River field and in nearshore Beaufort Sea waters — it is not enough to reverse the decline of production in the state.

What would it take? Myers said the state’s goal is to see more than 45 exploration wells drilled in 2005, the peak reached in exploration drilling in the state in the 1960s.

And what is the state doing to encourage more exploration? It has provided tax incentives that would cover 40 percent of exploration costs, 20 percent near production, and is also trying to encourage smaller companies to explore.

“One size doesn’t fit all,” Myers said. There are opportunities for smaller companies, especially in natural gas, and the state has an additional 2 million acres under exploration license in Interior and Southcentral basins.

And in the Cook Inlet basin, where shallow gas leasing has become a divisive issue in communities in the leasing area, Myers said the state is looking for a workable solution to allow development of coalbed natural gas to meet both residential and commercial needs in Southcentral Alaska.