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Vol. 25, No.04 Week of January 26, 2020
Providing coverage of Alaska and northern Canada's oil and gas industry

Bill seeks partner

Armstrong: taking what learned west of Prudhoe to explore for sweet oil to east

Kay Cashman

Petroleum News

Armed with what they learned west of Prudhoe Bay with the discovery of the giant Pikka oil field, Bill Armstrong’s team and their partner Oil Search are now looking for giant fields on the other side of Prudhoe Bay. And Armstrong is soon going to be looking for a third partner for the eastern North Slope acreage, he told Petroleum News Jan. 20.

“We’re taking what we learned at Pikka and applying it to a recently acquired 306,000-acre lease position we have to the east,” he said.

“The area is an explorationist’s dream. There have been very few wells drilled, something like one well per 200 square miles, and most of those wells were drilled in the 1970s trying to find another Prudhoe Bay and almost all of the wells had good oil shows,” Armstrong said. “It’s like west Texas 100 years ago.”

“Prior to finding all of that oil in the Nanushuk most people were saying the North Slope had very little remaining potential. Pikka changed all that,” he said.

What’s more, Armstrong and Oil Search’s eastern North Slope acreage is on state lands and is close to existing infrastructure. Like Pikka, the area has multiple objectives that image beautifully on 3D seismic, Armstrong said.

“It’s really new and really exciting. I believe what we do on the eastern Slope will set off a whole new flurry of activity.”

While “unconventionals have been getting most of the press, Alaska has quietly become the best spot on the planet for onshore conventional oil,” he said. “Between our multi-billion barrel Pikka field and ConocoPhillips’ billion barrel Willow discovery, it’s an extremely exciting time to be in Alaska.”

Armstrong has often said the North Slope “is a fantastic petroleum system … arguably the best petroleum system in the entire world. And good things can happen to you when you’re in a system that good.”

A 50-50 deal with Oil Search

Most of the acreage in the 306,000-acre block was secured in two North Slope areawide state lease sales. The initial 195,200 acres consisting of 120 tracts was acquired by Armstrong under the name Lagniappe AK LLC in the November 2018 lease sale as part of an ongoing hunt for oil pools missed by previous explorers. (Lagniappe means “a little extra” in Cajun.)

The acreage was identified as being highly prospective for oil in a regional study conducted jointly by Armstrong and Oil Search in 2018.

More recently, Oil Search was top bidder on 39 leases covering approximately 80,000 acres in the December 2019 state sale.

All the tracts in the 306,000-acre eastern North Slope block are today 50% owned and operated by Oil Search and 50% held by Armstrong in accordance with the companies’ area of mutual interest agreement, or AMI.

Long-term working relationship

In a mid-2019 interview Oil Search said that the two companies would continue to work together in reviewing opportunities on the North Slope, leveraging Armstrong’s technical capabilities and experience in the identification of additional potential growth opportunities in Alaska, particularly in Brookian sequence, the youngest of the region’s major petroleum bearing rock sequences.

“We’re trying to continue to make the play that we discovered to the west, the Nanushuk at Pikka,” Bill Armstrong told Petroleum News Jan. 30, 2019, about the Lagniappe leases, although not naming the analogous, lookalike formation.

“The amount of running room this concept has is just massive in Alaska … going east from Pikka we … see the same thing. We’re really excited. It’s still a wildcat play. It still has risk, but it has huge potential,” he said.

In addition to the Nanushuk lookalike, Armstrong saw “a whole other idea that has never been chased that we like but is nothing like the Nanushuk. Yet, it too is exciting and wild and wide open,” he said in the interview a year ago.

“There are so many zones, so many objectives out there on the North Slope that could work. You chase one thing and find another. So many discoveries have been found by accident.”

For example, “we were pursing the Alpine and Kuparuk at Pikka and the Nanushuk was just a secondary objective, yet it was the one that worked the best - although the Kuparuk and Alpine worked too,” Armstrong said.

Although the oil was stacked in several reservoirs, Pikka estimates were billed at the time as rivals to legendary North Slope giants. “The proven contingent oil reserve number makes the discovery the largest since the Alpine field, the probable contingent reserve number the largest since the Kuparuk field, and the possible contingent number makes the discovery the largest since Prudhoe,” then-Alaska Department of Natural Resources Commissioner Mark Myers said in February 2016.

After acquiring the first eastern North Slope leases Armstrong said of Pikka, “It’s hard to believe that in this day and age … a play like Nanushuk could lie essentially unexplored: onshore, shallow oil … with massive room to run and in, of all places, the United States. Who would have guessed?”

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