Alaska Gov. Sean Parnell’s proposed capital budget for fiscal year 2013 features several items of interest to the oil and gas industry.
The budget includes $1.1 million to support investment to find and develop shale oil deposits.
The bulk of the money, $1 million, would be used to “develop an inventory of environmental data to support permitting for shale oil development,” a project summary says.
The data will include the identification and delineation of wetlands and streams, surveys of animal and fish populations and habitat, and surveys of subsistence activities and “other potential resource conflicts.”
The state will provide this data to North Slope shale oil developers for use in completing environmental impact statements required for federal permits.
“In absence of this state data collection effort, the developers may find themselves competing for the same information,” the project summary says. “As a consequence data will be more costly and development may be slowed.”
“Moreover,” the summary says, “federal agencies tend to give more credence to data acquired by state agencies as opposed to third-party collection under contract to industry.”
Another $100,000 is proposed in fiscal year 2013 for a “geologic assessment of North Slope shale oil potential.” A project summary indicates the state would contribute $300,000 more in 2014.
“The North Slope remains underexplored relative to other sedimentary basins around the world,” the summary says.
The primary purpose of the two-phase project is to acquire “a comprehensive new geologic data set” to benefit explorers, especially smaller independents who rely heavily on publicly available maps and technical reports from the state Division of Geological and Geophysical Surveys.
Filling the gap
The shale oil project summary continues:
“The North Slope petroleum system includes three excellent organic-rich, source rock intervals — a characteristic that is required for the successful creation of shale oil accumulations. Industry has recently recognized this potential, as indicated by one company (Great Bear) spending more than $6.5 million to lease about 500,000 acres of state land for the stated purpose of exploring for shale oil resources.
“Numerous geologic factors control the productivity of shale oil systems. Organic geochemical properties, thermal and tectonic history, porosity and permeability characteristics, and mechanical properties (brittleness) can each control whether the resource can be commercially produced. These key characteristics are poorly understood on the North Slope. This project will fill this gap in geological knowledge by acquiring key subsurface and surface data on prospective rock units. Phase one of the project will include a short field season to identify outcrops that correlate to the potential source-reservoir units and collect a diverse suite of samples for laboratory analysis. Phase two will build on the reconnaissance field program and conduct more detailed examination of critical outcrop sections.
“In addition, geological analysis and interpretation of available subsurface data (seismic, well log, and core) will be integrated with field results to arrive at an improved understanding of North Slope shale oil potential.”
The project summary notes that “many foreign governments provide voluminous publicly available geologic data to entice companies to explore for oil and gas resources. Increasing the availability of high-quality data will make the exploration landscape in Alaska more globally competitive and attractive to new companies.”
Natural gas, ANWR
The governor’s capital budget also includes $200,000 to fund phase three of a three-year project to assess natural gas potential in prospective unexplored basins near Alaska transportation corridors and population centers.
Previous funding totaled $1 million to evaluate the Nenana and Susitna basins. The $200,000 request will go toward finishing that work, with data to be made available for public release to encourage exploration investment, a Department of Natural Resources project summary says.
“We completed a 10-day field program this past summer in the Susitna basin and are in the process of working up our data,” the summary says. “We are also in the process of compiling available data for the Nenana basin in preparation for field work next May.”
Parnell also is proposing $160,000 for Arctic Power, an organization that supports “education efforts to open the coastal plain of the Arctic National Wildlife Refuge for oil and gas exploration and development.”
A project summary indicates the state has contributed from $120,000 to $3.75 million almost every budget year since 2000.
Arctic deepwater port
The governor’s capital budget proposes $1.5 million, including $1 million in state general funds and $500,000 in federal receipts, to continue a study to identify potential sites for a deepwater port along the Arctic Ocean coast.
Such a port could support oil and gas industry efforts in the remote region, as well as U.S. Coast Guard operations, a project summary says.
A project summary contemplates further spending in fiscal years 2014 and 2015. The port study is being done in conjunction with the U.S. Army Corps of Engineers.
“We just signed a Feasibility Cost Share Agreement with the Alaska Department of Transportation and Public Facilities on Dec. 8. It is a $3 million, 3-year study,” Pat Richardson, Alaska spokeswoman for the Corps, told Petroleum News in Dec. 20 email.
“A feasibility study determines whether or not there is a federal interest in a project,” Richardson continued. “The detailed study includes preliminary design and environmental and economic aspects of a proposed project. The completed study is used to recommend a project to Congress if it determines there is a federal interest.”
Alaska legislators will consider the governor’s budget when they open their next session on Jan. 17.
