New North Slope Oil Discovery?

The oil explorer whose last major discovery in Alaska opened a new frontier for North Slope development believes he's sitting on another promising find in a remote area.

Geologists familiar with Bill Armstrong's work and North Slope geology say he and his team are likely on to something.

Armstrong, who is based in Colorado, discovered the huge Pikka field on the western edge of the North Slope oil patch in 2013.

That led to additional nearby discoveries, including ConocoPhillips' Willow field. It sparked what the oil industry in Alaska describes as a renaissance in new activity. It led to forecasts for a big turnaround in the oil flow that's vital to state revenues. After Pikka and Willow are completed, North Slope production should rise to about 650,000 barrels of oil daily in 2033, up from about 480,000 barrels today.

Armstrong says his latest discovery, Sockeye-2, could once again attract more oil companies to a little-explored area on state land, leading to a "second renaissance."

"If you're a betting man, it's happening," he said in an interview. "It was speculative before this past drilling season. But not anymore."

'Probably done it again'

Sockeye-2 is about 100 miles east of Pikka. It's not far from the Arctic National Wildlife Refuge, where President Donald Trump has repeatedly called for drilling, and where conservation groups have long fought such activity.

The only development in the area is ExxonMobil's Point Thomson field, which produces a type of light oil called natural gas condensate.

Armstrong's company, Lagniappe Alaska, teamed up with major oil companies, Apache and Santos, to drill the well early this year. The companies are exploring a 325,000-acre leasehold.

Apache and Santos are publicly traded companies, which tend to be cautious when they release statements about future prospects.

In March, Santos' Bruce Dingeman "expressed excitement about the discovery" of Sockeye-2, according to a statement from the company.

"We are pleased with the Sockeye-2 well exploration discovery and its confirmation of resource potential" across the leasehold, Dingeman said.

An oil-flow test at Sockeye-2 was "successful" and demonstrated "the exceptional productivity of this shallow-marine reservoir," Apache said in a statement.

Geologists familiar with the North Slope say early signs at Sockeye indicate there's a good chance it could lead to more discoveries in the area.

"Armstrong probably has done it again" by focusing on new, unknown areas, said David Houseknecht, a senior research geologist emeritus with the U.S. Geological Survey.

Houseknecht, who has long studied the North Slope's hydrocarbon prospects, has previously pointed to the area as having high potential for oil discoveries.

"For my money, this is an area that is highly prospective, and it has very few wells that have been drilled," Houseknecht said. "So it's an excellent area in which to explore because there's very little known about it."

"It looks like there are many more opportunities to pursue," he said, based on the data he's seen so far about Sockeye-2 and previous activity.

Armstrong's "credibility is high" given his Pikka discovery and accuracy about its oil potential, said Mark Myers, a former director of the U.S. Geological Survey and a petroleum geologist with a deep background in North Slope exploration.

Armstrong appears to have a "very competent" geological team, Myers said.

The techniques that allowed Armstrong to discover Pikka led to additional nearby discoveries such as ConocoPhillips' Willow field, Myers said.

The same could happen with the Sockeye field, Myers said. The discoveries are possible in part because of recent advancements in three-dimensional seismic processing and interpretation that helps identify characteristics in reservoirs.

"So it's a learning behavior," Myers said. "Once you have that initial discovery, there's opportunity for more of them like that in the area. And I think that's what's going to happen out east. Now that he's found how the play works, there's probably a lot of running room for new discoveries."

'Good oil'

Sockeye-2 is part of a field that could contain 700 million barrels of recoverable oil, Armstrong said.

"We know it's good oil and it flows really well," he said.

But it's just one of multiple opportunities the companies are eyeing in the area, Armstrong said.

Sockeye-2 looks smaller than Pikka, which may end up producing around 2.5 billion barrels of oil, Armstrong said.

But the area has better attributes than Pikka or Willow in important ways, Armstrong said.

Armstrong, a geologist himself, said his technical team predicted that reservoirs on the edge of the eastern oil patch would have characteristics that would allow oil to flow at great rates.

That is the case, and it's better than even at Pikka or Willow, he said.

"The wells really flow well and it's unstimulated," Armstrong said, meaning techniques weren't needed to enhance oil flow.

"It's old-school geology where the wells are really good," he said.

Last year, Lagniappe and partners drilled a well west of Sockeye that helped confirm that the area contained sizable deposits of oil, Armstrong said.

That King Street 1 well is not as robust as Sockeye, he said. But it could also one day boost oil production in the area, assuming development eventually occurs, he said.

"It kind of proved the idea up, but it was a little bit thin," he said. "But it's going to be a nice kind of tack-on field when we get around to it."

Questions answered, questions remain

The Sockeye field is not too far from infrastructure at Point Thomson, such as a pipeline that moves the oil, Armstrong said.

And it's located on state land, along with the other nearby opportunities the group is exploring.

That means the state of Alaska would receive full royalties from any development, potentially at 16.7% of the gross value of production, he said.

Oil production there could one day significantly boost state's finances, he said.

Armstrong said more drilling is needed to assess the size of the field at Sockeye. The next stage of drilling could start in early 2027, he said.

"All the big questions have been answered, but there's still obviously some smaller questions," he said.

Conservation groups in Alaska, which often fight oil activity on federal land in the state, have not appeared to have made a big issue of Sockeye, said Phil Wight, energy and environmental historian with the University of Alaska Fairbanks.

"Historically, oil and gas development on state land has been less controversial for conservation groups, especially in the last 20 years, partially because there's less avenues for contestation," Wight said.

But that could change, he said. Sockeye could generate concerns if development grows more likely, since it's near the border of the Arctic National Wildlife Refuge.

Wight said that the discoveries sparked by Pikka have helped show that there's no shortage of oil and gas on the North Slope.

"From an environmental perspective, the limitation that we are faced with is not the volume of available oil and gas," he said. "It's the availability of the Earth's oceans and atmosphere to absorb the carbon dioxide, the carbon emissions from combusting all of this oil and gas."