Alaska is heavily reliant on the revenue from the oil and gas industry. The shrinking oil prices haven’t been good for the state and it had been struggling for the past few years. The Spanish oil company Repsol partnered with Armstrong Oil and Gas to explore the possibility of oil extraction in the northern slope of Alaska. On Thursday, Repsol announced that it has made the biggest oil discovery in the past 30 years. The discovery was made in the northeastern part of National Petroleum Reserve. The oil wells at this site could produce 1.2 million barrels of oil every day.
Since 2008, oil exploration was done by Repsol and Armstrong in the northern slope of Alaska which was generally considered a depleting source of oil. Repsol announced that two wildcat wells in the Horseshoe prospect resulted in the discovery of light oil. The Nanushuk is vast, but the new discovery extends it by another 20 miles. Nanushuk belongs to the Pilla Unit. Armstrong currently owns a large amount of land near Nuiqsut village. The prospect is considered to extend to the southern parts of the village.
According to Repsol, the discovery is the largest oil discovery in the past 30 years. The company estimates that oil production could commence at this site starting from 2021. The prospect could help in producing 1.2 million barrels of oil per day, which could boost the economy of Alaska significantly.
Back in 2005, Nanushuk planning as a new opportunity in Alaska with third party engineers confirming oil reserves with a capacity of up to 3.76 billion barrels. The new discovery will add 120,000 barrels of oil to Alaska’s oil productionto increaseand it could boost the economy of the state easily. The estimated oil reserves are available in the Pikka unit and Horseshoe prospect combined together.
In the upcoming months, Repsol along with Armstrong will be busy in preparing and analyzing the prospect. While the company is not willing to put a cap on the number of barrels per day, it is cautious to take the necessary steps to ensure that the prospect is beneficial.
Meanwhile, Alaska is aplanning on increasing the oil production taxes in the North Slope to improve the economy. It is also trying to reduce the tax credits to increase the revenue for the state. Alaska is one of the states that were gravely affected by the reducing oil prices. Understandably, the oil industry is not happy with these new changes as it could increase the oil production costs.
Andy Josephson, co-chair of the House Resources Committee has commented that new oil discoveries will make it extremely difficult for the oil companies to pay the production costs with the current budget. However, Republicans are happy with the current tax system and people have voted against the repeal referendum in 2014. Repsol assured that the discovery of oil prospect is not related to the current debate on the tax system. As a duty bound company, Repsol had to disclose details about new oil discoveries.