by Cassy Fiano | March 15, 2017 11:38 am
Oil production has been dropping in Alaska for quite some time, but a Spanish oil firm has just made a huge discovery. Repsol, which partners with American firm Armstrong Energy, found 1.2 billion barrels in Alaska’s north slope — the largest offshore discovery in 30 years.
During the 2016-2017 winter season, Repsol drilled two test barrels, which allowed them to make the discovery. Currently, oil is expected to begin flowing in just a few short years, in 2021, and can potentially produce 120,000 barrels every day. Currently, all of Alaska produces 490,000 barrels per day, meaning that this new oil field would make a 25% increase in production.
“The interesting thing about this discovery is the North Slope was previously thought to be on its last legs,” a Repsol spokesman said. “But this is a significant emerging find.”
In 1980, oil production in Alaska was at a high, producing 1.5 million barrels per day. And this new discovery, according to Zero Hedge, could help preserve the state’s oil infrastructure:
Declining throughput means slower moving oil, which means lower temperatures for that oil. Slower and colder oil leads to water separating from the oil and freezing. That can damage the pipeline. Also, oil contains some small amounts of wax, and when the crude flow slows and gets cold, wax separates and sticks to the pipeline. Removing that wax requires more cleaning and maintenance, raising costs and operational problems.
The WTI crude oil price is currently around $48, down from between $80-$90 in 2012-2014. If prices were to reach $60 by 2021, then that could mean an estimated $1.2 billion in oil sales.
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