Walker okays Ambler Road funds
In the closing days of his term Gov. Bill Walker approved $3.6 million in state funds to complete federal regulatory work on the Ambler Mining District Access Project, a 211-mile industrial road that would support copper and zinc projects in the western Brooks Range. Trilogy Metals and its partner, South 32 Ltd., an Australian company, are planning development of Arctic, a high-grade deposit, and are in advanced exploration of Bornite, a large copper deposit in the upper Kobuk River area about 20 miles west of Arctic. The road would be built by the Alaska Industrial Development and Export Authority from the existing Dalton Highway.
Trilogy plans a 10,000-tonne-per-day surface mine at Arctic with work on permits underway in 2019. Thirty six million tons of mainly copper and zinc resources are indicated by drilling at Arctic, with another 3.5 million tonnes inferred, according to a late 2017 estimate. (A tonne is 2,200 lbs). At Bornite, still being explored, a copper-zinc resource of 40.5 million tonnes is indicated and 84.1 million tonnes are inferred by drilling in a deposit near surface, with an additional 57.5 million tonnes inferred in a deeper deposit. Recent drilling at Bornite has also shown presence of cobalt, with an inferred resource of 77 million pounds of cobalt announced in June.
Repsol’s bids demonstrated that company’s strong confidence in the Pikka project and areas around it, and Lagniappe’s entry demonstrates that independents with new ideas continue to be interested in the slope. Many of the leases Lagniappe acquired were previously leased to ConocoPhillips. However, other than the interest showed by Repsol and Lagniappe there was light bidding in the sale. Hilcorp’s Beaufort Sea tract that was acquired is near the Liberty, an offshore project in adjacent federal waters now in development planning.
NPR-A tracts offered Dec. 12
Another read on industry interest in the slope comes Dec. 12 when the U.S. Bureau of Land Management holds its annual areawide sale in the National Petroleum Reserve-Alaska. Two hundred and fifty four tracts and 2.85 million acres will be offered. A large prospective area inland from the coast is still off-limits but BLM has an effort underway to redo the land management plan for the reserve and to open some of these areas in the future.
Alaska production has been declining this year but is expected to increase in 2019 and 2020 thanks to new North Slope oil discoveries being brought on line, the state Department of Revenue said in its fall revenue forecast issued Dec. 3. The Department of Natural Resources participates in the preparation of the oil production part of the forecast. North Slope production has dropped this year, averaging 505,184 barrels per day for January through October, or 17,402 barrels per day below the same period in 2017. However, the daily average is projected to be up to 529,800 barrels per day in 2019 and 533,000 barrels per day in 2020 due to new production from ConocoPhillips’ GMT-1 and Hilcorp Energy’s Moose Pad project.
GMT-2, Willow, Pikka and other pending new project are expected to be producing after 2021 (GMT-2); and in 2023 (Willow and Pikka). This year only GMT-1 in the National Petroleum Reserve-Alaska Hilcorp’s Moose Pad, which is to begin production in January, are in the near-term production forecast. If Willow and Pikka are approved and proceed to development the production contribution will be substantial, estimated at 220,000 barrels per day at peak between the two.
Long term outlook is stable
The long-term expectation, according to the forecast, is for production to remain at about 500,000 barrels per day over the next decade. Essentially, new discoveries on the slope are expected to offset declines in the older, larger fields. BP and ConocoPhillips, operators of the large “legacy” Prudhoe Bay and Kuparuk River fields on the slope, have worked hard to mitigate declining production largely with new technology. BP and ConocoPhillips held Prudhoe and Kuparuk production generally flat in the two years following sharp oil price declines in late 2015. However, both fields are likely to show declines this year, former state Natural Resources Commissioner Andy Mack said he was told by senior managers at both companies.