One of the most promising oil discoveries on the North Slope is getting a new owner.
Denver-based Armstrong Energy is selling off a significant chunk of its stake in the Nanushuk oil play to Oil Search, a company based in Papua New Guinea. Oil Search announced Wednesday that it will take over as operator next June.
Estimated at over 1 billion barrels, Nanushuk could be one of the biggest future oil developments in Alaska. It’s on state land west of Prudhoe Bay, near the community of Nuiqsut. If developed, the companies think it could produce up to 120,000 barrels per day — close to a quarter of what’s currently flowing down the trans-Alaska pipeline.
Armstrong is still holding on to a percentage of its ownership in Nanushuk, but Oil Search has the option to buy up all of Armstrong’s stake in the field before next June, according to a presentation the company posted online.
Alison Wolters, an analyst with Wood Mackenzie in Houston, said selling its stake in the oil play isn’t a surprising move from Armstrong.
“It has been Armstrong’s business model to explore, prove up discoveries and then sell them to new operators on the North Slope,” said Wolters.
But Wolters says Oil Search is an unexpected buyer. Oil Search’s biggest investments are in liquefied natural gas projects in its home country.
“They’ve never operated in Alaska before, or on the North Slope, so that definitely took us by surprise,” said Wolters.
The company’s connection to Alaska is through Repsol, a Spanish oil company it partners with in Papua New Guinea, according to a press release announcing the $400 million purchase. Repsol also owns a significant stake in the Nanushuk play.
Oil Search aims to start producing oil by 2023. But because the company is new to the challenges of working in Alaska, Wolters said it could take longer for the oil project to get up and running.
Armstrong has started the permitting process for the Nanushuk project. The U.S. Army Corps of Engineers recently put out a draft Environmental Impact Statement, which is available for public comment until November 14.
- Attorneys sparred over the constitutionality of Juneau's head tax levied on cruise ship passengers. The oral arguments in federal court could be a prelude of things to come as the lawsuit heads toward trial.
- "It’s an area that I and some other colleagues have started thinking about: can you get methane forming in terrestrial environments? But it’s a very new area of science," carbon scientist Katey Walter Anthony said.
- This season, it seems like more bears have been spotted around Juneau scavenging for food, and scientists think they know why.
- The district has referred 98 children to the Students in Transition program since last week, up from 69 students identified at the same time last year