Driller boosts potential at big Alaska discovery by hundreds of millions of barrels

A newcomer to Alaska's oil patch, already recognized for getting a great deal on a giant discovery, just boosted the possible resource it's chasing by hundreds of millions of barrels.

Oil Search of Papua New Guinea told financial analysts Tuesday that North Slope acreage it acquired in November could contain about twice as much oil as it previously counted on, an extra 550 million barrels.

In November, Oil Search bought a piece of the large Pikka discovery amid western North Slope fields, plus other opportunities including the nearby Horseshoe block, all for $400 million. One energy consultancy called it a great value.

At the time, Oil Search had pegged Pikka's available oil resource at 500 million barrels at least, a large field that could sharply boost Alaska oil production by an extra 100,000 barrels daily.

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But on Tuesday, Peter Botten, Oil Search's managing director, said Pikka could hold an additional 250 million barrels.

Botten also said the Horseshoe section, about 20 miles south of Pikka, could contain another 300 million barrels or more.

The new numbers come as Oil Search digs into drilling data and other information from work that's previously been done in the area, including recent exploration drilling by ConocoPhillips,  Botten said.

ConocoPhillips is also pursuing its own new fields in the region. Oil Search has an agreement to view some exploration data acquired by ConocoPhillips, and the companies are talking about cooperating to optimize development in the area.

Oil Search is currently pursuing a key permitting document from the U.S. Army Corps of Engineers for Pikka. But Oil Search doesn't plan to make a final investment decision about development there until 2020, Botten said.

Oil Search plans to drill two additional wells at Pikka starting late this winter, to refine the company's understanding of its oil potential, said Botten. It's hired about 50 people to work in Anchorage and plans to double that number by year's end.

The more than 300 million-barrel estimate for the Horseshoe area follows a lot of new seismic mapping work, said Keiran Wulff, head of Oil Search in Alaska. The area may contain additional prospects beyond what was previously tested at the Horseshoe exploration well, completed last year.

But the prospects need further analysis, Wulff said by text Wednesday.

Botten said the Horseshoe opportunity is "subject to seismic reprocessing, reservoir modeling and data trades with ConocoPhillips later this year with (appraisal) drilling planned in 2020."

Oil Search's increased oil potential in Alaska comes closer to the amount set previously by Repsol, part owner of Pikka and Horseshoe. After drilling was completed at Horseshoe, Repsol last year announced the prospects contained about 1.2 billion barrels of recoverable light oil, amounting to the largest onshore U.S. oil discovery in three decades.