The US Bureau of Safety and Environmental Enforcement approved a plan this week to allow an Alaska Native-owned corporation to combine former Shell leases in the Alaskan Arctic, raising the possibility of new exploration in the Beaufort Sea.
The consolidation of 20 Outer Continental Shelf leases under the ownership of ASRC Exploration Inc. represents a new opportunity for the subsidiary of Arctic Slope Regional Corporation (ASRC) to conduct exploration and potentially extend their leases if new discoveries are made.
The consolidation of multiple leases, or unitization, makes it easier under federal laws to conduct exploration since work on a single tract will count as development on the whole parcel. Since a number of Beaufort leases are set to expire in 2018, ASRC is betting big that major new finds will result in automatic extensions of their leases.
Augmenting the unitization approval, the company has also requested a Suspension of Operations (SOO) on the parcel, which would halt lease term expirations, and allow exploration to resume at a later date. A decision on this application is due in December.
ASRC is a Native Alaskan corporation headquartered in Barrow and owned by 13,000 Iñupiat shareholders residing across eight northern Alaskan villages. The company provides valuable income in a region where the subsistence economy still dominates. ASRC was created as part of the 1971 Native Claims Settlement Act, in an effort provide long term income to Alaska Natives and preserve their way of life.
The company is the largest Alaskan-owned enterprise and employs 12,000 people across Alaska and the lower 48. It already has substantial onshore holdings in the North Slope totaling more than 5 million acres, in addition to 91,000 acres in the Arctic National Wildlife Refuge (ANWR).
If the application for Suspension of Operations is approved, the next step for ASRC will be submitting an exploration plan and work schedule to begin assessing the potential reserves in the area.
The offshore parcels approved for consolidation lie on the border of state lands and ANWR near Camden Bay. ASRC has high hopes for this region of the Arctic, since the Point Thomson gas and condensate field nearby has proved extremely productive.
Sivulliq, one of the leases in the unit that was originally explored by Shell, is a known oil deposit discovered in the 1980s. Once considered uneconomic, technological advances in drilling and operating in the Arctic have reduced costs to the point that ASRC is investing heavily in it.
This plan is part of a new wave of optimism and exploration opportunities in the Arctic that comes on the heels of recent moves by the Trump Administration to unlock Alaska’s energy potential.