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By Steve Horn
Hydraulic fracturing’s horizontal drilling technique has enabled industry to tap otherwise difficult-to-access oil and gas in shale basins throughout the U.S. and increasingly throughout the world. And now fracking, as it’s known, could soon arrive at a new frontier: Alaska.
As Bloomberg reported in March, Paul Basinski, a pioneer of fracking in Texas’ prolific Eagle Ford Shale, has led the push to explore fracking’s potential there, in what’s been dubbed “Project Icewine.” His company, Burgundy Xploration, is working on fracking in Alaska’s North Slope territory alongside the Australia-based company 88 Energy (formerly Tangiers Petroleum).
“The land sits over three underground bands of shale, from 3,000 to 20,000 feet below ground, that are the source rocks for the huge conventional oilfields to the north,” wrote Bloomberg. “The companies’ first well, Icewine 1, confirmed the presence of petroleum in the shale and found a geology that should be conducive to fracking.”
Why the name “Project Icewine”? “Everything we do is about wine,” Basinski told Alaska Public Radio. “That’s why it’s called Icewine. Because it’s cold up here, and I like German ice wine.”
Geographical Terrain
A report by DJ Carmichael, an Australian stockbroker firm, notes that the Project Icewine oilfield is located in close proximity to the Trans-Alaska Pipeline System, which flows from northern to southern Alaska and is co-owned by BP, ConocoPhillips, ExxonMobil and Chevron.
Drone footage, taken in 2016 by a company owned by Alaska Sen. Lisa Murkowski’s campaign manager, Steve Wackowski, shows a fracking test well being drilled for Icewine 1.
, we have increased our exploration and development investments and activities on the North Slope by adding rigs and progressing new development opportunities,” wrote the company. “We will continue to work with co-owners to identify additional opportunities to increase our investments in Alaska.”
Oil and Money
Fracking is a capital-intensive procedure, made all the more so given northern Alaska’s isolated geographical location and its Arctic drilling terrain.
Perhaps in a nod to this, the GOP-dominated Alaska Legislature attempted to offer $430 million worth of tax subsidies for the oil and gas industry in the fiscal year 2017 budget. That was vetoed by Alaska Gov. Bill Walker, an Independent, meaning the industry only got its statutory limit of $30 million in subsidies.
Patrick Galvin, chief commercial officer for Great Bear Petroleum, formerly served as petroleum land manager for the Alaska Department of Natural Resources and commissioner for the Alaska Department of Revenue. When Walker vetoed the $430 million proposed subsidy, Galvin publicly criticized him.
“What seems to have developed in this particular moment is the governor having to kind of take hostages in order to get the legislature to act on what he wants them to act on with regard to a fiscal plan,” Galvin told Alaska Public Radio. “It has an impact down the chain for all of the business that company wanted to do and they were expecting to get these payments and now they’re basically stuck waiting to see when the state will ultimately pay its bill.”
Galvin’s company also drilled fracking test wells earlier in the decade but has yet to commercialize the technique. Great Bear previously estimated it could frack 200,000 barrels of crude per day by 2020 and 600,000 barrels per day by 2056, though it appears a long way from reaching those aspirations.
Another tax subsidy fight in Alaska is currently underway over the proposed Alaska House Bill 111, which passed 21-19 in the Democratic-controlled House and awaits a Republican-controlled Senate vote. The state bill—opposed by ConocoPhillips, BP, Great Bear Petroleum and the Alaska Oil and Gas Association—would essentially undo the tax subsidy in place under the More Alaska Production Act, while also forcing the oil and gas industry to pay more taxes to fill the state’s coffers.
In the end, tapping Alaska’s shale resources via fracking, not unlike the attempts to drill for its Arctic oil, may come down to a simple issue of money. Whether enough cash will flow to the 49th state to make fracking a commercial-scale endeavor remains to be seen.
Reposted with permission from our media associate DeSmogBlog.