Royale Energy, a California-based firm, was the high bidder on about 100,500 acres of state land on the North Slope for shale oil exploration in 2011, and is waiting for those leases to be issued.
If the firms are successful, it could provide an avenue of cooperation between environmentalists and the oil industry in Alaska, who have in recent years been fighting over whether Royal Dutch Shell should recommence offshore drilling in the Chukchi and Beaufort seas.
The Trans-Alaska Pipeline System has a maximum daily capacity of 2.1 million barrels, but is now shipping on average 560,320 barrels per day. Sullivan likes to talk about how the state has “a great pipeline that has a lot of spare capacity” that can ship shale oil, and Lois Epstein, Arctic program director for The Wilderness Society, largely agrees with that sentiment.
“It could be, if it’s done right, a great thing for Alaska,” said Epstein, an engineer by training. “Shale oil offers opportunities for Alaska to continue the flow through the pipeline without going into areas which are more sensitive, like the Arctic National Wildlife Refuge.”
While some of the source rocks are on federal land, the most oil-rich sections of shale are state land, which should make exploration less controversial.
This does not mean a shale oil boom wouldn’t pose challenges for Alaska: The state usually has about 15 exploration wells operating at one time, a number which would grow exponentially if shale development is successful.
Cathy Foerster, chair of the Alaska Oil and Gas Conservation Commission, said her agency lacks engineers, geologists and field inspectors because it’s hard to hire well-qualified people.
“How do we manage increased activity with restricted staffing? That’s our challenge,” she said.
At the moment, however, it’s a problem Alaskans — and some federal officials — appear eager to have. Houseknecht said he usually gives a general briefing to Capitol Hill staffers when he issues a resource assessment; in the case of the North Slope report, he briefed Interior Secretary Ken Salazar and Sen. Lisa Murkowski (R-Alaska) in separate meetings.
In an interview, Murkowski said she and others know there will be plenty of oil flowing down the Keystone XL pipeline if it gets built, and shale oil provides Alaska another way to remain competitive.
“For Alaska’s people, when they saw North Dakota had bumped us out of first place it was like, what are we doing, North Dakota? It’s a little bit of a wake-up call,” she said. “We can’t take the approach we’re the only game in town. We have to recognize we’re competing on a world scene.”
Researcher Eddy J. Palanzo contributed to this report.