Some 1.2bn barrels of oil have been discovered in Alaska, marking the biggest onshore discovery in the US in three decades, according to CNNMoney.
The massive find of conventional oil on state land could bring relief to budget pains in Alaska brought on by slumping production in the state and the crash in oil prices.
The new discovery was made in just the past few days in Alaska’s North Slope, which was previously viewed as an ageing oil basin.
Spanish oil giant Repsol and its privately-held US partner Armstrong Energy announced the find last week, predicting production could begin as soon as 2021 and lead to as much as 120,000 barrels per day.
The oil resources lie in a well, called Horseshoe, that’s 75% owned by Denver-based Armstrong. Repsol owns the rest of this well.
The discovery is 20 miles south of where the two companies have already found oil in a project known as Pikka. That northern project is already in early development and is 51% owned by Armstrong, which is the operator on both developments.
“The interesting thing about this discovery is the North Slope was previously thought to be on its last legs. But this is a significant emerging find,” Repsol spokesman Kristian Rix told CNNMoney.
Of course, this news won’t ease rising concern among investors about the stubborn glut of oil in the US. There are increasing signs that shale oil producers are preparing to ramp up output after surviving a two-year price war with Organisation of the Petroleum Exporting Countries (OPEC).
Following an agreement struck between OPEC and non-OPEC members late last year to reduce output, oil prices went slightly higher to reach almost $60. However, this increase did not last for long.
Brent crude had fallen 42 cents, or 0.82%, to its lowest since November 30 at $50.95 per barrel. It closed the previous session down 1.6% at $51.37 a barrel.
US West Texas Intermediate crude (WTI) declined 50 cents, or 1.03%, to $47.99 a barrel, its weakest since November 29.
US drillers added oil rigs for an eighth consecutive week, Baker Hughes said last week, as energy companies increased spending to take advantage of a recovery in crude prices since the OPEC agreed to cut output late last year.
Overshadowing the cuts, crude inventories in the United States, the world’s top oil consumer, surged last week by 8.2mn barrels.
