Demand could outpace supply by 225 billion barrels by the end of this decade

Bill Armstrong

Bill Armstrong

“You all have been steeping in unconventionals. It truly has been a revolution, but I want to provide something different for you today,” Bill Armstrong, president and CEO of Armstrong Oil & Gas, said to the audience at EnerCom’s The Oil & Gas Conference Monday in Denver, Colorado.

Providing some context for the audience, Armstrong put up a chart showing the 93 MMBOPD of oil produced by conventional production compared to the 4 MMBOPD that comes from unconventional production each day.

“We’re living off the inventory found in the ’50s, ’60s, and 70s,” said Armstrong. By the end of this decade, production from those sources will not be enough to match demand, even if you include technically recoverable tight oil, he said. “That’s not the oil that’s economic to produce, that’s all of the technically recoverable tight oil out there. We’re going to fall 225 billion barrels short of demand by the end of this decade, even considering that technically recoverable oil.”

Armstrong Oil & Gas Supply shortfall by the end of the decade

The “dream field” may be in Alaska

To help meet the growing demand Armstrong sees coming later this decade, his company is exploring Alaska’s North Slope.

Armstrong’s Alaskan acreage was purchased jointly with Repsol on the North Slope and comprises 750,000 acres. In the Pikka unit the peak oil production is expected to be 120 MBOPD. The reported probable contingent reserve holding is estimated at 1.4 billion barrels of oil.

“Let me ask you,”Armstrong said to the audience, “what does your dream field look like? It’s probably in the U.S., it’s onshore, oil-weighted, high resource concentration, material in size, great porosity, great permeability, it has big individual wells, and it has robust economics… Well, we have all of that.”

Armstrong Oil and Gas Alaska

The mean field size in Alaska is 590 million barrels of oil, with mean well sizes of 5 million barrels of oil, and the state is relatively unexplored, said Armstrong.

Sharing a bit of West Texas oil field wisdom, Armstrong shared the saying “the best place to find oil is under the oil tree,” which he explained really meant the best place to look was where oil had already been discovered.

“This is why people are moving to SCOOP and STACK and the Delaware Basin, but Alaska has two of the five largest oil fields in the country, plus five more of the top 50 fields, all on the North Slope. So we’ve decided to look there instead.”

Comparing the Pikka’s 880 feet of pay to the Parshall Bakken, Armstrong pointed out that not only was the pay 25-times thicker, the porosity was four-times better, as was the recovery factor. Also adding to the attractiveness to the wells, most are less than 8,000 feet deep, and require limited stimulation, Armstrong said.

“A lot of guys have made a lot of money in the Bakken, but to have the equivalent kind of production from one of our wells, they would need to drill a well every month for 50 months,” Armstrong said.

Armstrong Oil & Gas Alaskan pay compared to the Bakken

Assuming no delays, Armstrong expects Pikka oil to stat flowing in 2021.

Armstrong presents at EnerCom’s The Oil & Gas Conference®

During Armstrong’s breakout session, management was asked the following questions:

  • What are the costs of your exploration wells?
  • What’s the infrastructure like in Alaska?
  • What are your lease terms?
  • How long is the Trans-Alaska Pipeline System (TAPS) good for?
  • What is the age of the sands?
  • Could you talk about the changes in taxation and regulations in Alaska?
  • Is the fiscal plan helping to push for new development?
  • How long are the laterals on your test wells?
  • What is the LOE up there?
  • What’s the development plan?
  • From whom did you get your leases? Are they state or federal?
  • How far are you from the TAPS?
  • Can you talk to us about how you’re planning on raising the capital for this development?
  • Between you, and others developing in Alaska, what are the chances of filling the TAPS again?

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