The conventional oil potential at Project Icewine may be the ‘sleeper’ in the 88 Energy Ltd (LON:88E, ASX:88E) portfolio, but it’s the kind of noisy sleeper that has become very hard to ignore.
Icewine’s HRZ shale, a now-proven system on Alaska's North Slope estimated in excess of 2.5bn barrels, is obviously priority number one.
And in the coming months, attention will be firmly on 88 Energy’s second well, due to spud in March.
Nevertheless, the conventional play could be a big deal too.
88 Energy’s seismic and partial desktop analysis has identified some 20 exploration leads – the interpretation process is only half way through.
The detailing of the ‘top five’ thus far gives the company around 750mln barrels of potential resources.
The ever-growing catalogue of exploration opportunities is the reason for the over-run on the current phase of desktop work, according to 88 Energy boss Dave Wall.
“I think one of things that we haven’t really managed that well is people’s expectations in the market about timing of when this (seismic interpretation) would be complete,” Wall told Proactive Investors.
“I guess the short story is that if we were seeing nothing or very little – it would have been complete a long time ago.
“But, because we are seeing a lot more than we were expecting to see it is taking longer.”
Wall added: “Hopefully people can understand that it is taking longer for good reason.”
Alpha is perhaps the ‘best’ - albeit not the largest - of the new conventional exploration leads.
It is estimated at around 118mln barrels and, significantly, it is conveniently located in terms of surface infrastructure.
Running beneath the road and pipeline infrastructure in the Icewine area, Alpha could be an ideal starting point for conventional exploration.
In fact, Wall says it could even be tested from the same gravel pad that will host the upcoming Icewine 2 shale well.
Bravo, as its name suggests, is the second most notable new exploration opportunity.
It is much bigger than Alpha, currently estimated at 273mln barrels, but it is not quite as accessible.
Investors will no doubt be excited to hear the full findings once the analysis and cataloguing process is complete.
It will likely provide punchy numbers and exciting headlines. But, the real focus on conventional oil will sharpen through the first half of 2017 as third party wells are drilled nearby.
Wall says the nearest of two exploration wells planned for 2017 will be just a few miles from the northern boundary of the Icewine acreage.
Alaska’s North Slope has delivered some big conventional oil discoveries in recent years, but success in these two will mean most to 88 Energy’s Icewine acreage.
Significantly, the new wells to the north are targeting the same horizons as 88 Energy is seeing in the seismic.
Wall noted the importance of the current desktop work, ahead of the nearby drilling.
“We need to assess the conventional potential, particularly because there’s going to be drilling into those horizons just to the north of us in the first half of next year,” he said.
“If we didn’t understand what we had prior to that drilling then if there is some success up there we wouldn’t really be able to quantify the look through to us. So now [as a result of the seismic] we will be in a position to do that.”
Wall highlights that the surge in exploration success on Alaska’s North Slope has been aided by improvements to technology, specifically the advances in seismic exploration that have allowed prospectors such as 88 Energy to look beneath the thick permafrost.
These techniques have helped Repsol and Armstrong Oil and Gas discover some 1.4bn barrels of crude around 30 miles north-west of the Project Icewine territory (which itself spans some 420 square miles, or 217,000 acres).
More recently, just a matter of weeks ago, privately owned Caelus Energy announced the North Slope’s newest discovery with some 2.5bn barrels of recoverable crude estimated – it is about 60 miles north west of Icewine.
“There’s a lot more oil to be discovered on the North Slope, we’re seeing that happening and hopefully we’ll be next,” Wall added.