Repsol Discovers Oil in Alaska

Spanish energy company Repsol says an oil reserve of 1.2 billion barrels has been identified in Alaska's North Slope, which the company says is the largest onshore discovery in the United States in three decades.

Repsol said that the contingent resources of recoverable light oil found near the village of Nuiqsut in North Slope, would allow production of 120,000 barrels per day starting from 2021, AP reported.

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.

Repsol partnered with Armstrong Oil and Gas in making the new Horseshoe discovery on Alaska's North Slope. Armstrong bought the lease for the area in 2001 and made two other discoveries on the North Slope that it has since sold, according to Alaska Public Media.

"Alaska has significant infrastructure which allows new resources to be developed more efficiently," Repsol said.

The finding came after Repsol, like many other oil companies, made aggressive cost and operations cuts in response to the collapse of oil prices. Its biggest discovery before this was in Venezuela in 2009.

 “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 said.

However, the news will not 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 OPEC.

Repsol has been actively exploring in Alaska since 2008 and has an additional presence in the Gulf of Mexico.

The North Slope find comes less than six months after Caelus Energy and private-equity giant Apollo Global Management announced a massive Alaska oil discovery in the waters of Smith Bay.

All of this is a big win for Alaska, which last year had to freeze hiring and limit state employee travel due to trouble in the oil industry.

Alaska, which relies on oil and gas taxes for the vast majority of its state revenue, has been hit by shrinking production from its mature fields and the fact that oil prices have been cut in half in recent years.