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"The Oil's There"

Stocks in this article: ROYL

High costs

Among the challenges for North Slope shale oil development is the high cost of operating in the region. Duncan questioned whether these high costs are somewhat self-inflicted, with a need for more service competition to drive costs down.

And industry needs to work with the state to reduce the complexities and redundancies of the permitting system.

"It's very expensive," Duncan said. "Time is money and it takes a long time to get just about anything through the permitting system."

Many wells needed

This permitting issue will become especially critical when it comes to development drilling in a shale oil play, with perhaps 200 new wells needed every year, Duncan said, commenting that people need to take a hard look at the regulatory systems in the Lower 48 states, where thousands of wells may be permitted in a year in a single play.

Duncan also suggested extending the Alaska railroad north to Prudhoe Bay. A railroad would enable the transportation of equipment and material to Prudhoe Bay more quickly than at present, and year round; it could act as a backup to the pipeline system for transporting oil south, and might also provide a means of exporting potential North Slope products such as heavy oil or the products from a gas-to-liquids plant, Duncan suggested.

Workforce an issue

Duncan sees the availability of the necessary workforce in Alaska as a huge problem, as activity in a shale oil development ramps up. The "brain drain" from Alaska to the Lower 48 needs to be reversed, and it is important to be pro-active rather than re-active in dealing with this issue, Duncan said. People need to be appropriately educated and trained. Is there scope for Alaska becoming a center of technical expertise and innovation, Duncan asked? And relocation incentives may be necessary to persuade people to move north, he said.

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