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Shale Oil: Geologist's Alaska Gamble Could Turn Into America's Next Big Shale Play

Stocks in this article: ROYL

After acquiring the leases, Great Bear moved quickly to test its fields. "We didn't take those leases to sit on them and watch them," he said. "We took those leases because we felt very confident and feel very confident that their potential is high when we set out to test those with the drill bit."

Duncan subsequently negotiated a joint venture agreement with Halliburton Co. covering about a quarter of his company's North Slope acreage. Great Bear owns a 75 percent share. Halliburton took 25 percent and is handling the drilling operations.

After acquiring 3-D seismic data on 57 acres of their leases, Duncan and his wife Karen Bryant Duncan went into the field to identify the best drilling sites. They focused on uplands areas that would not be subject to the U.S. Army Corps of Engineers' wetlands regulations.

In 2012, the company drilled its first two wells, Alcor 1 and Merak 1, located off gravel access roads along the Dalton Highway.

"The design is basically laying timber rig mats right off of the existing gravel," explained Patrick Galvin, Great Bear's vice president for external affairs and deputy general counsel. "That will allow year-round drilling, year-round access to any one of these sites."

Water everywhere, but other supplies are lacking

On the road to commercializing their leases, Great Bear officials are enjoying some unexpected benefits of working in Alaska, while at the same time struggling with serious long-term problems.

Unlike unconventional oil developers in the lower 48 states, Great Bear has plenty of water on hand to frack its underground wells. The company's North Slope leases sit on a deep aquifer of brackish water that is unusable for drinking water or agriculture but may be of "ideal quality for hydraulic fracturing operations," Duncan observed. The small Native villages that dot the North Slope rely on surface water, which is separated from the underground aquifer by a permafrost barrier.

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