Cook Inlet is still young as oil provinces go, but its exploration in the 1960s was cut short. Just as large oil and gas fields were being found in the late 1960s ¬– the heyday of Inlet exploration – the rich North Slope oil fields were found.

Companies flocked to the slope to get in on the bonanza, and oil company people exploring the Inlet were ordered to get on a plane and head north. “It was the lights were turned off,” one geologist said several years later.

The Inlet never got its mo-jo back. By mid-1980s and 1990s most of the big North Slope fields were discovered and producing and the nature of the industry changed, too. Companies familiar with Cook Inlet in the 1960s were larger and interested in big finds. The Inlet was small potatoes.

But the history of the petroleum industry is one of constant reinvention of what was conventional wisdom. It’s happened again and again.

Someone comes along with a new idea, a new way of looking at the geology of what people thought were mature, depleted oil basins, or how new exploration and drilling technology. Suddenly, big new resources are discovered. We’re still waiting for this to happen in the Inlet, at least in a big way.

The major oil companies had left the Inlet but there have been modest additions to resources by independent companies, like Hilcorp Energy. Hilcorp has shown what sheer energy and get-with-it can do. Aging oil platforms that were on the edge of economic viability in 2012 and 2013, when bigger companies like Chevron and Marathon left Alaska, were made more productive.

With small, incremental reserve additions, Hilcorp has increased oil production in the Inlet from about 10,000 barrels per day in 2011 to 16,000 barrels per day or more now. Another company, BlueCrest Energy, has invented a new well-drilling technique to exploit a small but challenged offshore oil reservoir near Anchor Point. Again, no big breakthrough yet, but steady progress. But the bonanza is out there – somewhere.

Dan Seamount, a commissioner at the Alaska Oil and Gas Conservation Commission, says there could be very large amount of oil left to be found but he believes the oil is deep, in the Jurrasic-age rocks that geologists think were the source of most of the oil found in the Inlet.

Oil companies just have to drill deeper to find it, said Seamount, who is a geologist. The U.S. Geological Survey has estimated that only 4 percent of the oil generated from Cook Inlet’s Jurassic source rocks have accumulated in the underground reservoir “traps” that have been discovered, Seamount said in an interview.

In a 2013 paper written for state legislators, the total oil produced as of then was 1.335 billion barrels. “If you assume a 50 percent ‘recovery’ rate (the percentage produced from oil physically in the reservoir rock) the total is about 2.7 billion barrels, Seamount wrote in his report.

“So if that is 4 percent of the oil generated, 68 billion barrels is missing. It could have come to the surface in geologic past and degraded or it still could be buried and yet to be identified. I believe most of it is still in the buried (rock) formations,” he wrote. Some could be in the relatively shallow rocks that hold fields now producing in the Inlet, but Seamount said he believes most of it is deeper, in the Jurassic-age rocks.

“I believe industry and the state have been remiss in not seeing that more wells were drilled into potential (deep) reservoirs. It seems prudent that wells should be drilled at least 5,000 feet,” into deeper Jurassic-age rocks that lie below currently producing field in the Inlet,” Seamount wrote.

That the Jurassic rocks do contain oil that can be produced has been shown in two wells drilled in the McArthur River field, one of Cook Inlet’s producing fields. Oil was produced commercially from the two wells but the extent and productivity of the reservoir section are unknown because the rocks are fractured, or broken by geologic processes. Seamount said more work should be done on these wells assess the potential.

“It would be interesting to see a long horizontal well drilled through the zone (between the two wells) and hydraulically fractured using the same modern technology now used widely in the Lower 48 states to exploit unconventional (shale oil) reservoirs,” he wrote in the report to legislators.

These are good ideas and virtually all industry experts agree with Seamount, but the question is how to make it happen. A key problem is that deep wells are expensive and high-risk if they turn out unsuccessful, as happens with many exploration ventures. It takes large companies with deep pockets to shoulder these risks, and it’s a tough nut to crack for even larger independents like Hilcorp.

It doesn’t help that other larger and medium-sized independents like Apache Oil and Forest Oil tried their luck, and then pulled out. Even ARCO Alaska, a legacy Alaska company that was also an experienced Inlet explorer, had a turn of bad luck. In the early 1980s ARCO thought it had made a big find, which it named “Sunfish,” but the discovery turned out to be unproductive, at least for ARCO.

In 2010 and 2011 the state of Alaska stepped in with a set of generous incentives (meaning subsidies) to get more Inlet exploration wells drilled. The incentives drew in smaller independents who are aggressive explorers, but many of those went bankrupt, including Buccaneer Energy and more recently Furie Operating. The state’s withdrawal of the incentives in 2016 because of Alaska’s own financial problems speeded the path to bankruptcies. BlueCrest Energy is the one small independent that survived and is now successfully developing a discovery.

Has the Inlet been such a hard-luck story that the industry has lost its nerve? What’s more likely is just that the prospects, although good in many respects, are risky for medium-sized and small independents, but too small for large companies. It’s not that there haven’t been companies willing to give deep oil a try. Buccaneer Energy and Furie Operating had plans for deep tests on leases they held before they went bankrupt.

Hilcorp, which dominates the Inlet oil and gas business, has traditionally focused on its core business of being an efficient producer and not being an explorer, at least for new “wildcat” prospects away from established fields. This may now be changing. The company has acquired federal offshore leases in Lower Cook Inlet and is planning an exploration program there.

Seamount still thinks an incentive program to encourage a few deep test wells in upper Cook Inlet where there is infrastructure is still a good idea and there may still be a role for the state in encouraging this. The previous program was expensive (the state had the money at the time) but a limited, targeted program, perhaps offering temporary reductions in royalty as the incentive rather than tax credits and cash payments, as before, might be workable.

The Jurassic oil might be there, waiting for the drill bit. There might be a lot of it or there might not, but we need to know.

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