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.
The new discovery was made in just the past few days in Alaska's North Slope, which was previously viewed as an aging oil basin.
Spanish oil giant Repsol (REPYY) and its privately-held U.S. partner Armstrong Energy announced the find on Thursday, predicting production could begin as soon as 2021 and lead to as much as 120,000 barrels of output per day.
The oil resources lie in a well, called Horseshoe, that's 75% owned by Denver-based Armstrong. Repsol owns the rest of this well.
The discovery is 20 miles south of where the two companies have already found oil in a project known as Pikka. That northern project is already in early development and is 51% owned by Armstrong, which is the operator on both developments.
"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 told CNNMoney.
Of course, this news won't ease rising concern among investors about the stubborn glut of oil in the U.S. There are increasing signs that shale oil producers are preparing to ramp up output after surviving a two-year price war with OPEC.