Oct. 5--The potential for oil as well as natural gas discoveries in the big sedimentary basins of Interior Alaska is higher than previously thought, say officials with Doyon Ltd., the Fairbanks-based Alaska Native regional corporation.

Doyon is a major landowner in Interior Alaska, with 12 million acres overall, and is looking closely at prospects for oil and gas in a wide area along the Yukon River and the Nenana Basin west of Fairbanks, where the corporation is in an exploration partnership with two other Alaska firms.

Norm Phillips, Doyon's president, acknowledges concerns for environmental protection in villages near areas with oil and gas. "We've got to be sensitive to that," he said.

Most residents of the communities are Doyon shareholders. However, many village leaders also realize that resource development can bring infrastructure and jobs into the area, and create a sustainable regional economy.

"People are recognizing the need for some economic anchor," Phillips said.

Doyon is bullish about oil prospects because of high oil prices as well as new geological data.

"At $100 per barrel prices, the minimum discovered field size needed to be commercial is smaller than with price at $60 per barrel," said Jim Mery, Doyon's lands and resources vice president.

Since smaller prospects will be more numerous, the chances that discoveries can be commercially developed are improved.

Mery said new work by the U.S. Geological Survey in the Yukon Flats, where Doyon owns about 3 million acres, has identified several sub-basins of older deep sedimentary deposits that are favorable for oil. Previously sedimentary basins in the region were thought to be shallow and young in age, with conditions more favorable to natural gas than oil.

In 2002 and 2003, the USGS did a resource evaluation of petroleum prospects in the Yukon Basin, which covers a broad area of Interior Alaska, and concluded that the region has good prospects for gas but limited possibilities for oil. The agency estimated 17 trillion cubic feet of technically recoverable (gas that can produced with current technology) resources in the area.

Doyon feels the oil potential was greater and began working with the USGS and allowing government geologists to review the corporation's own data and that acquired under licensing agreements with oil and gas companies that have limited work in the area.