The U.S. Geological Survey (USGS) believes the National Petroleum Reserve Alaska (NPR-A) contains only one-tenth of the oil previously thought to exist there, basing its sharp downward revision on new data derived from disappointing exploration results in the 23-million acre reserve over the past decade.

USGS now estimates NPR-A contains 896 million barrels of oil, a 90 percent reduction from its 2002 estimate of 10.6 billion barrels. Th e new assessment indicates 53 trillion cubic feet of undiscovered conventional natural gas within NPR-A and adjacent state waters. That is 8 trillion cubic feet less than the 2002 estimate of 61 trillion cubic feet, but still more than double the 24 trillion cubic feet of gas discovered at Prudhoe Bay.

By comparison, the coastal plain of the Arctic National Wildlife Refuge (ANWR) is estimated to contain about 10.5 billion barrels of oil while federal waters in the nearby Chukchi and Beaufort Seas may hold up to 29 billion barrels of oil and 209 trillion cubic feet of natural gas.

Interestingly, the USGS acknowledged that the largest potential for undiscovered oil lies in Northeast NPR-A near Teshekpuk Lake, where little to no exploration has occurred. These highly prospective areas, covering 649,000 acres, have been deferred from leasing by the federal government with the endorsement of environmental groups who have fought to block energy development in the area. An additional 1.57 million acres in Northwest NPR-A have also been deferred from leasing.

The federal agency now believes natural gas is the dominant energy resource in NPR-A. The highest potential for gas is in structural plays in South NPR-A.

The USGS says the new data indicate an abrupt change from oil to more gas prone resources in the reserve. Consequently, USGS said many of the newly drilled wells show an abrupt transition from oil to gas just 15 to 20 miles west of the Alpine field, located outside the northeastern boundary of the petroleum reserve.

NPR-A has been the focus of significant oil exploration during the past decade with discoveries made by ConocoPhillips in the northeastern part of the energy reserve, west of Alpine.

The sharply revised estimates for NPR-A have been received with some alarm by Alaskans. Some geologists have questioned the shear magnitude of the revisions, given no recent drilling has occurred in the Teshekpuk Lake area or over some of the most prospective acreage high on the Barrow Arch. (Virtually all of the North Slope’s commercial discoveries have been near the coast and north of an area known as the Barrow Arch.)

Moreover, the release of the new projections coincide with the Bureau of Land Management’s (BLM) launching of a new planning process for the reserve, leaving some to question the timing of the USGS projections. The new plan will cover the entire reserve and determine which areas will be open to development. It will supersede other planning efforts of the past 15 years.

The State of Alaska is concerned the lower projections could provide BLM with cover to curtail future lease sales. This is a concern to Kevin Banks, Director of the Division of Oil and Gas, who noted the state would share with the federal government revenues from new oil production in NPR-A. The state would also benefit from increased throughput in the oil pipeline, which is running at one-third of its peak flow set in 1988.

Alaska geologist Ken Boyd said that since the USGS was apparently able to use some of the new data from recent exploration and 3D seismic surveys in its recent assessment, additional credence should be given to the results. “That said, they are extrapolating these new data over a huge area – 23 million acres,” Boyd said. “There is one part of NPR-A that does not have any new data and it is the area some believe may be the most prospective. For a variety of reasons – some environmental and some political – the northeast corner of NPR-A has not been included in any of the recent lease sales.”

Boyd said “until the northeast acreage has been made available for lease and exploration is allowed to take place, I don’t believe the full story of NPR-A has yet been told. Unless and until this area is open for exploration, I think any evaluation remains incomplete.”

Geologist Richard Garrard called the new resource assessment “controversial” and said that “before the new numbers can be taken seriously, some independent audit by other organizations should be considered.” Garrard said such an effort might be undertaken collaboratively by representatives from the various federal agencies, the state, and industry.

Garrard asked: “Did the USGS have access to all of the available 3-D seismic or recently drilled wells? Did they have sufficient time to interpret these data? What new technical studies have they conducted? Did they consult with all of the various operators who have been active in NPR-A?”

If the latest USGS numbers are correct, then the assessment should represent a major concern for Alaska, Garrard said. “Alternatively, if the USGS was under pressure to issue a new number without having access to all of the data or time to conduct a thorough analysis, then the possible political ramifications could be concerning,” he added.

Winners and losers
Environmental groups want permanent protection for coastal areas of the energy reserve, and the sharply lower oil projections could make it easier for the Obama administration to justify permanent closure of currently deferred areas to oil exploration.

However, the lower oil projection for NPR-A could strengthen the case for exploration in the Chukchi Sea, considered the most promising unexplored offshore oil and gas basin in North America.

Even if the projections for oil ultimately prove accurate, the potential gas resources in the energy reserve are immense and developing them could greatly improve the long-term economic viability of the proposed gas pipeline from Prudhoe Bay to Lower 48 markets.

Garrard believes the reserve’s potential for oil is still quite good, but getting it out of the ground economically will be challenging due to the lack of infrastructure in the remote frontier area. As for the gas resource, until a pipeline is built from the North Slope southward, a major discovery in NPR-A isn’t much better than a dry hole, a USGS scientist noted.

With regard to the new planning process launched earlier this fall by the BLM, RDC urged in its scoping comments that all of NPR-A should be open to oil and gas leasing, as well as mineral entry. Moreover, RDC said the BLM should establish transportation corridors within NPR-A to facilitate future oil and gas development in the OCS and resource development in South NPR-A.

“With climate change and polar bear critical habitat issues to be introduced into the new planning process, it is highly likely that anti-development forces will use these and other issues to demand the removal of additional acreage from exploration,” RDC warned. “Those who oppose new oil development in the Arctic are likely to demand permanent Wilderness protection of much, if not all, of the petroleum reserve’s coastal plain, thus blocking future oil and gas exploration and development inside an area specifically intended for oil development.”

RDC’s comments on the new plan, known as the Integrated Activity Plan, is available at: www.akrdc.org/alerts/2010/ npraplanningcomments.html.

 

 

 

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