Will Alaska rise again?
Alaska’s oil production commenced with developments in the Cook Inlet region of southern Alaska in the late 1950s, where production reached a peak of about 220,000 b/d in 1971. Cook Inlet production has since declined to ~15,000 b/d.
The discovery of the supergiant Prudhoe Bay field in 1967 ultimately led to Alaska becoming the top oil producing state in the U.S., at least for a while. In 1977, production started from the Prudhoe Bay field and Alaska’s oil production rose rapidly. The Prudhoe Bay field is the largest field ever discovered in the U.S. and Canada, and one of the twenty largest fields ever found globally.
Even supergiant fields ultimately decline and the Prudhoe Bay field started declining in the late 1980s. Since 1987, Prudhoe Bay field production has declined from ~1.6 million barrels/day to ~0.32 mb/d in 2007.
Figure 1 is a graph of annual production versus cumulative production for the Prudhoe Bay field. The graph indicates that the ultimate recovery for the Prudhoe Bay field will be approximately 12.3 Gb. At the end of 2007, ~11.4 Gb of oil had been produced from the Prudhoe Bay field, ~93% of the estimated ultimate recovery.
Figure 1 – Plot of annual production versus cumulative production for the Prudhoe Bay field [rectangles] and best-fit line to x-axis [X] (Data from the Alaska Department of Revenue)
Because the Prudhoe Bay field dwarfs all other North Slope fields, Alaska’s oil production has declined in parallel with the Prudhoe Bay field (see Fig. 2).
Figure 2 – Alaska’s historical [1958-2002] and projected [2003-2040] oil production from presently active oil fields (Data from the Alaska Department of Revenue)
Alaska’s oil production peaked in 1988 at 2.02 mb/d. By 2007, production had declined to ~0.75 mb/d. There was a slight increase in production from 2000 through 2002 due to the introduction of the Alpine and Northstar fields, as well as satellites of the Prudhoe Bay and Kuparak fields. Those fieldsstarted declining a few years after their introduction and have contributed to Alaska’s overall production decline since 2002.
The future fate of Alaskan oil production lies in the National Petroleum Reserve-Alaska (NPR-A) and the Arctic National Wildlife Refuge (ANWR). Figure 3 is a map of northern Alaska showing the locations of NPR-A and ANWR.
Figure 3 – Map showing ANWR and NPR-A (U.S. Geological Survey)
In the late 1990s, the Clinton administration opened ~4 million acres in the northeast quadrant of NPR-A to oil and gas development. In 2004, the Bush administration opened ~8.8 million acres in the northwest quadrant, although about 2 million acres were deferred for further study. In 2005, the Bush administration opened ~600,000 acres in the Teshekpuk Lake area (northeast quadrant) but the U.S. District Court temporarily suspended leasing. In 2005, scoping started on ~9.2 million acres of the Southern Planning Area of NPR-A for future oil and gas development.
Historically, there has been considerable exploration activity in NPR-A. From 1944 through 1953 the U.S. Navy drilled 36 test wells. From 1974 through 1982 the Navy and USGS drilled 28 test wells and obtained 12,000 linear miles of seismic data. From 2000 through March 2007, the oil industry drilled 25 exploratory wells.
To date, no large discoveries have been found in NPR-A and I’m not expecting any. Approximately 0.33 Gb of oil have been discovered and production in the northeast quadrant started in 2006. That new production did not prevent Alaska’s production from continuing to decline in 2007. I believe the most productive part of the NPR-A will be the northeast quadrant and the lack of significant discoveries there does not bode well for the NPR-A contributing significantly to Alaska’s future oil production.
In 2002, the USGS estimated that the mean technically recoverable amount of oil in NPR-A was 9.3 Gb. The USGS has a history of coming up with technically recoverable reserves figures that are substantially higher than decline curves suggest ultimate recovery values will be. I previously calculated a correction factor between the two of 2.4. It appears that this correction factor may be too low for NPR-A.
In 1998, the USGS estimated that the mean technically recoverable amount of oil in ANWR was 10.4 Gb. If the 2.4 correction factor is applied to ANWR, the corrected ultimate recovery would be 4.3 Gb. I personally think even that ultimate recovery is optimistic. Although Congress has not opened ANWR, based upon the 4.3 Gb value, I project that peak production would occur twelve years after development began at 940,000 b/d.
What impact would ANWR and NPR-A production have on future U.S. oil production? Figure 4 shows that future production from ANWR, NPR-A and the deepwater Gulf of Mexico would slow the decline in U.S. production out to about 2020 but then production declines rapidly.
Figure 4 – Historical [1900-2001] and projected [2002-2100] total U.S. oil production (Historical data is from Colin Campbell [1900-1959] and the US DOE/EIA [1960-2001])
The numbers used to calculate future U.S. production will be off to some degree but oil production from ANWR and NPR-A will never cause more than a temporary increase in U.S. oil production. By 2050, domestic production may have fallen below 1 million barrels a day.
One additional factor that may shape Alaska’s oil future is the minimum operational flow through the Trans-Alaska Oil Pipeline (TAPS), which has been estimated at 300,000 b/d. The minimal operational flow limit of the pipeline insures that the ultimate recovery from the North Slope will be less than what could be pumped from North Slope fields before they dry up unless some of the late-stage oil is transported by ship.
Roger Blanchard is Assistant Professor of Chemistry at Lake Superior State University, Sault Ste. Marie, Michigan. Roger is the author of "The Future of Global Oil Production: Facts, Figures, Trends and Projections by Region" published by McFarland & Company (2005).
(Note: Commentaries do not necessarily represent ASPO-USA's positions; they are personal statements and observations by informed commentators.)
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