New USGS assessment shows dramatically higher petroleum resources in NPR-A

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, May 17 -- Undiscovered oil and gas resources within the National Petroleum Reserve-Alaska (NPR-A) are much higher than previously thought, the US Department of Interior's US Geological Survey said May 16.
According to USGS, the new study—4 years in the making—concludes that "NPR-A holds significantly greater petroleum resources than previously estimated."
The last time USGS did a comprehensive study of the region was more than 20 years ago. Then US geologists estimated the technically recoverable oil in NPR-A at 0.3-5.4 billion bbl, with a mean value of 2.1 billion bbl. The 1980 assessment did not include an economic analysis.
The 2002 reassessment shows 1.3-5.6 billion bbl are estimated to be economically recoverable, assuming market prices of $22-30/bbl, respectively. Estimates of technically recoverable oil on the NPR-A federal lands alone are 5.9-13.2 billion bbl, with a mean value of 9.3 billion bbl.

North holds large resources
A large proportion of the undiscovered oil resources are thought to occur in the northern third of the NPRA in "moderate-size accumulations," according to a May 16 USGSreport.
The report further estimated technically recoverable undiscovered natural gas resources on federal lands in the NPR-A at 39.1-83.2 tcf, with a mean value of 59.7 tcf. The bulk of the natural gas resources are thought to occur in the central and southern NPR-A. But the economic viability of that natural gas depends on the availability of a pipeline to transport the product to the Lower 48, USGS said.
A pending Senate energy bill offers generous tax incentives and other federal assistance to encourage industry to build a new North Slope gas line along the Alaska Highway and then via southwestern Canada that would eventually be connected to the upper US Midwest.
But presently, no natural gas pipeline exists, and the economic viability—and fate of supportive energy legislation in the US Senate—underpinning such a project is far from certain.
Meanwhile, the USGS report also draws comparisons between the newly beefed-up NPR-A resource assessment and the agency's 1998 Arctic National Wildlife Refuge hydrocarbon resource assessment.
the US House of Representatives' energy bill includes a provision to allow leasing of the ANWR 1002 (coastal plain) area in northeastern Alaska, now off-limits.

New methodology
USGS said the new NPR-A assessment reflects a comprehensive examination of all public domain data and considers new exploration and development strategies being applied on the Alaska North Slope; it uses a methodology similar to that used in the 1998 USGS assessment of the ANWR 1002 area.
The assessment area for ANWR included federal lands within the 1002 area and adjacent offshore state waters and native lands and did not study the entire wildlife refuge.
Using the USGS estimates for undiscovered technically recoverable oil, a comparison between the federal study areas of NPRA and the ANWR 1002 area shows:
-- NPR-A federal area covers 22.5 million acres, with 5.9-13.2 billion bbl of recoverable oil, with a mean value of 9.3 billion bbl.
-- ANWR 1002 federal area covers 1.5 million acres, 4.3-11.8 billion bbl of recoverable oil, with a mean value of 7.7 billion bbl

The White House's energy blueprint released a year ago calls for the leasing of ANWR. USGS said that, although NPR-A holds much promise for future oil and gas development, the location of ANWR's reserves might make exploration more attractive to industry.
"The economic analysis of undiscovered resources is particularly important in an area as large as NPR-A, because some of the oil resources may be far from existing infrastructure. The amount of technically recoverable oil estimated for NPR-A is similar to that estimated for the ANWR study area," USGS said. "The economic analysis considers accumulation sizes, numbers of accumulations, and proximity to infrastructure. The conclusion is that when market prices are below $35/bbl, a larger volume of technically recoverable oil would be economic in the ANWR 1002 area. And if prices exceed $35 per bbl, NPRA and ANWR 1002 would have nearly equal volumes of economically recoverable oil.".

Murkowski stance
Sen. Frank Murkowski, (R-Alas.), a proponent of ANWR leasing and ranking member of the Senate Committee on Energy and Natural Resources, welcomed updated estimates for the oil potential of NPR-A, calling the new estimates "heartening" but said the data do not mean the US government should not open a portion of the refuge as well.
Murkowski said economic oil is still likely to be found in the ANWR coastal plain, but from a footprint 15 times smaller.
"The report also proves that ANWR is a far better source of oil. Development in the coastal plain would be far more concentrated, likely improving the economics and certainly lessening the environmental impacts. The report builds the case for energy development in both ANWR and NPR-A," said Murkowski.
Murkowski said the report also should give policy-makers another reason to justify federal support for the proposed natural gas line from Alaska to the Lower-48.

Chairman's view
Murkowski's Democratic counterpart, Senate Energy Chairman Jeff Bingaman (D-NM) concurred that the USGS analysis helps bolster the argument for a new gas pipeline from Alaska. But Bingaman rejected Murkowski's reasoning that the nation should open ANWR, an area that environmental groups say is ecologically unique and too fragile to be trusted to oil exploration, no matter how sophisticated today's technology.
"The administration's reassessment of the oil and gas potential of the National Petroleum Reserve-Alaska is great news for our nation's energy future. It also validates the Democratic view that this reserve has outstanding potential as a major new source of oil. And Congress doesn't need to pass any new law to drill there.
"Enhancing America's energy security is the goal of the Senate-passed energy bill. When we debated this bill for 6 weeks, the volume of rhetoric about drilling in the arctic wildlife refuge may have confused some into believing that ANWR is the only place in the US where you can find more oil. This study proves what we have said all along: That's not so.
"In addition to the 32 million acres in the Gulf of Mexico that have been leased for oil and gas activities, the NPR-A also holds great promise for more oil and gas development, according to the government's scientists. That shouldn't surprise anyone: Those 23 million acres were specifically set aside 79 years ago because of their oil resources. Drilling there is already happening, and there have been major finds.
"As the leader for the Senate majority when we conference energy, I'm eager to begin working with my colleagues in the House. We've got a lot of work to do, and this new analysis of the NPR-A's potential will be very useful when the discussion turns to whether drilling should be allowed in the arctic refuge," Bingaman said.

More industry interests
Following a 10-year hiatus in exploration activity, NPR-A got back on industry's radar screen following the 1996 announcement of the discovery of Alpine oil field, located just outside NPR-A.
Portions of NPR-A were leased in 1999, and additional lease sales are expected. The Bureau of Land Management is offering another lease sale in June 2002.
The NPR-A study is the second in a series of assessments that ultimately will result in a reevaluation by the USGS of the petroleum potential of the entire Alaska North Slope.
USGS scientists reexamined the geology of NPR-A, focusing on understanding the recent oil discoveries on state lands east of NPR-A and the potential for those productive geologic trends to extend westward into NPR-A.