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USGS: 18 Tcf of North Slope Gas Possible at $8/Mcf

Approximately 18 Tcf of undiscovered natural gas would be economically recoverable from the National Petroleum Reserve in Alaska (NPRA) at a market price of $8/Mcf or more, and the amount would soar to 32 Tcf if the market price were to increase to $10/Mcf or more, according to an assessment by the U.S. Geological Survey (USGS).

The USGS also estimates that 273 million bbl of undiscovered oil is economically recoverable in the NPRA at $72/bbl and 500 million bbl at $90/bbl. The oil estimates do not include discovered oil accumulations in the northeastern NPRA that have not yet been developed and are dependent upon gas exploration in the NPRA, USGS said. The assessment assumed that the oil would be found while looking primarily for natural gas.

Economically recoverable resources are those that can be sold at a price that covers the costs of discovery, development, production and transportation to market.

The economic analysis is based on a USGS resource assessment released last October, which revised downward the estimate of conventional, undiscovered gas and oil within the NPRA that is technically recoverable (see Daily GPI, Oct. 27, 2010). Those estimates, revised from 2002 numbers, put conventional, undiscovered nonassociated gas in the NPRA and adjacent state waters at 53 Tcf and undiscovered oil reserves at 896 million bbl.

Technically recoverable resources are those that could be potentially produced using current technology and industry practices.

Because there is no pipeline in place to transport gas from the North Slope, the economic analysis assumed a 10- or 20-year delay between discovery and production in the NPRA. The analysis indicates that if a pipeline is constructed, there is a significant amount of gas that would be economically recoverable from the NPRA when prices are above $8/Mcf.

"USGS estimates are based on 2010 costs and technology, and these results could change over time as they are dependent on multiple factors," said USGS scientist Emil Attanasi. "For example, USGS economic recoverability estimates could vary in the future depending on the timeframe and costs to construct a gas pipeline to the NPRA, technological advances that make resource extraction and development easier and less expensive, and fluctuating market prices for oil and gas."

Hopes have dimmed for two competing projects to carry Alaska's North Slope natural gas to Canada and Lower 48 markets (see Daily GPI, April 21). Alaska lawmakers have proposed legislation that would rescind a $500 million state subsidy for a joint project by TransCanada Corp. and ExxonMobil Corp. (see Daily GPI, April 7; Feb. 10).

Since the 2002 assessment, six federal lease sales have taken place and 30 exploration wells have been drilled on federal and native lands, according to USGS, which said results of exploratory drilling indicate that NPRA formations previously thought to be oil prone are actually gas prone. The data also indicate that actual reservoir quality is inferior to the reservoir quality inferred in the 2002 assessment, USGS said.

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