A new U.S. Geological Survey (USGS) assessment of the National Petroleum Reserve in Alaska (NPRA), an area covering 24.2 million acres that is west of the Arctic National Wildlife Refuge (ANWR), concludes that there is “significantly greater petroleum resources than previously estimated.” However, it also concludes that ANWR is a better target with more recoverable oil at prices under $35/bbl.

The assessment, which was released on Thursday, said that undiscovered oil beneath the federal part of the reserve (93% of the area) likely ranges between 5.9 billion and 13.2 billion bbl with a mean value of 9.3 billion bbl (10.6 billion bbl for the entire reserve including nonfederal portions). An estimated 1.3 billion to 5.6 billion bbl of those resources are economically recoverable at market prices of $22-30/bbl. The undiscovered natural gas in the same area ranges between 39.1 Tcf and 83.2 Tcf with a mean value of 59.7 Tcf (61.4 Tcf for the entire reserve). The economical viability of the gas depends on the availability of a pipeline to market. The bulk of the natural gas resources are thought to occur in the central and southern NPRA.

The increase in estimates of oil resources is largely the result of the recognition of new plays based on oil accumulations recently discovered just east of NPRA. Increased gas estimates resulted from a better understanding of reservoir development, thermal maturity and timing of trap development relative to hydrocarbon generation, the USGS said.

The four-year re-assessment of the undiscovered oil and gas resources significantly increases the estimates from the prior study done in 1980 in which technically recoverable oil in the entire NPRA was estimated between 0.3 billion and 5.4 billion bbl of oil with a mean value of 2.1 billion bbl.

The new NPRA 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, adjacent offshore state waters and native lands, and did not study the entire wildlife refuge. The ANWR 1002 federal area, which at 1.5 million acres is much smaller than the NPRA federal area, was estimated to contain unrecovered resources of 4.3 billion to 11.8 billion bbl of oil with a mean value of 7.7 billion bbl.

“The amount of technically recoverable oil estimated for NPRA is similar to that estimated for the ANWR study area,” the 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 per barrel, a larger volume of technically recoverable oil would be economic in the ANWR 1002 area. And if prices exceed $35 per barrel, NPRA and ANWR 1002 would have nearly equal volumes of economically recoverable oil.”

Sen. Frank Murkowski (R-AK), the chief proponent of exploration and production in Alaska and ANWR in particular, said the assessment proves ANWR is a 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 development in both ANWR and NPRA,” he said. Murkowski said because of NPRA’s vast area the oil is expected to be less economic.

The USGS concluded that the ANWR study area is estimated to contain “more accumulations in larger size classes.” It also noted the NPRA study area is 12 times larger than the ANWR study area. “A direct comparison of results based on the mean estimates of technically recoverable oil shows that a larger volume of oil is economically recoverable at market prices below $35 per barrel in the ANWR study area,” the USGS said. “At market prices above $35 per barrel, estimates of economically recoverable oil for the two areas are similar.” For example, at $25/bbl about 3.7 billion bbl of oil is recoverable in NPRA compared to 5.6 billion bbl in ANWR.

Murkowski said the report provides more ammunition for efforts in Congress to create incentives to build an Alaska natural gas pipeline system to bring NPRA and other North Slope gas to market. Last month, Murkowski helped get a “safety net” include in the Senate energy bill that would provide tax incentives to gas producers if the price of gas was to fall below what was needed to finance the $19.4 billion gas line. Specifically, the legislation provides for expedited permitting and regulatory review of an Alaskan line, would offer a loan guarantee of up to $10 billion to encourage the line’s construction, and would give producers a credit if prices fall below $3.25/Mcf for natural gas supplies delivered over the envisioned Alaskan transportation system. The pipeline, if built, would transport North Slope gas to the Lower 48 states, taking the route along the Alaska highway.

Portions of the NPRA were leased in 1999, and additional lease sales are anticipated. The Bureau of Land Management is offering another lease sale in June 2002. The NPRA study is the second in a series of assessments that ultimately will result in a re-evaluation by the USGS of the petroleum potential of the entire Alaska North Slope.

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