New plays add 8.7B barrels to NPR-A oil estimate

  • A revised resource estimate for the National Petroleum Reserve-Alaska pegs a potential of 8.8 billion barrels of oil based on discoveries announced since the last official estimate in 2013. The new estimate was ordered by Interior Secretary Ryan Zinke during a visit to Alaska last May. (Photo/Molly Riley/AP)

And back the pendulum swings.

U.S. Geological Survey again officially believes it is likely the National Petroleum Reserve-Alaska holds billions of barrels of recoverable oil, according to its updated resource assessment released Dec. 22.

Specifically, the federal geologists estimate the mean undiscovered conventional and recoverable oil resource in the 23 million-acre NPR-A and adjacent state and private lands to be more than 8.8 billion barrels, with a 95 percent chance there is at least 1.7 billion barrels in place and a 5 percent probability the area holds more than 21.8 billion barrels of oil.

Interior Secretary Ryan Zinke, who ordered the updated assessment while on a trip to Alaska last May, said it is a big step towards what has become his catchphrase of sorts, “American energy dominance.”

“Thanks to the incredible work of scientist at the USGS and (the Bureau of Ocean Energy Management), we know what’s available and what our potential is,” Zinke said in a formal statement. “New discoveries have changed our geologic knowledge of the area and these assessments show that the North Slope will remain an important energy hub for decades to come in order to meet the energy needs of our nation.”

BOEM, which manages oil and gas activity in federal waters, contributed data from nearby offshore areas to the resource estimate, according to an Interior Department release.

The members of Alaska’s congressional delegation similarly said the new numbers are good news for the state and prove now is a prudent time to invest in Arctic energy development.

“Just as we have always known, this assessment shows that the NPR-A has significant potential and will remain a big part of our energy future,” said Sen. Lisa Murkowski, who chairs the Senate Energy and Natural Resources Committee. “I thank Secretary Zinke for traveling to this area with me earlier this year, for directing USGS to update its resource assessment and for working with Alaskans on a better plan for responsible development.”

While the Republican delegation insists the new NPR-A oil estimate is further proof the industry should be encouraged to explore the state-sized area, the assessment is the latest in a series in which oil projections have varied wildly.

A 2002 assessment, completed after what is now ConocoPhillips discovered the large Alpine oil field on state and Native corporation lands near the eastern edge of the NPR-A, put the mean undiscovered oil resource at 10.6 billion barrels, with a 95 percent probability of there being at least 6.7 billion barrels available.

Current USGS Senior Research Geologist David Houseknecht has said the 2002 estimate was based on the presumption that the oil charge in the Alpine formation stretched far to the west across much of the NPR-A.

Houseknecht led or participated in the drafting of similar assessments of the NPR-A in 2002 and 2010 and the Arctic National Wildlife Refuge coastal plain in 1998, and is well regarded by many geologists who have studied the North Slope.

However, subsequent exploration efforts revealed the oil quickly turned to natural gas pools, putting a damper on industry’s excitement at the time.

The fizzled Alpine play in part led to a drastically reduced mean estimate of just 896 million barrels in the 2010 NPR-A assessment.

“Recent activities in NPR-A, including extensive 3D seismic surveys, six federal lease sales totaling more than $250 million in bonus bids, and completion of more than 30 exploration wells on federal and Native lands, indicate in key formations more gas than oil and poorer reservoir quality than anticipated,” the 2010 assessment states. “In the absence of a gas pipeline from Alaska, exploration has waned and several petroleum companies have relinquished assets in the NPR-A.”

What hasn’t changed much is the belief there is a massive amount of natural gas beneath the western North Slope.

The most recent assessment contains the smallest mean estimate for gas quantities at 39.2 trillion cubic feet, which is slightly more than the 35 trillion cubic feet of known gas reserves at Prudhoe Bay and Point Thomson that would supply a large gasline and LNG export project.

The big change on the oil side has been the Brookian revelations in and around the NPR-A.

The large Nanushuk formation discoveries by the Armstrong Energy-Repsol partnership on state lands just to the east and ConocoPhillips’ Willow find within the reserve together total more than 1.5 billion barrels of confirmed and recoverable oil, according to the companies.

Additionally, Caelus Energy’s Torok formation oil prospect at Smith Bay — in state waters of the Beaufort Sea just offshore from the NPR-A — holds roughly 6 billion barrels of oil, the company estimates.

The Nanushuk and Torok sand formations are part of the Brookian geologic sequence and generally hold oil pools in more subtle stratigraphic traps that until recently have largely been overlooked.

Slope geologists say advanced 3D seismic has made it easier to identify the traps.

Nearly all of the 8.7 billion barrels of oil added to the new mean assessment are expected to come from the Nanushuk and Torok formations.

Houseknecht said during a November presentation in Anchorage that the companies focusing on the Brookian plays have mostly been forthcoming with proprietary seismic and drilling results, which helped greatly in drafting the assessment.

Zinke’s order did not include funding for the agencies to gather new data.

An updated resource assessment for the newly-available ANWR coastal plain, also part of the Interior directive, should be on its way soon as well.

However, Houseknecht and others have noted that the lack of any new geologic information for the costal plain will make it difficult for scientists to make drastic improvements on the latest ANWR assessment, done in 1998. That one estimates a mean undiscovered resource of 7.6 billion barrels and was done mostly using data collected in the mid-1980s.

More than 7 billion barrels of the new oil estimate is expected to be in the northeast corner of the NPR-A, most of which was closed to oil and gas leasing by the Bureau of Land Management in the 2013 NPR-A Integrated Activity Plan. The area was put off limits to industry to protect subsistence activities and critical habitat for the Teshepuk Lake caribou herd.

Environmental groups speculated when Zinke directed the assessment that it would be used as justification to open the protected area to industry.

The BLM — now overseen by former Alaska Natural Resources Commissioner and current Assistant Interior Secretary Joe Balash — offered up all of the areas open to leasing in the NPR-A in its Dec. 6 lease sale.

Regardless of the changes to the speculative assessments, ConocoPhillips has been plugging away on its Greater Mooses Tooth projects to the south of the currently set aside Teshepuk Lake area in the reserve.

GMT-1, which the company is building this winter, is expected to start producing oil late next fall. It would be the first production on true NPR-A lands. The company’s CD-5 development started producing in 2015 but is on Native corporation in-holdings within the reserve boundary.

The GMT-2 project, now in permitting, is planned to come online in a few years. Each of the roughly $1 billion projects is expected to produce about 30,000 barrels per day at its peak.


01/03/2018 - 10:29am