Most Recent Action   Leasing Activities   USGS Assessment 

Update on National Petroleum Reserve in Alaska (6-13-02)

Domestic energy production has gained wide-spread interest in both Congress and the Administration. Many people in Washington are calling on the nation to increase its investment in domestic energy resources to enhance national security. High energy prices in 2001, rolling blackouts in the West, the attacks of September 11th, and the collapse of industry giant Enron have kept energy issues in the limelight. Policy debate normally focuses on the Arctic National Wildlife Refuge (ANWR), with relatively little attention paid to the National Petroleum Reserve in Alaska (NPRA). NPRA is a 23 million acre site on the northern coast of Alaska. In 1999 a federal lease sale was held in the northeastern region of the reserve and a number of exploration wells have been drilled that encountered oil and natural gas. The map below shows both NPRA and ANWR in relationship to Prudhoe Bay -- the central focus of petroleum exploration -- and the Trans-Alaskan Pipeline System (TAPS).

Most Recent Action
On May 16th, the U.S. Geological Survey (USGS) released its re-assessment of the undiscovered oil and natural gas resources within the National Petroleum Reserve in Alaska (NPRA). The last assessment was completed in 1980 and reported that the technically recoverable oil in the area on federal lands totaled between 0.3 and 5.4 billion barrels of oil (BBO). According to the new assessment, which includes an economic analysis of the technically recoverable resources, there is between 1.3 and 5.6 BBO that are considered economically recoverable at market prices between $22 and $30 per barrel. It also estimates that there is between 39.1 and 83.2 trillion cubic feet (TCF) of natural gas on federal lands within NPRA, but that the economic viability of these resources depends on transporting them to markets in the lower 48 states. According to the USGS fact sheet (045-02), the "increase in estimated oil resources is largely the result of the recognition of new plays based on oil accumulations recently discovered just east of NPRA." Included in the assessment is a comparison of the resources available in NPRA (using the 2002 assessment figures) and ANWR (using the 1998 assessment figures) that will be of great political interest as Congress begins to craft compromise energy legislation this summer. Additional details on the USGS assessment is available below. A Geotimes "web extra" on the assessment is available at http://www.agiweb.org/geotimes/may02/WebExtra0517.html.



USGS Fact Sheet 045-02

Leasing Activities in NPRA
In 1923, President Harding set aside a 23 million acre petroleum reserve in Alaska to provide an emergency oil supply for the US Navy. The area, Naval Petroleum Reserve No. 4, was placed under the management of the Department of the Interior (DOI) and renamed as the National Petroleum Reserve - Alaska (NPRA) in 1976 by the Naval Petroleum Reserves Production Act. DOI sold several leases in the 1980s, but only two exploratory wells were drilled. Neither wells resulted in industry developing any petroleum resources. In May 1999, the Bureau of Land Management (BLM) held another federal lease sale in the northeastern section of NPRA that resulted in 133 leases. Several exploratory wells have been drilled in these areas and many have encountered oil and gas resources. Additional wells are scheduled to be drilled in 2002. This northeastern section of NPRA is adjactant the Alpine oil field that was announced in 1996. The Alpine field is estimated to contain about 429 million barrels of recoverable oil.

Both BLM and the Minerals Management Service (MMS) are moving ahead with plans for future leasing activities in NPRA. BLM opened another NPRA lease sale in June 2002. MMS, which oversees oil and gas production from the outer continental shelf, announced in the September 19, 2001, Federal Register its consideration of three lease sales in the Beaufort Sea that is off the northeastern section of NPRA. Preleasing activities include a call for information and a Notice of Intent to Prepare an Environmental Impact Statement (EIS). These preparations would allow MMS to hold a lease sale in fall 2003.


USGS Assessment

In response to increasing interest in domestic energy production, the U.S. Geological Survey (USGS) has released a new assessment of the undiscovered oil and natural gas resources available in the National Petroleum Reserve in Alaska (NPRA). The new report builds upon the assessment completed in 1980 by using current exploration and development strategies and the economic analysis of developing these resources. Unlike the previous assessment, the lastest one considered resources situated in the offshore boundary between state and federal jurisdiction. As the assessment fact sheet notes: "Thus, in addition to Federal lands of NPRA, this assessment includes resources beneath State waters offshore from NPRA and beneath Native lands within the NPRA boundary." The assessment estimates (Table 1) that there is between 5.9 and 13.2 billion barrels of oil (BBO) of technically recoverable oil and between 39.1 and 83.2 trillion cubic feet (TCF) of natural gas on federal lands within NRPA. Additional information on the latest assessment is available at the USGS Energy Resources Program's Energy in Alaska website, which includes a link to the assessment fact sheet.

Table 1: U.S. Geological Survey estimates of volumes of technically recoverable
oil and nonassociated gas in the NPRA study area.


USGS Fact Sheet 045-02

The assessment methodology used is similar to that used in previous USGS assessments, whereby 24 petroleum plays -- described as "a volume of rock that contains similar geological parameters that determine petroleum potential -- are defined. The plays are then reviewed to estimate the number and size of petroleum accumulations. USGS restricted the size of accumulations to those larger than 50 million barrels of in-place oil or 250 billion cubic feet of technically recoverable natural gas. The size restriction was chosen because smaller accumulations are not typically economical on the Alaskan North Slope. Also taken into account in the assessment's numbers is a recovery factor to go from an in-place figure to a technically recoverable number. As Figure 1 shows, these factors were then used to determine a 95% and 5% probability, which is considered a reasonable minimum and maximum volume for technically recoverable resources. The assessment went one step further by including an economic analysis to provide figures of economically recoverable petroleum at different prices per barrel.

Figure 1: Schemic graph illustrating petroleum volumes and probablilities. Curves
represent categories of oil assessment. How one reads the graphy is illustrated by
the blue and orange lines projected to the curve for economically recoverable
oil -- in this example, there is a 95% chance (probablity F95) of at least volume V1
of economically recoverable oil, and there is a 5% chance (probablity F05) of
at least V2 of economically recoverable oil.


USGS Fact Sheet 045-02

As part of the assessment, the USGS looked not only at the resources within NPRA but also at how these figures compared to estimates for oil and gas in the 1002 Area of the Arctic National Wildlife Refuge (ANWR). As Table 2 shows, the technically recoverable resources available in NPRA and ANWR are similar in quantity. "The similarities between these estimates may be misleading, however, because of differences in accumulation sizes (the ANWR study are is estimated to contain more acculumations in larger size classes) and differences in assessment area (the NPRA study area is more than 12 times larger than the ANWR study area)." At market prices of less than $35 per barrel, the larger accumulations and proximity to existing infrastructure make the resources within ANWR more economically recoverable than those in NPRA. But these differences are moot when the market prices goes above $35 per barrel.

Table 2:Comparison of the 1998 ANWR and 2002 NPRA U.S. Geological
Survey assessments. Volumes are techncally recoverable oil.


USGS Fact Sheet 045-02

The new assessment estimates that there is between 5.9 and 13.2 billion barrels of undiscovered, technically recoverable oil within NPRA. It suggests that the majority of these petroleum plays will be in the northern section and in moderate sized accumulations. "Over a range of market prices between $22 and $30 per barrel, between 1.3 and 5.6 billion barrles of oil are estimated to be economically recoverable, on the basis of the mean estimate of technically recoverable oil volumes." As for natural gas, the assessment estimates that there is between 39.1 and 83.2 trillion cubic feet of undiscovered nonassociated natural gas resources within NPRA, but that the economic viability of these resources will depend on developing an infrastructure in the region to transport the natural gas to market.



Sources: E&E News Publications, Department of the Interior, Greenwire, U.S. Geological Survey, and Washington Post.

Please send any comments or requests for information to the AGI Government Affairs Program at govt@agiweb.org.

Contributed by Margaret A. Baker, AGI Government Affairs Program

Posted: June 13, 2002


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