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Vol. 14, No. 23 Week of June 07, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Arctic oil, gas riches

USGS: 30 percent of undiscovered gas and 12 percent of oil in the Arctic

Alan Bailey

Petroleum News

The U.S. Geological Survey has published the detailed results of its recent Arctic oil and gas assessment. The agency had issued the general conclusions of its assessment in the summer of 2008, as reported in Petroleum News at that time. But the agency, in an article featured in the May 29 edition of the journal “Science,” has now released its final assessment findings, including evaluations of the uncertainty associated with the resource estimates.

83 billion barrels

USGS says that in total there may be 83 billion barrels of undiscovered, technically recoverable oil and 1,550 trillion cubic feet of undiscovered, technically recoverable natural gas in the Arctic, volumes that the agency says represent 13 percent of worldwide remaining undiscovered oil and 30 percent of remaining undiscovered gas, and which lie within a total area of land and ocean amounting to about 6 percent of the total area of the Earth’s surface. The resource volumes published in Science differ slightly from the volumes that USGS published in 2008, a statistical quirk of the agency now quoting median volumes rather than mean volumes, Donald Gautier, one of the Science article’s authors, told Petroleum News June 1.

To put the single-number resource volume estimates into perspective, given the uncertainties in the resource assessment, USGS has published ranges of volumes that are thought to have a 90 percent probability of existing in the Arctic. Those ranges are 44 billion to 157 billion barrels for oil, and 770 tcf to 2,990 tcf for gas.

USGS has also estimated a mean volume of 5.3 billion barrels of natural gas liquids.

And the assessment points to northern and Arctic offshore Alaska as a premier region in which to search for new oil; this region may also hold large quantities of gas, although the preponderance of undiscovered gas may lie offshore northern Russia.

69 units

USGS conducted its assessment by delineating 69 areas, known as assessment units, each encompassing an Arctic region with distinctive geology and with geologic characteristics conducive to the formation of oil and gas. USGS geologist Dave Houseknecht told Petroleum News in July 2008 that the assessment units are rather broader than areas such as the National Petroleum Reserve-Alaska that have been assessed by USGS in the United States — the broad assessment units in the Arctic assessment reflect the relatively low resolution inherent in evaluating a region the size of the whole of the Arctic.

Using available geologic data from a variety of sources, the USGS geologists characterized the geology of each assessment unit, and then assessed the possible sizes and quantities of oil and gas pools in each unit by comparison with analogous worldwide geologic settings where oil and gas have been found. The scientists discounted from further evaluation those Arctic assessment units thought to only contain individual hydrocarbon accumulations of less than 50 million barrels of oil equivalent.

Potential for significant find

One upshot of this screening of the assessment units was a finding that the mean probability of an accumulation size more than 50 million barrels of oil equivalent across all assessment units is 41 percent, a figure somewhat lower than the average of 50 to 60 percent for similar regions worldwide. That difference reflects a view that the petroleum potential of Arctic basins is a little lower than that of similar basins elsewhere, a view that relates to subtle differences between the geology of the Arctic and the geology of other regions, Gautier told Petroleum News.

By combining estimated accumulation numbers, sizes and hydrocarbon types for each of the assessment units that remained after the accumulation-size cutoff, the USGS team derived estimated total volumes of oil, gas and natural gas liquids for each unit, together with estimated ranges of volume that have a 90 percent probability of being present. The team then combined all of the data to derive total estimates and confidence intervals for the whole of the Arctic.

In doing all of this, the team found that 60 percent of the total oil resource is likely to exist in just six assessment units, with the Arctic platform, the unit that encompasses the northern Chukchi Sea, the North Slope of Alaska and the Alaska Beaufort Sea, standing out as particularly prospective, with a mean estimated resource of 28 billion barrels of oil and a 90 percent probability of holding somewhere between 14 billion and 47 billion barrels.

“The Alaska platform is already a well-known petroleum-producing area; new discoveries there could maintain the flow of Alaska oil for years to come,” the Science article says.

In terms of oil, the offshore region off and to the west of the Mackenzie Delta comes second to the Arctic platform with an estimated mean of 6 billion barrels of oil and a possible range of 2.5 billion to 12.5 billion barrels. The north Barents basin (estimated mean of 5.3 billion barrels), the Yenisey-Khatanga basin (estimated mean of 5.2 billion barrels), the northwest Greenland rifted margin (estimated mean of 4.9 billion barrels) and the north Danmarkshavn salt basin off northeast Greenland (estimated mean of 4.3 billion barrels) constitute the remainder of the top six assessment units.

More gas

On a barrels-of-oil-equivalent basis, the USGS estimated volume for undiscovered Arctic gas is more than three times the estimated volume for oil. Not only that, but the largest likely undiscovered Arctic gas accumulation may be nearly eight times the size of the largest likely oil accumulation, thus making gas development more likely to be viable than oil development.

Two-thirds of the undiscovered gas is likely to exist in four assessment units: the south Kara Sea (estimated mean of 607 tcf), the south Barents basin (estimated mean of 184 tcf), the north Barents basin (estimated mean of 117 tcf) and the Alaska platform (estimated mean of 122 tcf). And with the first three of these units lying off the north coast of Russia, and with the south Kara Sea by itself thought to hold almost 39 percent of the undiscovered Arctic gas, Russia likely has rights to a substantial portion of undiscovered gas resources north of the Arctic Circle.

“Although substantial amounts of gas may be found in Alaska, Canada and Greenland, the undiscovered gas resource is concentrated in Russian territory, and its development would reinforce the preeminent strategic resource position of that country,” the Science article says.

However, it is important to understand that with few wells drilled and little seismic data available in many of the areas included in the USGS assessment, the assessed volumes of oil and gas are subject to huge uncertainty.

“I would emphasize that this is a very uncertain area and these are probabilistic estimates with a great deal of uncertainty associated with them,” Gautier said when the initial assessment results were announced in 2008.

And, being estimates of resources theoretically recoverable using conventional drilling and production techniques, the estimates do not take into account the technical difficulties and economic challenges of operating in hostile weather with ice-laden water, perhaps far offshore.

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