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Vol. 13, No. 30 Week of July 27, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

90 billion barrels

USGS estimates 90 billion barrels of oil and 1,670 tcf of gas in the Arctic

By Alan Bailey

Petroleum News

On July 23 the U.S. Geological Survey released the long-awaited results of its appraisal of potential Arctic oil and gas resources.

“The area north of the Arctic Circle has an estimated 90 billion barrels of undiscovered, technically recoverable oil, 1,670 trillion cubic feet of technically recoverable natural gas and 44 million barrels of technically recoverable natural gas liquids in 25 geologically defined areas thought to have potential for petroleum,” USGS said in announcing the completion of its assessment. “… These resources account for 22 percent of the discovered technically recoverable resources in the world.”

30 percent of gas worldwide

Worldwide, the estimated Arctic resources represent 13 percent of undiscovered oil, 30 percent of undiscovered natural gas and 20 percent of undiscovered natural gas liquids, with about 84 percent of the resource occurring offshore, USGS said.

“Before we can make decisions about our future use of oil and gas and related decisions about protecting endangered species, Native communities and the health of our planet, we need to know what’s out there,” said USGS Director Mark Myers. “With this assessment, we’re providing the same information to everyone in the world so that the global community can make those difficult decisions.”

USGS scientist Brenda Pierce told Petroleum News July 24 that the Arctic assessment forms part of a USGS world petroleum project. Following publication of results from that project in 2000 the agency realized that the study had only included a few Arctic basins, she said.

“The Arctic clearly was one area in which we knew we needed to focus in order to really understand the world’s petroleum endowment because there is great petroleum potential in the Arctic,” Pierce said. “So, for the past few years our world petroleum project has focused solely on the Arctic, gathering data, building partnerships, getting the information necessary to conduct an assessment.

Three provinces

USGS thinks that more than half the undiscovered Arctic oil resources occur in just three provinces — Arctic Alaska, the Amerasia basin and the East Greenland rift basin, with 70 percent of the gas resource occurring in the West Siberian basin, the East Barents basin and Arctic Alaska.

Arctic Alaska comes at the top of the list by a large margin in terms of potentially recoverable oil resources, with an estimate of nearly 30 billion barrels. In terms of natural gas, Russia’s west Siberian basin comes out on top with an estimate of 651 tcf; the east Barents basin (the Russian side of the Barents Sea) comes up next with 317 tcf; and Arctic Alaska is third with 221 tcf.

But Donald Gautier, a member of the Arctic appraisal assessment team, cautioned that, with little drilling or seismic surveying in many of the Arctic basins, the new resource estimates are subject to considerable 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.

And Pierce said that, although the estimates represent oil that could be extracted using current technology, the assessment did not take into account the technical difficulties of operating in deep water or sea ice.

“We assumed these resources are recoverable in sea ice and despite water depth,” Pierce said.

Assessment units

USGS says that the Arctic assessment involved assembling available geologic information and then defining assessment units — mapable volumes of rocks with common geologic traits. Because of the scarcity of seismic and well data in many basins, the USGS scientists found worldwide analogues to the assessment units — geologic settings with similar characteristics — to estimate the probabilities of oil and gas accumulations in the Arctic basins. By adding the estimates for individual assessment units, the scientists could obtain an overall resource estimate for each province. The scientists also estimated likely accumulation sizes and did not assess quantitatively eight provinces where there appeared to be less than a 10 percent probability of a significant accumulation (defined as 50 million barrels of oil equivalent or more).

However, USGS has not yet published the probability distribution data that would give an indication of the level of certainty of the assessment results. Pierce told Petroleum News that USGS is still evaluating the probability distributions of the various assessment units and expects to present the results of this evaluation at the International Geological Congress in August.

Arctic Alaska

The Arctic Alaska province that figures high in the oil and gas resource estimates includes the whole of northern Alaska, most of the Chukchi Sea shelf and quite a large section of the Beaufort Sea shelf. However, USGS has included part of the Beaufort Sea shelf, as defined by bathymetry, within what USGS terms the Amerasia basin province, a province that figures in the top three for potential oil resources. The Amerasia basin province includes extensive areas of continental margin north of Alaska and along the Canadian side of the Arctic Ocean, as well as the Mackenzie Delta, USGS geologist Dave Houseknecht told Petroleum News.

USGS used geologic distinctions, rather than bathymetry or political boundaries, to define the provinces in the assessment, Houseknecht explained. As a consequence there are boundary differences between the USGS Arctic provinces and the provinces covered by some existing petroleum assessments. For example, both the Arctic Alaska province and the Amerasia basin province overlap the U.S. Minerals Management Service Beaufort shelf assessment province.

Houseknecht also stressed that, to achieve consistency across the whole of the Arctic, USGS had used very broadly defined assessment units, even in areas such as northern Alaska where USGS and MMS have published much more detailed assessments. And the 50 million-barrel cutoff point for a “significant accumulation” is relatively high.

“This should be perceived as a lower resolution look at the global Arctic,” Houseknecht said.

Specific assessments such as the MMS Beaufort and Chukchi Sea assessments, and the USGS assessments of different sections of northern Alaska, provide detailed evaluations of multiple petroleum plays and the associated resource potential in the region.

“We continue to defer to the preceding assessments by MMS and USGS for the details of Arctic Alaska resource potential,” Houseknecht said.

Worldwide perspective

But the figure of 22 percent of worldwide undiscovered resources from the new USGS Arctic assessment does bring into perspective the figure of 25 percent that many people have bandied about for Arctic oil and gas resources. The 25 percent figure came from an assessment of seven oil and gas basins that had been broadly described as “Arctic” in the 2000 USGS world petroleum project report, but which contained substantial tracts of land that were not, strictly speaking, within the Arctic.

On the other hand, Professor Anatoly Zolotukhin, deputy rector on international affairs at Gubkin Russian State University of Oil and Gas, said in April that the Russians have estimated that the Russian Arctic Ocean shelf by itself could hold 25 percent of the world’s remaining oil and gas resources.

Of course, no one will really know how much oil and gas exists in the Arctic unless people drill holes in the ground. But whatever the real volumes are, they certainly look to be large.

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