AOGCC seeks Prudhoe reservoir study

Kristen Nelson

John Norman, chairman of the Alaska Oil and Gas Conservation Commission, reviewed a $1.2 million fast-tract supplemental budget request for House Finance Feb. 25. The request, one of a number related to the proposed North Slope gas pipeline, is for reservoir studies and depletion plan evaluations, and is being fast tracked to make sure the commission can complete its work in a timely manner and not delay other parts of the project, Norman said.

There is a conservation order in place for Prudhoe Bay, he said, which establishes a gas off-take rate of 2.7 billion cubic feet a day from the Prudhoe Bay reservoir, based on studies done in 1977.

Since major gas sales appear to be imminent, Norman said, with much higher off-take rates proposed, it appears time to bring the conservation order up to date.

The commission’s responsibility is “to make sure that the reservoir is developed in a responsible way” so that there is no waste of hydrocarbons. Prudhoe Bay is the largest reservoir in North America, and the commission needs “sound science to act as the underpinning whenever an allowable off-take rate is established.” If the gas off-take rate is too high, he said, substantial amounts of oil would be left in the ground, and because of the size of the reservoir that could amount to hundreds of millions of barrels of oil. The commission is beginning hearings March 3, Norman said, and owners of the gas resource and other experts will offer testimony.

Norman said the commission is also asking that this funding come from the general fund. Most of the commission’s work, he said, is funded “in a pro-rata manner based upon production levels of all of the companies that have production in the state of Alaska.”

Prudhoe Bay, the focus of the proposed depletion studies and reservoir modeling, is owned “essentially 99 percent … by three companies,” and it would be inequitable to argue that other companies should bear that cost, hence the request that this appropriation come from the general fund.