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Alaska still has plenty of oil and gas USGS geologist overviews potential hydrocarbon resources that remain undiscovered and undeveloped in various parts of the state Alan Bailey Petroleum News
With plentiful oil and gas resources but difficult development economics and controversial environmental issues, Alaska presents something of a challenge for oil and gas explorers. But the state and its offshore seas still hold huge potential volumes of undiscovered and undeveloped resources.
On Sept. 15, U.S Geological Survey geologist Dave Houseknecht, an expert on Alaska petroleum geology, spoke to the Alaska-Japan LNG Opportunity Summit about the state’s oil and gas potential.
Arctic potential Commenting that the preponderance of Alaska’s hydrocarbon resources lie in the state’s Arctic region, Houseknecht referenced a 2008 study that the USGS had carried out, estimating the volumes of oil and gas that may remain undiscovered across the whole of the Arctic. Based on analyses of the various geologic basins that lie around the Arctic region, the agency’s scientists had concluded that northern Alaska presents the most promising Arctic region for oil exploration. Undiscovered natural gas in the Arctic, on the other hand, is likely concentrated in both the Russian and U.S. sectors of the region, Houseknecht said.
But much of the Alaska Arctic undiscovered oil resource lies offshore, a circumstance that has led to some impediments to Alaska exploration, especially on the outer continental shelf, Houseknecht commented. In addition, some regions, such as the Arctic National Wildlife Refuge, or ANWR, have high oil potential but are off limits to oil exploration, Houseknecht said.
Stranded gas And, while the discovery of the massive Prudhoe Bay oil field on Alaska’s North Slope resulted in the construction of the trans-Alaska oil pipeline for carrying oil to market, the economic disparities between Arctic oil and gas have left the gas as a stranded resource. In the absence of a natural gas market, a major natural gas discovery on the North Slope is tantamount to a dry hole, Houseknecht said.
While cumulative oil production from the North Slope has now reached a level of around 16.5 billion barrels, gas production, used for local consumption on the Slope, has only amounted to about 7.6 trillion cubic feet - most of the gas produced along with the oil has been re-injected into the field reservoirs and remains part of the gas reserve base in northern Alaska, Houseknecht said.
The U.S. Geological Survey and the Bureau of Ocean Energy Management have estimated that there may be about 17 billion barrels of technically recoverable oil remaining undiscovered onshore in northern Alaska; about 15 billion barrels of undiscovered oil on the Chukchi shelf; and about 8 billion barrels of undiscovered oil on the Beaufort shelf. The corresponding figures for undiscovered natural gas are 99 trillion cubic feet onshore, 76 trillion cubic feet on the Chukchi shelf and 27 trillion cubic feet on the Beaufort shelf.
Cook Inlet The Cook Inlet basin, in Southcentral Alaska, the state’s other producing oil and gas province, has estimated undiscovered oil resources of 1 billion barrels in state lands and a further 1 billion barrels in the federal part of the basin, Houseknecht said. Estimated undiscovered gas resources amount to 14 trillion cubic feet, he said. To date the basin has produced about 1.4 billion barrels of oil and about 7.8 tcf of gas, with the gas production number reflecting the fact that Cook Inlet gas has enjoyed access to markets, Houseknecht said.
Although there are published estimates of undiscovered oil and gas for various parts of Alaska, commercial confidentiality issues make it difficult to obtain estimates for oil and gas reserves, the volumes of resource that have been proved to exist and that can be viably produced. It appears that the reserves volumes for Alaska as a whole lie in the ranges of 3.4 billion to 5 billion barrels of oil and 28 tcf to 36 tcf of gas, with the preponderance of these reserves being in the northern part of the state, Houseknecht said.
Other resources Houseknecht said that, in addition to the continued production of oil from traditional field reservoirs, companies operating on the North Slope have been starting to develop relatively impermeable sand reservoirs using techniques associated with shale oil development in the Lower 48, such as horizontal drilling and massive “fracking” techniques.
USGS has assessed the possibility of developing shale oil in northern Alaska and has concluded that there may be 1 billion barrels of extractable oil of this type, with perhaps 40 tcf of shale gas. But, but because of difficult economics, development of these resources may come after the development of more conventional hydrocarbons, Houseknecht said.
There is also a massive North Slope resource in the form of perhaps 37 billion barrels of heavy oil, a form of natural bitumen. Two of the larger companies operating on the North Slope have been trying to find viable ways of developing this resource, but with mixed success, Houseknecht said. However, as technology evolves, and if oil prices remain high or increase, this challenging resource may enter the oil production profile for northern Alaska, he said.
Coalbed methane, natural gas that can be extracted from coal seams, is common in many parts of Alaska but is likely to be of value more as a rural energy source rather than as a driver for major gas production, Houseknecht said. Another potential source of gas, sometime out in the future, is gas hydrate, an ice-like material that exists onshore and offshore the North Slope.
Arctic exploration opportunities An assessment of the geology of northern Alaska suggests that oil and gas are likely to be found under a broad area of the Chukchi Sea shelf, in a zone along the northern North Slope and under the relatively nearshore waters of the Beaufort Sea. However, the deeper basins onshore to the north of the Brooks Range and further offshore under the Beaufort Sea are more likely to contain just gas.
And there is plenty of opportunity for exploration. The exploration well density in northern Alaska is just three wells per thousand square miles, Houseknecht said. That compares with a well density of 250 per thousand square miles in Wyoming, a state that would fit between Prudhoe Bay and the Burger prospect, a promising prospect in the Chukchi Sea, he said.
Almost all drilling activity in northern Alaska takes place in and around the area of existing oil development in the central North Slope. This focus of activity reflects the way in which the distance from any existing oil infrastructure has such a huge impact on the economics of oil development in northern Alaska, Houseknecht said.
Cook Inlet is different The petroleum geology of Cook Inlet is very different from that of the North Slope and is closely related to the fact that the petroleum basin underneath the inlet has formed as the Pacific plate, one of the massive plates that form the Earth’s crust, slides under the Alaska continent. Oil and associated gas, both formed from the heating of hydrocarbon source rocks, are found in the deeper rock reservoirs of the basin, while shallower reservoirs host only natural gas, formed from the microbial decomposition of coal and other organic material.
Although current oil and gas fields are in state land in and around the upper Cook Inlet, the more northerly part of the inlet, there is also oil and gas potential on the federal outer continental shelf in the more southerly lower Cook Inlet. Renewed interest in the development of the Cosmopolitan oil and gas prospect, offshore the southern Kenai Peninsula, appears to bode well for interest in the lower Cook Inlet, where the Bureau of Ocean Energy Management will be holding a lease sale in a couple of years, Houseknecht said.
Other basins There are several other basins with hydrocarbon potential in other parts of Alaska, including the Susitna basin that extends north from the Cook Inlet basin and the Nenana basin in the Alaska Interior. The Alaska Department of Natural Resources and USGS have been collaborating on researching the oil and gas potential of the Susitna basin. Doyon Ltd., the Native regional corporation for the Alaska Interior, has been exploring the Nenana basin and has reported positive indications from a couple of wells that it has drilled. Wells in the Kotzebue and Selawik basins in northwest Alaska suggest that these basins are gas prone, with potential gas resources to supply local communities.
But northern Alaska, offshore and onshore, with an estimated nearly 40 billion barrels of oil and more than 200 tcf of gas, remains in the Alaska driving seat as a world-class resource. There are few places on Earth where it is possible to find this scale of resource either on land or beneath water as shallow as that of the Chukchi and Beaufort seas, Houseknecht said.
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