Conoco’s Bowles says gas pipeline drives exploration

Kristen Nelson

Petroleum News Editor-in-Chief

North Slope oil producers have been saying for some time that a gas pipeline would produce a gas exploration industry in Alaska.

The initial price tag, just to fill in the needed 50 trillion cubic feet for the proposed line, is about $15 billion, Jim Bowles, president of ConocoPhillips Alaska, said Nov. 16.

With 35 tcf known (24 tcf at Prudhoe, 8 tcf at Point Thomson and 3 tcf at known fields yet to be developed) and a proposed 4.5 billion cubic foot a day pipeline that will require 50 tcf over its first 30 years, there is a 15 tcf shortfall, Bowles told the Resource Development Council’s annual conference.

It costs about a dollar just to explore for and find a barrel of oil, the equivalent of about 6,000 cubic feet of natural gas, and when you calculate that out for a shortfall of 15 tcf, the cost just to find the additional gas is on the order of $2.5 billion, he said.

But to develop that gas, build facilities and drill all of the wells, “you’re probably looking at something more on the order of a billion dollars per tcf,” so a 15 tcf shortfall is going to require an investment of some $15 billion to fill the pipe for 30 years.

Broader exploration, ‘indifferent’ to whether oil or gas found

Exploration on the North Slope has been focused around existing facilities at Prudhoe Bay and Kuparuk, he said.

Exploration needs to step out, particularly in the National Petroleum Reserve-Alaska, but there will probably be more gas found there, “so that’s where the gas pipeline really ends up being a facilitator,” Bowles said.

ConocoPhillips Alaska has announced discoveries in the greater Moose’s Tooth area in NPR-A, he said, and for the Carbon, Rendezvous and Spark wells there were high gas-oil ratios, with some wells testing at rates of 25 million cubic feet a day.

Once there is a gas pipeline in place, “we can see efforts moving forward as far as development” at greater Moose’s Tooth, he said. It’s “a known resource base, waiting to be developed based on a market for gas.”

ConocoPhillips and its partners Anadarko Petroleum and Pioneer Natural Resources have “a very large acreage position in NPR-A,” and expect to find more gas in NPR-A, “and as we see a gas line coming closer we can expect to see more and more exploration activity ... looking for those big gas discoveries.”

The Foothills, he said, is also gas-prone, and “could spawn off a lot of activity once that gas pipeline is in place.”

The Minerals Management Service believes there is a natural gas resource base of some 32 tcf in the federal waters of the Beaufort Sea.

“Of course there’s a lot of oil potential in the Beaufort also,” Bowles said, but once there is a gas pipeline, explorers can “go into an area and explore without the risk of finding gas and not having a potential market for it.”

Access to the coastal plain of the Arctic National Wildlife Refuge is a question mark, “but one thing’s for certain: If we have a gas pipeline in place, you’ve got exploration that can occur that’s indifferent as to whether or not it discovers oil or large gas resources.”

Heavy oil and satellites drive investment

So is satellite development. With 10 to 12 satellites developed primarily over the last 10 to 12 years at Prudhoe Bay and Kuparuk.

Nanuq and Fiord are under development at Alpine, with peak production of 35,000 bpd expected in 2008-09.

West Alpine will be the next satellite field there, he said, “and then look out beyond that.”