|
EIA looks at ANWR oil potential after BLM ordered to offer leases
Alan Bailey Petroleum News
Following the opening of the Arctic National Wildlife Refuge 1002 coastal plain area to oil and gas activities, the Energy Information Administration has had a go at forecasting what that opening might mean in terms of future additions to U.S. oil output. Essentially, an EIA analyst has taken the U.S. Geological Survey’s assessment of undiscovered but technically recoverable oil in the 1002 area and translated that into production rates from possible oil fields, and the timing with which that production may take place.
880,000 barrels per day The conclusion is that production is unlikely to start before 2031 and, in a median case, ANWR may cumulatively add 3.4 billion barrels to total U.S. output. Peak production of 880,000 barrels per day is possible around 2041.
However, given the age and paucity of data for assessing ANWR oil potential, there is major uncertainty in any prediction. The USGS assessment indicated potential recoverable oil resources in the range of 5.7 billion to 16.0 billion barrels. The low end of that range translates to peak production of nearly 560,000 barrels per day in 2039, while the high end peaks at 1.2 million barrels per day in 2044, EIA says.
The EIA report says that ANWR development and production appear economically viable across the entire range of possible volumes. However, given some of the constraints around the characteristics of the oil that U.S. West Coast refineries can process, some of the ANWR oil may have to be exported to Asia.
Oil field size A critical factor in the rate of ANWR oil production is the size of the oil fields: the larger the field, the higher the potential production rate, the EIA report says. The EIA analyst used the range of potential oil field sizes that the USGS had assessed and assumed that the largest fields would be developed first, with new fields being sequentially developed at two-year intervals. A field would take three to four years to reach peak production and maintain peak rates for another three to four years before declining until production ceases to be profitable.
Congress has ordered two ANWR lease sales, with the first sale to take place within four years and the second within seven. Prior to the first lease sale the Bureau of Land Management, the agency responsible for administering ANWR oil and gas activities, would need to complete an environmental impact statement. Some collection and analysis of seismic data would also be needed.
Consequently, the EIA has assumed that the first lease sale would take place in 2021. The agency then assumes that first ANWR oil production might take place 10 years after that lease sale. That would allow time for exploration activities, field appraisal, permitting and field development. However, this timeline does not take into account the potential for protracted legal battles over the final EIS, the approval of seismic surveying or the approval of development plans, the EIA report says.
Impact on U.S. trade balance By increasing overall U.S. oil production, production from ANWR would in turn reduce U.S. oil imports. That in turn would improve the U.S. balance of trade. In the mean case, ANWR production could reduce expenditure on imported crude oil and liquid fuels by around eight percent, or $409 billion in 2017 dollars, with a possible range of $200 billion to $595 billion in that expenditure reduction, the EIA report suggests.
See ANWR story in Oil Patch Insider in this issue.
- ALAN BAILEY
|
