OTC: Alaska Would Restore Oil Pipeline Volumes

by OGJ editors, OGJ, Houston, May 4, 2011
The state of Alaska is putting final touches on a plan to attract investment in order to restore trans-Alaska oil pipeline throughput to 1 million b/d within 10 years.

Alaska’s North Slope is still considered sparsely explored, said Daniel S. Sullivan, commissioner of the state Department of Natural Resources. The trans-Alaska oil pipeline has shipped more than 16 billion bbl since 1977, but the ANS and adjacent offshore areas are still lightly drilled.

For example, about 500 exploratory wells have been drilled in an ANS area the size of the state of Wyoming [sic], where more than 19,000 wells have been drilled, Sullivan said May 4 in Houston during the Offshore Technology Conference. Alaska’s other main producing basin, Cook Inlet, is also considered to be underexplored, he said.

The pipeline has a capacity of slightly more than 2 million b/d, which was reached in 1988. But with declines at giant Prudhoe Bay field [please see remarks below -- D.R.], Alaskan oil production had fallen to 628,000 b/d last month (OGJ, May 2, 2011, p. 133).

The state’s five-part plan starts with ensuring that Alaska has a globally competitive investment climate, Sullivan said. The state plans to streamline permitting by enacting statutory and regulatory reforms. Specifics haven’t been released.

The state will enact incentives to facilitate the next phase of ANS development, Sullivan said. That work will involve offshore and onshore heavy and viscous oil development, shale oil, and smaller pools of conventional oil and gas.

Alaska is one of a group of coastal states that seeks to improve liaison with federal agencies, Congress, and the president to promote constructive investment (OGJ Online, May 4, 2011).

Sullivan, who was Alaska’s attorney general until December 2010, noted that Alaska’s constitution provides for the maximization of the state’s natural resources. [Full story]

(Prudhoe Bay field, discovered in 1968, came on stream in 1977, rapidly increasing output until the field's maximum rate was reached in 1979 at 1.5 million barrels a day. This rate was maintained until early 1989. Field's production declined to 1.1 million barrels a day in December 1993 and further to 1 million barrels a day at the beginning of 1995. Prudhoe Bay produced an average of 855,000 barrels a day during the 1996. Production totaled approximately 475,000 barrels a day on January 1, 2004, and continued its decline. Nevertheless, the North Slope’s Prudhoe Bay field today is still the largest oil field in United States, producing nearly 300,000 barrels a day in 2010---please see my post, including remarks and map of Alaska/TAPS, here. Alaska is the second-ranked oil-producing State after Texas, when output from the Federal Outer Continental Shelf/OCS is excluded from the State totals. Alaska produced 599,000 barrels of crude oil per day in 2010, with 97% of this coming from the Alaska's North Slope/ANS. U.S. crude oil production totaled 5.51 million barrels per day in 2010. Thus, Alaska accounted for about 11% of U.S. crude oil production in 2010---please see EIA figures, here. In 1988 it was c. 25% of total U.S. crude oil production. For the latest trends in U.S. oil production, please see my post "Domestic Oil Production Reversed Decades-Long Decline in 2009 and 2010," here. -- D.R.)