Alaska oil search proceeds outside ANWR spotlight
Date: 12-Mar-02
Country: USA
Author: Yereth Rosen
Drilling teams have already found significant pools of untapped oil there. Oil companies are poised for more exploration. And the petroleum potential is so great that the federal government is planning new oil and gas leasing.
The site is not northeast Alaska's Arctic National Wildlife Refuge (ANWR), the subject of a bitter battle between environmentalists and drilling supporters. It is the National Petroleum Reserve-Alaska (NPR-A), a sprawling 23 million-acre piece of federal land that lies far west of the Arctic Refuge and, apparently, well out of the national spotlight.
The largely undeveloped petroleum reserve has long been in ANWR's shadow, partly because its remoteness, failed exploration attempts in past decades and earlier government decisions to not bother with oil leasing there, said one federal manager.
"It's way up here all by itself, and nothing happened with it because nobody could get into it," said Fran Cherry, Alaska district manager of the Bureau of Land Management (BLM), the federal agency that oversees the reserve.
Now new information, including recent exploration successes by Phillips Petroleum Co. , is likely to boost estimates of potential oil resources in the reserve, Cherry said.
The U.S. Geological Survey said that the reserve's northeast quadrant probably holds 1.8 billion to 4.7 billion recoverable barrels. The USGS is scheduled to release a new estimate this spring, Cherry said.
Past estimates are likely to be too conservative, he said.
"Who knows the potential in NPR-A? I think it's huge," he said. "NPR-A has the potential to be a lot bigger than we had originally estimated."
Government surveyors found oil seeps in the area as early as 1917. The petroleum reserve was created in 1923 to provideenergy for military security. But despite sporadic exploration that started in the 1940s, there has been no commercial oil production there. For decades, the industry ignored the area.
That changed after 1995, when Arco Alaska Inc. announced the discovery of its 430 million barrel Alpine field on state land near the petroleum reserve's eastern border. Phillips, which acquired Arco's Alaska assets in 2000, is now producing 90,000 barrels a day at Alpine, currently the westernmost oil field on the North Slope.
The BLM in 1999 offered the first NPR-A leases in 15 years, opening about 4 million acres in the reserve's northeast corner to development. Oil companies bid $104.6 million for the rights to explore 133 tracts there.
The BLM plans another lease sale this June, offering the tracts that did not receive bids three years ago. Officials from Phillips and Anadarko Petroleum Corp. , Phillips' partner at Alpine, have said their companies plan to participate in the June lease sale.
The BLM has also launched a broader land-management plan that would allow for more leasing as soon as 2004 in the reserve's northwest corner. That area has been the subject of some oil industry inquiries, Cherry said.
The Alpine field - about 60 miles west of the trans-Alaska pipeline's intake station at Prudhoe Bay - is what makes even modest amounts of oil from the reserve attractive to the industry, said Chuck Logsdon, chief petroleum economist for the state Department of Revenue.
"If you found something in NPR-A, it wouldn't have to be a gargantuan oil field to justify building a pipeline all the way to Pump Station No. 1," Logsdon said.
The state is optimistic about NPR-A development, he said. His department's long-term revenue forecasts predict NPR-A production to start in 2007, with up to 75,000 barrels a day pumped from there by 2009.
Not all oil companies are bullish on the reserve. Phillips and Anadarko are drilling exploratory wells there during the extended Arctic winter, as far as 40 miles southwest of Alpine. But British Petroleum, which drilled there last winter, will not return this year.
While the reserve is attractive to Phillips and Anadarko, that might not be the cas