USGS economic analysis updated for the National Petroleum Reserve in Alaska

May 04, 2011

The U.S. Geological Survey assessment on the economic recoverability of undiscovered, conventional oil and gas resources within the National Petroleum Reserve in Alaska (NPRA) and adjacent state waters is now available.

This is based on a 2010 USGS resource assessment (http://pubs.usgs.gov/fs/2010/3102/) that determined how much undiscovered, conventional and gas in the NPRA is technically recoverable. These reports provide updates from the USGS 2003 economic analysis (http://pubs.usgs.gov/of/2003/of03-044/) and 2002 resource assessment (http://pubs.usgs.gov/fs/2002/fs045-02/) of the NPRA.

"The USGS conducts assessment updates to re-evaluate petroleum potential as new data and information become available," said USGS Energy Resources Program Coordinator Brenda Pierce. "Understanding how much undiscovered, technically recoverable resource might be present serves as a basis for calculating how much might be economically developed."

Technically recoverable resources are those that could be potentially produced using current technology and industry practices. Economically recoverable resources are those that can be sold at a price that covers the costs of discovery, development, production and transportation to the market.

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Listen to a podcast interview with USGS scientists on this assessment

The new economic analysis estimates that approximately 273 million barrels of undiscovered oil are economically recoverable at an oil price of $72 per barrel (comparable to $8 per thousand cubic feet of gas). About 500 million barrels of undiscovered oil are economically recoverable at $90 per barrel (comparable to $10 per thousand cubic feet of gas). These estimates do not include the discovered oil accumulations in northeastern NPRA that have not yet been developed.

The economically recoverable oil estimates above are dependent upon in the NPRA, meaning that it is assumed the oil would be found in the process of looking primarily for gas.

The USGS assessment also found that about 18 trillion cubic feet of undiscovered gas are economically recoverable when the market price is $8 or more per thousand cubic feet, and 32 trillion cubic feet of undiscovered gas would be economic when the market price is $10 or more per thousand cubic feet.

There currently is no pipeline in place to transport gas from the North Slope of Alaska, so this assessment assumes that there is a 10- or 20-year delay between discovery and production in the NPRA. This analysis shows that if a pipeline is constructed, there is a significant amount of gas that is economically recoverable from the NPRA when prices are above $8 per thousand cubic feet of gas.

The different market prices quoted above for the same resource are because some resource accumulations are relatively easy to find and produce while others are not and therefore cost more.

"USGS estimates are based on 2010 costs and technology, and these results could change over time as they are dependent on multiple factors," said USGS scientist Emil Attanasi, who was the lead author for this assessment. "For example, USGS economic recoverability estimates could vary in the future depending on the timeframe and costs to construct a gas pipeline to the NPRA, technological advances that make resource extraction and development easier and less expensive, and fluctuating market prices for oil and gas."

The amount of oil that could be economically developed is significantly less than what the 2003 analysis concluded. One reason for the reduction is reduced volumes of technically recoverable oil based on recent NPRA exploration drilling which found gas rather than oil.

All of the cited resource estimates are based on the mean undiscovered resources.

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Quantum_Conundrum
1 / 5 (1) May 04, 2011
Why would you drill for Oil in Alaska when there is around 300 BILLION barrels of oil off each coast of Florida and California, totalling around 600 billion. This is enough to power the WORLD for 28 years, or the U.S. for around 90 years. Others can just find their own resources.

Yes, America CAN drill our way out of the oil crisis, and certainly for the next several decades to perhaps a century. All we need to to is drill more of our own resources, and require no oil exports so companies can't abuse foreign markets.

We also have about another 700 BILLION barrels of oil in the form of shale oil and other less economical deposits when those deposits run out.

This should give the U.S. up to 170 to 180 years to develop whatever technology and infrastructure will eventually replace oil.
emsquared
not rated yet May 04, 2011
Yes, America CAN drill our way out of the oil crisis, and certainly for the next several decades to perhaps a century.

You have to be careful making statements like this. Everyone knows it's not the availability that's the problem. It's our infrastructure and ability to produce/refine that oil fast enough and get it to the consumer. I saw a figure (this snopes link will have to do for now... http://www.snopes...ken.asp) where it would take 20 years of aggressive development (read; very damaging to the environment) to get production levels to a volume sufficient to provide even 1/10th of our daily demand (we import something like 10MM bbl a day). Sorry, we cannot drill our way out, not any time soon.

Here's the truth: the basic laws of economics will continue to drive prices up, we will consume less which will moderate some, gradually other options will become more viable, it will be painful. People may have to change their lifestyles. This is reality.