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Page added on June 15, 2018

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A Closer Look at Drilling the ANWR

A Closer Look at Drilling the ANWR thumbnail

The passage of Public Law 115-97 in December 2017 required the U.S. Secretary of the Interior to administer a competitive oil and natural gas program for the leasing, development, production, and transportation of oil and natural gas in the Arctic National Wildlife Refuge (ANWR). Prior to the Trump Administration’s decision to open up the area, the ANWR was essentially under a drilling moratorium.

The ANWR is located on the northern coast of Alaska, east of Prudhoe Bay and the National Petroleum Reserve-Alaska (NPRA). The coastal plain covers 1.5 million acres and is about eight percent of the total area of the ANWR. In 1998, the U.S. Geological Survey (USGS) estimated that this area held about 10.4 billion barrels of oil.

According to the Energy Information Administration (EIA), ANWR production probably couldn’t begin until 2031 because of the time needed to acquire leases, explore the area, and develop the necessary production infrastructure. It’s assumed that fields would take three to four years to reach peak oil production, after which they should maintain peak production for three to four years, and then decline until they reach a point where they are no longer profitable.

The EIA also looked at how the oil obtained from the ANWR would make its way to the U.S. The 41-year-old, 800-mile Trans-Alaska Pipeline System (TAPS) currently hauls about 500,000 barrels/day to southern ports. Ships then take it south, with about 80 percent of Alaska’s oil refined in Washington or California. This new source could present a new dynamic, as it’s also estimated that the oil taken from the ANWR will be a lighter crude not ideally suited for West Coast refineries.

Additionally, the potential impact of electric cars and government mandates for more fuel-efficient vehicles could cut the demand for gas, which would impact oil needs. Combined, these market factors could produce a situation where the oil extracted from the ANWR is neither refined nor used in the U.S. It may actually end up making more sense to export this oil if U.S. demand drops and the crude oil can be refined more efficiently by another country.

thomasnet



13 Comments on "A Closer Look at Drilling the ANWR"

  1. brough on Fri, 15th Jun 2018 6:49 am 

    If my ‘number crunching’ is right, 10.4 billion barrels is about 120 days of global oil
    consumption.
    I am right, ain’t I ???

  2. brough on Fri, 15th Jun 2018 7:33 am 

    NOT RIGHT

  3. deadly on Fri, 15th Jun 2018 7:49 am 

    Alaska has had that pipeline for about forty years now and there is still more oil flowing in the thing. Not a stranded asset yet.

    If you use easy numbers to do the math, one hundred days at one hundred million each day is ten billion.

    10,400,000,000/120=86,666,666.7 bpd

    So the answer is you are correct, probably just the amount of crude, not all oils and condensates.

  4. dave thompson on Fri, 15th Jun 2018 10:09 am 

    This story keeps coming back like a bad penny. If there was significant oil in ANWR I contend it would have long ago been produced. The area is isolated with no infrastructure to begin with and I am sure the number crunchers have long ago figured it was not worth it.

  5. rockman on Fri, 15th Jun 2018 10:49 am 

    “…as it’s also estimated that the oil taken from the ANWR will be a lighter crude not ideally suited for West Coast refineries.” None of the light oil produced anywhere in the US is suitable for processing BY ITSELF in any US refinery. OTOH light oil is extremely important as a blending component with heavy oil to create the 32 API oil US refineries (including those on the West Coast) are suited to process.

    Additionally light oil is critical to the export of over 1 BILLION BBLS per year of Canadian oil sands production. About 300 million bbls per year is blended with the bitumen to produce the dilbit that can be pumped thru the pipelines. But that only increases its gravity to 23 API. Once in the US more light oil/condensate is added to increase the gravity to the 32 API utilized by our refineries.

  6. rockman on Fri, 15th Jun 2018 11:06 am 

    dave = “…I am sure the number crunchers have long ago figured it was not worth it.” Perhaps the govt number crunchers. Who are also the one’s offering bbls the 10 billion bbl estimate. Neither set of numbers are meaningful. The only important estimates are the numbers crunched by the folks who will risk their monies chasing the ANWR dream. And their numbers won’t mean anything to the country until they do risk their capex and prove what is, or isn’t, sitting underground in ANWR.

    Yes, called “exploration” as someone pointed out. And as a famous geologist, Wallace Pratt, observed in 1952: “”Where oil is first found, in the final analysis, is in the minds of men”. IOW those numbers don’t mean shit until they are proven…or disproven.

  7. dave thompson on Fri, 15th Jun 2018 11:26 am 

    There have been test wells drilled in ANWR none of them were reported as gushers. But then again the results have largely been kept company secret.

    ANWR has no roads no ports not even any airport of any significance. Drilling and building infrastructure will be very costly. Lets not even mention the non- existent pipeline connection. So unless the people OK a whole lot of land destruction in ANWR at the public’s cost I do not see a lot of drilling going on any time soon. Mostly because I do not think all that much oil is in ANWR to begin with.

  8. BobInget on Fri, 15th Jun 2018 11:40 am 

    Venezuelan workers flee the nation.
    Thieves loot equipment.

    Bottom line, Venezuela will be off line for at least a year from when repairs are begun.

    Some are saying Venezuela will never be able to ship oil again. I believe that is total BS.
    In any case, it will require billions to restore
    exports.

    NYT article:
    https://www.nytimes.com/2018/06/14/world/americas/venezuela-oil-economy.html

  9. BobInget on Fri, 15th Jun 2018 11:54 am 

    As for ‘The Pipeline’.

    Crews are installing cooling units near every pylon
    to keep permafrost frozen.

    Here’s a WSJ piece from 2009..
    https://www.wsj.com/video/thawing-permafrost-on-the-trans-alaska-pipeline/165DBC79-09CE-45A3-ACFE-B9F716BC65E3.html

    Here’s a more recent piece:
    https://www.npr.org/2018/06/11/617240387/oil-industry-copes-with-climate-impacts-as-permafrost-thaws

    BTW, Do you believe state run pipelines in Siberia
    are being cared for in the same way?

    Alaska is melting. That’s a fact.

  10. BobInget on Fri, 15th Jun 2018 12:18 pm 

    Trump gets Trans Mountain moving faster.

    At last, Canada will have another market besides US.

    Canadian unions and Eagle Spirit Energy sign ground-breaking Memorandum of Agreement for indigenous pipeline project
    “Eagle Spirit Energy Holdings Ltd. and Canada’s Four Pipeline Craft unions are pleased to announce the signing of a Memorandum of Agreement (MOA) to collaboratively pursue and deliver the Eagle Spirit Energy Corridor Project (the Project) from Fort McMurray, Alberta to Grassy Point, British Columbia (B.C.).”

    https://www.newswire.ca/news-releases/canadian-unions-and-eagle-spirit-energy-sign-ground-breaking-memorandum-of-agreement-for-indigenous-pipeline-project-685587301.html

    ***********************************************************
    More info ( article from May) on Eagle Spirit pipeline:

    http://www.cbc.ca/news/canada/british-columbia/the-b-c-pipeline-project-you-ve-never-heard-of-and-why-it-may-succeed-1.4646892

    “One obstacle any northern pipeline would face is the federal Liberals’ oil tanker ban.Bill C-48 is expected to pass final reading in the House of Commons next week.”

    As I posted yesterday, Bill C–48 is already being addressed and is currently being heard by the Senate. It is expected for this bill to be killed in the fall when its up for final reading by the Senate.

    “Even NDP MP Nathan Cullen, who represents the North Coast of B.C. and has supported the tanker ban, says if the project has First Nations support, he would be on board too.”

    Have a listen to the video in the link below:

    http://calgaryherald.com/news/politics/braid-a-federal-tanker-ban-that-doesnt-ban-tankers-just-alberta-oil?utm_source=Sailthru&utm_medium=email&utm_campaign=Calgary Herald Daily Headlines 2018-06-14&utm_term=CH_HeadlineNews

    *********************************************************
    Trans Mountain News:

    “Varcoe: First Nations press for chance to buy stake in Trans Mountain pipeline”

    http://lfpress.com/business/energy/varcoe-first-nations-press-for-chance-to-buy-stake-in-trans-mountain-pipeline/wcm/fc310bc6-a510-4a34-ae6a-adf60004fd3b

  11. BobInget on Fri, 15th Jun 2018 12:32 pm 

    More on the nation with biggest stash of crude in world.

    Venezuela Oil Production may never return.
    I think the government will collapse and default with a new government repudiating the previous governments debts on the basis of “It was not me” and negotiating a settlement.

    World’s largest oil reserves, once they are not beneath a murderous lesson in the Entropy, will be attacked with vigor by a number of players, wanting to get paid.

    Venezuela crude oil output careens toward 1 million b/d
    Washington (Platts)–15 Jun 2018 847 am EDT/1247 GMT

    Venezuelan crude oil production is on the verge of sinking to 1 million b/d, and factors playing out this month will determine whether that level is reached early next year or within a few months.

    EIA says June exports could change outlook through 2019
    Low rig count leaves no chance of stabilizing output: Citi
    Projection becoming more of art than science: EIA analyst

    The Energy Information Administration projects Venezuela will hit 1 million b/d in second-quarter 2019, said analyst Lejla Villar, who develops projections for the monthly Short-Term Energy Outlook.

    “However, I am eagerly awaiting to see what the actual June production number falls to, which may very well accelerate the decline in production through 2019, pushing up this time line,” she said. “If the worst-case scenario for June production comes true, then we could see Venezuela’s production fall to 1 million b/d sooner.”

    EIA’s latest STEO report estimated Venezuelan output at 1.43 million b/d for May, down from 1.46 million b/d a month earlier and from 1.98 million b/d in May 2017. The International Energy Agency put May production at 1.36 million b/d and said it could fall to 800,000 b/d or even lower next year.

    No recovery in sight for Venezuelan oil output

    S&P Global Platts estimated the country’s May output at 1.36 million b/d, down from 1.41 million b/d in April, according to a survey of industry officials, analysts and shipping data.

    Francisco Monaldi, a Latin American energy policy expert at Rice University, expects Venezuelan production to show a “major drop” in June and July. He sees it falling to the key psychological level of 1 million b/d by November or December.

    Ed Morse, Citi Group’s global head of commodity research, said the 1 million b/d level is imminent, with current output likely around 1.1 million-1.2 million b/d. He attributes the latest sharp drop to the seizing of Venezuelan logistics assets critical to blending up heavier crude as part of a ConocoPhillips lawsuit.

    Morse added that production will keep dropping as long as Venezuela’s rig count remains in the 20s.

    “You need a rig count above 40 and closer to 50 to keep production even in Venezuela,” he said. “That doesn’t look like they can manage to stabilize production yet.”

    EIA’s Villar said the Venezuelan forecast is becoming trickier. “It’s become been more of an art than a science lately,” she said.

    In the past, Villar has been able to track individual joint ventures project by project to develop her monthly outlook.

    “In the absence of good information, I have to rely on export numbers,” she said. “Recently that’s really been the driver, the main input into the estimate, simply because that is the most real-time available information as to what leaves Venezuela’s shores.”

    Villar said export data at the end of the month could affect her entire forecast.

    “Depending what June does, this may or may not lead me to take a more pessimistic view on Venezuela’s production outlook through the end of 2019,” she said.

    –Meghan Gordon, meghan.gordon@spglobal.com
    –Benjamin Morse, benjamin.morse@spglobal.com
    –Edited by Valarie Jackson, newsdesk@spglobal.com

  12. Dredd on Fri, 15th Jun 2018 1:02 pm 

    A closer look at drill baby drill (Humble Oil-Qaeda – 2).

  13. Anonymous on Sat, 16th Jun 2018 2:58 am 

    Here is James Hamilton in 2012 with a peak oil lecture:

    https://www.youtube.com/watch?v=D9z1Ikn84Aw

    He shows state by state peak oil charts and argues that “Once they have peaked, they don’t come back. Have to go somewhere new, to grow production”.

    At the time of his talk only ND had recently broken its old record. (But this very significantly.) Since then ND has increased much more (more than doubled since his talk).

    In addition the following states recently broke their all time peak: Colorado, Ohio, New Mexico, South Dakota, and TEXAS.

    Plus the overall US monthly production is well above the all time peak. (We will break the annual record this year.)

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