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Page added on October 27, 2015

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The North Slope puzzle: more gas means less oil

The North Slope puzzle: more gas means less oil thumbnail

During this week’s special session in Juneau, most lawmakers have been focused on whether the state should take a larger stake  in the Alaska LNG project, which would build a natural gas pipeline from the North Slope.

But on Monday afternoon (Oct. 26), the Senate Resources Committee met to hear about another crucial, if little-discussed issue: if you tap the state’s supply of natural gas, you’ll end up with less oil.

Cathy Foerster of the Alaska Oil and Gas Conservation Commission, put it this way:

“Taking the gas from an oil field…before all the oil has been produced, will – will, all caps – cause some of that oil to be lost,” Foerster said. “That’s not my opinion. That’s not somebody’s prediction…When you take the gas out of an oil field, and there’s oil still left, some of that oil is unrecoverable. Period.”

That’s because the natural gas in fields like Prudhoe Bay is re-injected into the wells to pressurize the field and increase oil production. Take away that gas, and you lose access to some of the oil.

The Conservation Commission is tasked with making sure the state’s oil and gas resources aren’t wasted, and it has to approve any plans to take gas from the North Slope – including for the Alaska LNG project.

And despite declining production on the Slope, there’s still plenty of oil to worry about, Foerster said.

“There’s 2.5 billion barrels of oil,” she said. “As Donald Trump would say, that’s HUUUGE.”

For context, she said, 2.5 billion barrels is about the amount produced from the North Slope’s Kaparuk reservoir, the second largest oil field in North America, during its entire 34-year lifetime.

Still, in mid-October the commission gave its formal approval for the Alaska LNG project to take gas from both Prudhoe Bay and Pt. Thompson. Foerster and Commissioner Dan Seamount say the timing is finally right.

The state has been trying to build a pipeline from the North Slope for some forty years. But from the commission’s point of view, it was always too early, Seamount said.

“When I first took this job in the year 2000, they were talking about a gasline in 2014 and that just scared the hell out of me,” he said. “Because we were making a million barrels of oil a day, and we were using that gas to help make that million barrels of oil a day.”

Seamount and Foerster said they’re now comfortable tapping the gas fields – starting in 2025. In a best-case scenario, that’s just about when the Alaska LNG pipeline would be ready to start shipping.

alaska public media

15 Comments on "The North Slope puzzle: more gas means less oil"

  1. marko on Tue, 27th Oct 2015 11:01 am 

    can anybody tell me what is going on with Prudohe bay. I red few years ago that it was in serious decline. The pipeline was experiencing serious problems due to low oil flow and depressurization , and I didn,t read anything since.

  2. Davy on Tue, 27th Oct 2015 11:29 am 

    Marko, classic case of depletion and a pipeline with a minimum operating level. On a side note I traveled the whole length of the pipeline with my dad when it was being constructed. I stayed a day up at Prudo in a crew quarters with dad. I remember being cold as hell looking out over the ocean up there and it was July. I was 10 year old.

  3. eugene on Tue, 27th Oct 2015 12:28 pm 

    Alaskan production peaked in 1988 at 2 million a day and has been in steady decline since. I think production is somewhere around 600k now. The pipeline was built with an expected life expectancy of 30 yr so is long overdue. Last I read was they would shut it down at around 350k a day. As the flow rate decreases there are increasing problems with, I believe, paraffin build up on the walls which requires a “pig” to be sent through to clean the walls which, in turn, becomes impractical at some point

    Alaska is in a world of hurt financially as oil funds are 85% of the budget. They stuck a bunch of money in the Perm Fund which is untouchable to run the state. Course the people love it as get a chunk of interest money each yr. Right now they are running a huge deficit and either have to touch the fund or start collecting state taxes. It will be battle royal.

  4. apneaman on Tue, 27th Oct 2015 12:43 pm 

    Recover the gas – Protect the oil

    Count the barrels – Covet thy portfolio

    Fuck the kids and grand-kids

    Air pollution stunting children’s lungs, study finds
    A six-year study finds children living in highly polluted parts of cities have up to 10 per cent less lung capacity than normal, with warnings the damage could be permanent

  5. yukonfisher on Tue, 27th Oct 2015 1:33 pm 

    The pipeline is running about 1/4 capacity now. By 2025, there will not be any oil flowing through it, so that is why they are going for the gas. The state wants everyone in Alaska to retire their wood stoves and switch to natural gas. They say it is the environmentally responsible thing to do and it will drive demand gas.
    Alaska is so deep in a resource trap, nobody can see a way out. They could give up statehood and revert to territory status and hope the feds can bail them out, but even that is no sure thing.

  6. rockman on Tue, 27th Oct 2015 1:38 pm 

    This article was written by Bill White I, a researcher/writer for the Alaska Natural Gas Transportation Projects Office of the Federal Coordinator. It’s very long but relatively non-technical and an easy read. One cannot understand the dynamics at play on the N Slope without fully absorbing this piece.

    The Peak Oil News article is little more than a long winded bumper sticker explanation of the situation.

    Here is a very short section from White’s report:

    The mid-2020s timing dovetails with plans of the Alaska LNG project to start sending maybe a third of Prudhoe’s gas production to market around that same period. Those plans are still in the early, formative stage, called pre-front-end engineering and design, with a final investment decision whether to construct the estimated $45 billion to $65 billion project unlikely before 2019. Prudhoe would be the anchor gas reservoir for Alaska LNG. Other gas would be piped from the Point Thomson field to the east, the North Slope’s second largest gas reservoir after Prudhoe. The start of “major gas sales,” as the industry calls them, would mean that Prudhoe, while entering spring as a gas field, officially would be in deep autumn as an oil field. Prudhoe’s oil production would continue for many years, still declining. And natural gas still would be reinjected, just in reduced volumes. Oil production would slacken somewhat as the reservoir pressure drops with both oil and gas going to market. Some fraction of Prudhoe’s remaining oil that could have been produced without gas sales would stay locked underground. But selling that gas would produce tens of billions of dollars in revenue for the producers and the state treasury.

    {IOW the FUTURE NG reserves will be worth considerably more then the remaining oil production. Essential over the next 10 years or so continued NG injection provideds diminishing returns. IOW the state of Alaska loses money by continuing to have all the NG injected. Not the impression one might get reading the words of that politician.}

  7. shortonoil on Tue, 27th Oct 2015 4:18 pm 

    “In 1991, Lod Cook, then chief executive of ARCO, told the U.S. secretary of energy in a letter that, “If major gas sales of two billion cubic feet per day were to begin late in this decade, the loss of recoverable crude oil would be about one billion barrels. If such sales were delayed until 2005, the loss still would be about one-half billion barrels. In short, early sale of gas from the North Slope will substantially reduce the amount of available domestic oil from the Prudhoe Bay Field.”

    Whether or not to produce the remainder of Prudhoe’s oil, or to produce its gas will depend on the future price of oil and gas.

    It could turn out that Prudhoe’s half billion barrels won’t be worth producing?

  8. paulo1 on Tue, 27th Oct 2015 4:37 pm 

    re: “Prudhoe would be the anchor gas reservoir for Alaska LNG. ”

    Along with BC LNG, Australian LNG, Texas LNG…oops, no market. As maxwell Smart used to say, “missed it by that much”.

  9. rockman on Tue, 27th Oct 2015 4:47 pm 

    Alaska LNG might have a significant advantage over other exporters: Japan

  10. apneaman on Tue, 27th Oct 2015 5:32 pm 

    AGW might just give the pipeline the permafrost heave ho. Sure repairs and modifications can be done, but for how long? The meltdown has just begun really.

    An Oil Pipeline Is Suspended Above Alaska’s Melting Tundra


    Alaska’s permafrost threatened by intense fires, climate change

  11. Mark Bucol on Tue, 27th Oct 2015 8:17 pm 

    I recall from old articles about the Alaska pipeline that around 340 to 360K barrels per day are required for maintaining proper flow. Currently flow is a little less than 500K but still declining every year.

    Natural gas IMO will be the energy source of the future as it produces less than half of the green house gases compared to coal and about 2/3 that of oil when fueling power plants. And power plant can supply energy for a lot of ground transportation with the proper conversion of car/truck fleet, as can gas.

    Alaska should go for the gas and forget about the oil. Too many other low price producers of oil to think they will survive on oil production. Besides, you don’t have much to worry about with a gas “spill”, whereas oil spill in the arctic is a big mess. And in the long run, much of the oil will probably not be economical to produce anyway, just ask Shell their opinion of offshore Alaska oil.

  12. rockman on Tue, 27th Oct 2015 11:29 pm 

    Mark – I know the article I posted is long but it really isn’t a choice between oil and NG. The NG injection dynamics are winding down. In another 10 years or so the oil production rate will be insignificant even if they maintain NG/water injection. So they either be generating significant revenue for the state from NG production or they’ll have very little if any. And given how long it takes to build out infrastructure in that ciliate they probably should start the process sooner then later.

  13. marko on Wed, 28th Oct 2015 8:42 am 

    Thank you everybody

  14. GregT on Wed, 28th Oct 2015 9:21 am 

    @Mark Bucol,

    “Natural gas IMO will be the energy source of the future as it produces less than half of the green house gases compared to coal and about 2/3 that of oil when fueling power plants.”

    Only if one ignores ( or eliminates) natural gas leakage. Methane is some 86 times more powerful of a greenhouse gas than CO2. And also, CO2 is accumulative in the environment and will remain for 1000s of years. Climate change is already occurring more rapidly than the models have predicted. Adding more CO2 into the environment, whether 2/3 or 1/100 the rate of burning coal, does nothing to help the situation. It is contributing more to the problem, and is in no way a part of any solution.

  15. Dredd on Wed, 28th Oct 2015 9:47 am 

    Those Alaska folks also do not know why the sea level around them is falling as their glaciers melt.

    It is uncanny that newspapers in the state of Alaska wonder why the sea level there is falling (Alaska Dispatch News)

    Do you?

    (The Evolution and Migration of Sea Level Hinge Points)

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