Dispelling the Alaska Fear Factor 2007-2008

243 Pages·2007·22.99 MB·English

by  Petroleum News

DISPELLING THE ALASKA FEAR FACTOR A.1
Introduction
T
hank you for your interest in investing in Alaska.This is a state rich in
opportunities and we look forward to working together to responsibly
develop the state’s oil and gas resources.
Highlighting Alaska’s resource opportunities and the stable nature of
our regulatory and tax regimes is an important goal of my administration.We
recognize that your investment in this state is important to our future.We
want you to know that your presence in Alaska is appreciated and your input is
always welcome.
We hope that you will also find the development of Alaska resources to be in
your best interests — from the North Slope south to the Alaska Peninsula.We are
proud to have long-time companies continuing to invest in our state and profit from “Whether it is the
their exploration,and we are also excited to see new and returning companies willing North Slope or
to invest,such as Shell,Pioneer,ENI,Benchmark,Savant,Total and others.They recog- Cook Inlet, Alaska
is demanding
nize the exciting environment that exists in Alaska,and they are companies committed
greater access to
to forging new relationships in the Last Frontier and initiating investments in this rich facilities in order to
environment. enhance expansion
As Alaska’s governor,one of my very first pledges during the first month in office opportunities for
current investors
was to ramp up responsible resource development.I know that’s a goal under which
and future
we both can live.I promise to vigorously defend Alaska’s rights,as resource owners,to investors.”
develop and receive appropriate value for our resources.But I also know that the state
should be trusted to keep its promises and I will expect the same of the industry.Oil —Alaska Gov.
Sarah Palin
and gas development remains the core of our state.We recognize that one thing we
can do for you is to provide stability for our developers.
We have numerous resource development priorities over the next few years of my
administration.The number one priority is ensuring the construction of the North
Slope natural gas pipeline.We know that Alaska’s gas can be developed profitably and
begin to flow from the North Slope to commercial markets in this state and through-
out the Lower 48.We are no longer going to accept the warehousing of Alaska’s gas.
We are moving forward aggressively to bring to market this valuable resource and pro-
vide a safe and secure domestic supply for our homes and businesses as well as those
in the Lower 48.
We also recognize that while Alaska’s gas pipeline will first flow our proven gas
reserves,we must strongly encourage exploration and expansion.Whether it is the
North Slope or Cook Inlet,Alaska is demanding greater access to facilities in order to
enhance expansion opportunities for current investors and future investors.
We are excited about many great prospects,and naturally our focus is on energy
supplies because we are blessed with them.Members of my administration and I look
forward to answering your questions and partnering in a way which will respect our
land and provide a promising future for the state and those who are willing to invest
in the exploration and development of our resources.
Thank you,again,for your interest.
Sincerely,
Sarah Palin
Governor of Alaska
A.2 DISPELLING THE ALASKA FEAR FACTOR
Message from the publisher
T
he first biennial edition of “Dispelling N barrels of oil;Oooguruk around 70 million
A
the Alaska Fear Factor”was published M barrels.
S
in May 2005.The book was designed ALI Enough said.The next step is to sub-
to report on government and indus- SY T scribe to Petroleum News and get a week-
E
try efforts to dispel the “Alaska fear factor,” URT ly news update and access to our exten-
O
which had discouraged many oil compa- C sive story archives.
nies from doing business in the state. Many thanks to all the individuals in
The first edition also provided what the government agencies and private compa-
second part of its title promised:“A guide nies who contributed to “Dispelling the
Nabors 14E drilling a successful exploration well in
to Alaska’s oil and gas basins and business Alaska Fear Factor:A guide to Alaska’s oil
NPR-A during the 2006-07 drilling season for
environment.” Talisman Energy’s Alaska subsidiary, FEX. and gas basins and business environment.”
Because of the success of newcomers
Eni SpA.Armstrong President Bill
such as Armstrong Oil & Gas,Pioneer
Armstrong said his firm did not have deep
Natural Resources and Kerr-McGee,the
enough pockets to be a good partner in
second edition of the book,published in
developing the two discoveries.
May 2007 (which you are reading),has Kay Cashman
Eni soon made a reportedly generous,
much less information about the “Alaska Petroleum News publisher
and successful,offer to Anadarko for
fear factor.” & executive editor
Nikaitchuq.In April 2007,Eni said it was
Armstrong proved a tiny independent
targeting the end of 2007 for project sanc-
from “Outside”could purchase leases in
tioning,with first oil to flow by the end of
Alaska (offshore the North Slope,no less),
2009.
identify drillable prospects near existing
Newcomers to the more remote
infrastructure,find partners to help
National Petroleum Reserve-Alaska face
finance exploration,and discover commer-
the stuff the Alaska fear factor is made of Fear Factor project staff
cial quantities of oil and gas.
— absence of infrastructure,short winter
Pioneer and Kerr-McGee were two of KAY CASHMAN publisher & executive editor
Armstrong’s partners.Using the Alaska drilling season and high costs.Talisman AMY SPITTLER associate publisher
subsidiary FEX L.P.is on its second winter KRISTEN NELSON editor
expertise Armstrong had under contract
drilling season as an operator in NPR-A. ALAN BAILEY editor
and adding some of its own,Pioneer took
The Calgary-based company has made a STEVEN MERRITT production director
over as operator of the Armstrong-identi- significant petroleum discovery in this far- TOM KEARNEY graphic designer
fied Oooguruk prospect,discovered by the flung part of the North Slope,and is talk- TIM KIKTA copy editor
partners in 2003 and expected to come CLINT LASLEY circulation director
ing in the hundreds of millions of barrels.
online in 2008. SHANE LASLEY IT chief
A tiny independent,BRPC Group,also
Kerr-McGee’s story is similar.The com- discovered oil at one of its two North Contact and order information
pany,which is now part of Anadarko Dispelling the Alaska Fear Factor is published every
Slope exploration wells in the winter of
Petroleum,came into the state as an other year in May by Petroleum News,a weekly oil
2006-07.The North Shore No.1 encoun-
Armstrong partner in late 2003 to drill the and gas newspaper,which is owned by Petroleum
tered approximately 70 feet of oil-charged
near-shore Nikaitchuq prospect in early Newspapers of Alaska LLC.
Ivishak sandstone formation north of the
2004 where it discovered commercial To order print and CD editions,call 907 522-9469
Prudhoe Bay oil field.
quantities of oil.
Which brings me to another subject: Mailing address
Development was initially scheduled to P.O.Box 231651 • Anchorage,AK 99523
the rewards.The payoff in Alaska in terms
match Oooguruk’s,but a number of things
of size of a discovery is large by any stan- Email [email protected]
interfered with that,including Armstrong’s
dard,especially anywhere else in Canada Web page www.PetroleumNews.com
decision in 2005 to sell its interests in all
and the United States. Printed in Nansha,China
its Alaska assets to yet another company
Nikaitchuq is thought to hold between by Everbest Printing Co.,Ltd.
new to Alaska,Houston-based Eni
100 million and 200 million recoverable Published May 2007,Volume 2
Petroleum,the U.S.E&P affiliate of Italy’s
Disclaimer:'Dispelling the Alaska Fear Factor' is our best
effort to assemble accurate information for companies look-
ing to invest or currently investing in Alaska.This publication
Cover photo is simply meant to be the first step in your research efforts,
and should not be construed as investment advice.Readers
A digital composite,© 2006 Ron Sanford/AlaskaStock.com should consult with their own independent tax,financial,
geologic, engineering and other business advisors with
Contributions from Mapmakers Alaska respect to any information or opinion stated in this publica-
tion.Petroleum Newspapers of Alaska LLC (dba Petroleum
Figures in this guide were provided by Mapmakers Alaska unless otherwise noted News),its writers,consultants,contractors and contributors
to this and all its publications do not warrant or assume any
([email protected]). legal liability or responsibility for the accuracy,complete-
ness,or usefulness of any information,apparatus,product,
Contributions by Judy Patrick
or process disclosed in this or any publication.In addition,
all information about the companies in this publication
Most of the chapter cover shots and several other photos in this guide were taken by should not be construed as investment advice.
Judy Patrick Photography of Anchorage,Alaska ([email protected]).
DISPELLING THE ALASKA FEAR FACTOR A.3
Contents
Introduction from Alaska Gov.Sarah Palin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A1 Current exploration focus in the Cook Inlet area . . . . . . . . . . . . . . . . . . . . . . .4.4
Message from Petroleum News Publisher Kay Cashman . . . . . . . . . . . . . . . . .A2 The Lower Cook Inlet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.4
Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A3 CHAPTER 4 TABLES & FIGURES
Figure 4.1 Structural setting of the Cook Inlet basin . . . . . . . . . . . . . . . . . . . . .4.1
CHAPTER 1 Table 4.1 The oil and gas fields of the Cook Inlet . . . . . . . . . . . . . . . . . . . . . . .4.2
Alaska’s oil and gas potential Figure 4.2 Present day Cook Inlet basin (map) . . . . . . . . . . . . . . . . . . . . . . . . .4.3
Overview of Alaska’s oil and gas potential . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-1 Figure 4.3 Cook Inlet tectonic-stratigraphic correlation chart . . . . . . . . . . . . . .4.6
CHAPTER 1 TABLES & FIGURES Figure 4.4 Upper Cook Inlet fields (map) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.7
Figure 1.1 Generalized oil and gas basins/provinces in Alaska (map) . . . . . . . .1.2 Figure 4.5 Exploration wells in Cook Inlet . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.8
REPRINTS FROM PETROLEUM NEWS
CHAPTER 2 The unexplored depths of the Cook Inlet basin,
The Alaska Fear Factor:Fact or fiction? w.Cook Inlet stratigraphic column . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.9
Interview with Bill Van Dyke . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1 New model needed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.11
Bob Britch:Ten steps to smooth,successful permitting . . . . . . . . . . . . . . . . . . .2-2 Looking for Cook Inlet hydrocarbon kitchen . . . . . . . . . . . . . . . . . . . . . . . . . .4.13
Barnes:Alaska needs to fix permitting,regs . . . . . . . . . . . . . . . . . . . . . . . . . . .2-4 Chevron’s revitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.14
REPRINTS FROM PETROLEUM NEWS The 10-year itch:Cook Inlet R-to-P ratio may make
Gustafson knocks Alaska fear factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-6 users nervous,but it spurs investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.16
TAPS rates too high . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-8
CHAPTER 5
CHAPTER 3 Alaska’s Bristol Bay Basin
Northern Alaska’s oil and gas province Geological setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1
Geological setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-1 The oil and gas potential in the Mesozoic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1
The central North Slope,including The oil and gas potential in the Cenozoic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
Prudhoe Bay and offshore state waters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-7 Current exploration focus in Bristol Bay area . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
The western North Slope,including Exploration history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.5
NPR-A and offshore state waters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-12 CHAPTER 5 TABLES & FIGURES
The eastern North Slope,including the coastal plain Figure 5.1 General layout of the Bristol Bay basin . . . . . . . . . . . . . . . . . . . . . .5.2
of ANWR and offshore state waters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-13 Figure 5.2 Composite stratigraphic section . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.4
The Brooks Range Foothills and overthrust belt . . . . . . . . . . . . . . . . . . . . . . . .3-16 Figure 5.3 Alaska Peninsula geologic cross section . . . . . . . . . . . . . . . . . . . . . .5.6
The Beaufort Sea OCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-16 REPRINTS FROM PETROLEUM NEWS
The Chukchi Sea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-17 New Alaska Peninsula gas play? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.7
Current exploration focus in northern Alaska . . . . . . . . . . . . . . . . . . . . . . . . .3-19 Alaska areawide lease sales draw just one bid . . . . . . . . . . . . . . . . . . . . . . . . .5.9
CHAPTER 3 TABLES & FIGURES
Figure 3.1 General geologic structure of northern Alaska . . . . . . . . . . . . . . . . .3.2
Table 3.1 The oil fields of the central North Slope (map) . . . . . . . . . . . . . . . . . .3.3 CHAPTER 6
Figure 3.2 Structural evolution associated with the Ellesmerian, Alaska’s other oil and gas basins
Beaufortian and Brookian sequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.4 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
Figure 3.3 General stratigraphic column for northern Alaska . . . . . . . . . . . . . .3.5 The Hope and Kotzebue basins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
Figure 3.4 North Slope oil & gas fields (map) . . . . . . . . . . . . . . . . . . . . . . . . . . .3.6 The Holitna,Minchumina and Innoko basins . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
Figure 3.5 The geologic setting of Prudhoe Bay field . . . . . . . . . . . . . . . . . . . . .3.8 The Nenana and Middle Tanana basins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1
Figure 3.6 A general north to south cross section of the Colville basin . . . . . .3.9 The Lower Tanana,Galena and Northway basins . . . . . . . . . . . . . . . . . . . . . . .6.2
Figure 3.7 Petroleum system operation in the Colville basin . . . . . . . . . . . . . .3.10 The Yukon Flats basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.2
Figure 3.8 Petroleum plays in NPRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.11 The Kandik basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.2
Figure 3.9 Map of the ANWR 1002 area . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.12 The Copper River basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.3
Figure 3.10 Petroleum plays in ANWR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.14 The Bethel basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.3
Figure 3.11 Beaufort Sea program area (map) . . . . . . . . . . . . . . . . . . . . . . . . .3.15 The Yukon-Koyukuk-Kobuk terrane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.3
Figure 3.12 National Petroleum Reserve Alaska (NPRA) (map) . . . . . . . . . . . .3.18 The Shumagin-Kodiak shelf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.4
REPRINTS FROM PETROLEUM NEWS The Norton basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.4
Shell building legacy with map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-21 The St.Mathew-Hall basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.4
MMS approves Shell’s plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-22 The St.George basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.5
North Slope gas hydrate well hits target . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-24 The Navarin basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.5
Talisman NPR-A wells hit pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-26
BRPC announces North Slope crude discovery . . . . . . . . . . . . . . . . . . . . . . . .3-27 CHAPTER 7
Securing mineral rights and access
CHAPTER 4 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-1
Alaska’s Cook Inlet Basin Alaska Department of Natural Resources,Division of Oil and Gas . . . . . . . . . .7.2
Geological setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1 Federal government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.4
The Susitna basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1 Alaska Mental Health Trust Land Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8
The Upper Cook Inlet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2 University of Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.8
A.4 DISPELLING THE ALASKA FEAR FACTOR
Alaska Native regional and village corporations . . . . . . . . . . . . . . . . . . . . . . . .7.8 CHAPTER 11 TABLES & FIGURES
Field unitization in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.11 Table 11.1 RCA regulated pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.2
CHAPTER 7 TABLES & FIGURES Figure 11.1 Cook Inlet units and processing facilities (map) . . . . . . . . . . . . .11.4
Table 7.1 Alaska land distribution on Sept.30,2005 . . . . . . . . . . . . . . . . . . . . .7.1 Figure 11.2 Cook Inlet gas gathering system . . . . . . . . . . . . . . . . . . . . . . . . .11.6
Figure 7.1 Alaska General land ownership (map) . . . . . . . . . . . . . . . . . . . . . . .7.2 Figure 11.3 North Slope units and processing facilities . . . . . . . . . . . . . . . . .11.8
Figure 7.2 Alaska Department of Natural Resources Figure 11.4 Alaska road system (map) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.13
Division of Oil and Gas five-year oil & gas leasing program . . . . . . . . . . . . . . .7.3 REPRINTS FROM PETROLEUM NEWS
Table 7.2 Minerals Management Service lease sale schedule . . . . . . . . . . . . . .7.4 Palin signs PSIO administrative order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.16
Figure 7.3 US Minerals Management Service planning area map . . . . . . . . . . .7.5 State,feds agree on pipeline oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.17
Table 7.3 BLM land use plans and lease sale schedule . . . . . . . . . . . . . . . . . . .7.6
Figure 7.4 Alaska Native regional corporations (map) . . . . . . . . . . . . . . . . . . . .7.7 CHAPTER 12
REPRINTS FROM PETROLEUM NEWS Commercialization of North Slope gas on the horizon
BLM stops work on South NPR-A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.12 History and AGIA update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12.1
CHAPTER 12 TABLES & FIGURES
CHAPTER 8 Figure 12.1 Proposed Alaska gas pipeline,Alaska Highway route . . . . . . . . .12.4
Securing seismic and well data REPRINTS FROM PETROLEUM NEWS
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.1 Governor gets AGIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12.5
Permitting for seismic exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.1
Existing seismic data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.2 CHAPTER 13
Well data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.2 Energy opportunities in rural Alaska communities
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.1
CHAPTER 9 Rural communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.1
Environmental compliance and permitting Energy for mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.1 Potential local partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.5
Permit requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.2 State and federal incentives,assistance available . . . . . . . . . . . . . . . . . . . . . .13.6
The National Environmental Policy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.11 CHAPTER 13 TABLES & FIGURES
Bonding requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.11 Figure 13.1 Mines and mine prospects (map) . . . . . . . . . . . . . . . . . . . . . . . .13.2
Rezoning and permitting oil and gas projects REPRINTS FROM PETROLEUM NEWS
within the North Slope Borough . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.13 Wanted:Bush entrepreneurs (“bush”refers to rural Alaska) . . . . . . . . . . . . .13.7
CHAPTER 9 TABLES & FIGURES Testing for shallow gas at Wainwright . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13.8
Table 9.1 A general guide to the types of permits required Tapping into Alaska’s volcanoes (with map) . . . . . . . . . . . . . . . . . . . . . . . . .13.10
for an oil and gas project in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.2
Figure 9.1 Alaska coastal zone districts (map) . . . . . . . . . . . . . . . . . . . . . . . . . .9.6 CHAPTER 14
Table 9.2 Alaska regional Native nonprofit corporations . . . . . . . . . . . . . . . . . .9.9 Oil and gas companies active in Alaska
REPRINTS FROM PETROLEUM NEWS Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.1
BIF out for 2009-17 North Slope lease sales . . . . . . . . . . . . . . . . . . . . . . . . . .9.15 Oil and gas companies in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.1
New to Alaska,looking to explore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.8
CHAPTER 10 REPRINTS FROM PETROLEUM NEWS
Royalties,taxes,access and other fees Total never lost Alaska focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.1 Forest sells Alaska assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14.10
State of Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.1
Federal government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.5 CHAPTER 15
Local governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.6 Alaska-based oil and gas associations
Alaska Native regional and village corporations . . . . . . . . . . . . . . . . . . . . . . .10.6 Resource Development Council celebrates 30 years . . . . . . . . . . . . . . . . . . . .15.1
Alaska Mental Health Trust and University of Alaska . . . . . . . . . . . . . . . . . . .10.6 The Alliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15.3
CHAPTER 10 TABLES & FIGURES Alaska Oil and Gas Association:Alaska,a realistic look . . . . . . . . . . . . . . . . .15.4
Table 10.1 State of Alaska PPT tax floor as a percentage
of total wellhead value of production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.1 CHAPTER 16
Figure 10.1 Boroughs and cities in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.2 Living and working in Alaska
Table 10.2 Sample 2006 property tax mill rates Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.1
and sales tax rates for some Alaska municipalities . . . . . . . . . . . . . . . . . . . . .10.4 Alaska’s economy and cost of living . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.1
REPRINTS FROM PETROLEUM NEWS Alaska’s Permanent Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.3
Governor looking at special session for PPT . . . . . . . . . . . . . . . . . . . . . . . . . .10.7 Alaska’s tax structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.3
Images of Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.4
CHAPTER 11 Cook Inlet and the Kenai Peninsula Borough:
Infrastructure and access Significant reserves yet to be discovered . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.6
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.1 Wasilla:Offering the best of Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.8
Regulated pipelines in Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.1 The opportunities in Anchorage – Alaska’s largest city . . . . . . . . . . . . . . . . . .16.9
The Charter for the Development of the Alaskan North Slope . . . . . . . . . . . .11.5 CHAPTER 16 TABLES & FIGURES
Existing facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.6 Figure 16.1 Alaska gross state product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.1
Seasonal access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.10 Figure 16.2 Number of Alaska jobs by industry . . . . . . . . . . . . . . . . . . . . . . . .16.2
Roads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.14 Figure 16.3 Anchorage consumer price index . . . . . . . . . . . . . . . . . . . . . . . . .16.3
DISPELLING THE ALASKA FEAR FACTOR A.5
Companies doing business in Alaska
CAMPS & CATERING ENVIRONMENTAL RESPONSE & CLEAN UP Dowland-Bach . . . . . . . . . . . . . . . . . . . . . . . . .8-5
Doyon Universal . . . . . . . . . . . . . . . . . . . . . . . .1-8
Doyon Universal . . . . . . . . . . . . . . . . . . . . . . . .1-8 Alaska Chadux . . . . . . . . . . . . . . . . . . . . . . .14-11 Flowline Alaska . . . . . . . . . . . . . . . . . . . . . .11-21
ESS Support Services Worldwide . . . . . . . . . .12-7 Alaska Clean Seas . . . . . . . . . . . . . . . . . . . . .9-17 FMC Technologies . . . . . . . . . . . . . . . . . . . . .2-13
CCI Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6 H.C.Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13
COMMUNICATIONS Crowley Marine Services . . . . . . . . . . . . . . .11-18 MI Swaco . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-29
Great Northwest Inc. . . . . . . . . . . . . . . . . . .13-10 TIW Corporation. . . . . . . . . . . . . . . . . . . . . . .5-11
Alaska Telecom . . . . . . . . . . . . . . . . . . . . . .11-20 Pacific Environmental . . . . . . . . . . . . . . . . . . .9-19 Unitech of Alaska . . . . . . . . . . . . . . . . . . . . .10-11
Arctic Slope Telephone . . . . . . . . . . . . . . . . . .10-8 Unitech of Alaska . . . . . . . . . . . . . . . . . . . . .10-11
PERMITTING
CONSTRUCTION COMPANIES ENVIRONMENTAL SERVICES
ENSR Corp. . . . . . . . . . . . . . . . . . . . . . . . . . .9-21
Alaska Frontier Constructors . . . . . . . . . . . .4-18 Alaska Anvil . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 Mactec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-28
H.C.Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13 Alaska Chadux . . . . . . . . . . . . . . . . . . . . . . .14-11 Michael Baker Jr. . . . . . . . . . . . . . . . . . . . . .10-10
CCI Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6
CONSTRUCTION SUBCONTRACTORS ENSR Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . .9-21 PHOTOGRAPHERS
& SUPPLIES Mactec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-28
Pacific Environmental . . . . . . . . . . . . . . . . . . .9-19 Judy Patrick Photography . . . . . . . . . . . . . . .16-11
Cruz Construction . . . . . . . . . . . . . . . . . . . . .9-20 SGS Environmental Services . . . . . . . . . . . . . .9-23
ESS Support Services Worldwide . . . . . . . . . .12-7 PIPELINE CONSTRUCTION COMPANIES
Flowline Alaska . . . . . . . . . . . . . . . . . . . . . .11-21 FABRICATION FIRMS
Great Northwest Inc. . . . . . . . . . . . . . . . . . .13-13 BJ Services . . . . . . . . . . . . . . . . . . . . . . . . . . .12-9
H.C.Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13 Dowland-Bach . . . . . . . . . . . . . . . . . . . . . . . . .8-5 H.C.Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-13
CONSULTING SERVICES HOTELS,ACCOMMODATIONS SECURITY
(G&G,engineering,safety,environmental,geo-
physical) Sheraton Anchorage Hotel . . . . . . . . . . . . . . .4-19 Doyon Universal . . . . . . . . . . . . . . . . . . . . . . . .1-8
Alaska Anvil . . . . . . . . . . . . . . . . . . . . . . . . . .2-16
Arlen Ehm Geological Consultant . . . . . . . . .2-11 HUMAN RESOURCES SEISMIC & GEOPHYSICAL DATA BROKERS
BJ Services . . . . . . . . . . . . . . . . . . . . . . . . . . .12-9 & CONTRACTORS
CCI Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6 ESS Support Services Worldwide . . . . . . . . . .12-7
ENSR Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . .9-21 Petrotechnical Resources of Alaska . . . . . . .11-19
Mactec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-28 INFORMATION TECHNOLOGY PGS Onshore . . . . . . . . . . . . . . . . . . . . . . . . .7-14
Michael Baker Jr. . . . . . . . . . . . . . . . . . . . . .10-10
Petrotechnical Resources of Alaska . . . . . . .11-19 Computing Alternatives . . . . . . . . . . . . . . . . .10-9 SURVEYING & MAPPING SERVICES
DIVING,UNDERWATER WELDING FIRMS INSPECTION SERVICES F.Robert Bell & Assoc. . . . . . . . . . . . . . . . . . . .6-7
Lounsbury & Associates . . . . . . . . . . . . . . . . .12-8
American Marine . . . . . . . . . . . . . . . . . . . . . .9-18 Kakivik Asset Management . . . . . . . . . . . . .14-12 Michael Baker Jr. . . . . . . . . . . . . . . . . . . . . .10-10
DRILLING CONTRACTORS LEGAL SERVICES TRANSPORTATION & LOGISTICS FIRMS
Doyon Drilling . . . . . . . . . . . . . . . . . . . . . . . .7-15 Perkins Coie . . . . . . . . . . . . . . . . . . . . . . . . . .9-22 Air Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . .1-7
Kuukpik Corp. . . . . . . . . . . . . . . . . . . . . . . . .2-14 Carlile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-24
Nabors Alaska Drilling . . . . . . . . . . . . . . . . . . .1-9 MAPS Crowley Marine Services . . . . . . . . . . . . . . .11-18
Nordic Calista Services . . . . . . . . . . . . . . . . . .2-15 Lynden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-4
Mapmakers Alaska . . . . . . . . . . . . . . . . . . . . .3-30
EMPLOYMENT SERVICES WELL SERVICING FIRMS
MEDICAL FACILITIES & EMERGENCY
NMS Employee Leasing . . . . . . . . . . . . . . . .14-13 RESPONSE PROVIDERS BJ Services . . . . . . . . . . . . . . . . . . . . . . . . . . .12-9
Doyon Drilling . . . . . . . . . . . . . . . . . . . . . . . .7-15
ENGINEERING & ARCHITECTURAL FIRMS Aeromed . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-10 FMC Technologies . . . . . . . . . . . . . . . . . . . . .2-13
Nabors Alaska Drilling . . . . . . . . . . . . . . . . . . .1-9
Alaska Anvil . . . . . . . . . . . . . . . . . . . . . . . . . .2-16 OILFIELD SERVICE & SUPPLY COMPANIES Nordic Calista Services . . . . . . . . . . . . . . . . . .2-15
Lounsbury & Associates . . . . . . . . . . . . . . . . .12-8 TIW Corporation. . . . . . . . . . . . . . . . . . . . . . .5-11
Michael Baker Jr. . . . . . . . . . . . . . . . . . . . . .10-10 American Marine . . . . . . . . . . . . . . . . . . . . . .9-18
NANA/Colt Engineering,LLC . . . . . . . . . . . .13-12 BJ Services . . . . . . . . . . . . . . . . . . . . . . . . . . .12-9 WELLHEAD CONTROL SYSTEMS
Petrotechnical Resources of Alaska . . . . . . .11-19 CCI Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-6
URS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-12 Colville . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-12 Dowland-Bach . . . . . . . . . . . . . . . . . . . . . . . . .8-5
Crowley Marine Services . . . . . . . . . . . . . . .11-18
1
c h a p t e r
Alaska’s oil and gas potential
JUDY PATRICK PHOTO
DISPELLING THE ALASKA FEAR FACTOR 1.1
Katalla, site of Alaska’s first commercial oil production in 1902
THE BARRETT WILLOUGHBY COLLECTION,ACCESSION NUMBER 72-116-213,
ARCHIVES,ALASKA AND POLAR REGIONS DEPARTMENT,UAF
C H A P T E R 1
Alaska’s oil and gas potential
T
he discovery of the giant Prudhoe Bay also presents some exploration opportuni- lion barrels of oil,23.27 trillion cubic feet
oil field on Alaska’s North Slope in ties. to 124.33 tcf of natural gas and 0.44 billion
1967 marked Alaska as a world-class The Interior of Alaska contains several to 2.08 billion barrels of NGL.
oil and gas region.Two years later,the sedimentary basins,such as the Nenana These 1995 estimates now seem much
discovery of the nearby Kuparuk River Basin near Fairbanks and the Yukon Flats too low.A U.S.Department of Energy
field,still the second largest producing oil Basin near the Canadian border.These report in 2001,for example,estimated the
field in North America after Prudhoe Bay, Interior basins probably contain natural ultimate recoverable oil reserves on the
confirmed Alaska’s position as a premier gas. whole of the North Slope to be 22.2 bil-
place to explore for oil and gas.Since lion barrels,including reserves from exist-
The North Slope
those discoveries were made,a cluster of ing fields and undiscovered resources.
major oil and gas fields have been devel- Since the startup of Prudhoe Bay fol- A 1998 U.S.Geological Survey assess-
oped on the central North Slope. lowing the completion of the trans-Alaska ment of the 1002 area of the Arctic
But with production declining in the oil pipeline in 1977,the central North National Wildlife Refuge at the east end of
Prudhoe Bay and Kuparuk fields and a gen- Slope has remained the fulcrum of the the North Slope gave estimates of 5.7 bil-
eral recognition that the central North state’s oil and gas industry.The fields on lion to 15.9 billion barrels of technically
Slope is reaching maturity as an oil and gas the Slope have cumulatively produced recoverable oil,with a mean estimate of
province,is there still potential for Alaska more than 15 billion barrels of oil and nat- 10.4 billion barrels.
as an area for oil and gas development? ural gas liquids and field operators contin- A 2002 U.S.Geological Survey assess-
The answer has to be a resounding ue to extend reserves through in-field ment of the National Petroleum Reserve-
“yes.” development and the development of Alaska,a 23 million-acre tract of land at the
Look at figure 1,a map of Alaska’s oil satellite fields.In addition to oil,some west end of the North Slope,resulted in
and gas basins.The Prudhoe Bay area occu- fields contain huge quantities of natural estimates of 6.7 billion to 15.0 billion bar-
pies just one relatively small part of a vast gas,which Alaskans hope to be able to rels of technically recoverable oil and 40.4
and largely underexplored oil and gas eventually market to the Lower 48 via a tcf to 85.3 tcf of natural gas.The mean esti-
province extending across northern Alaska gas pipeline yet to be built. mates for technically recoverable oil and
and out into the Beaufort and Chukchi The U.S.Geological Survey’s 1995 gas were 10.6 billion barrels and 61.4 tcf.
seas. National Assessment of United States Oil And a 2005 U.S.Geological Survey
In southern Alaska,substantial aspects and Gas Resources recognized 11 oil and assessment of the central North Slope sug-
of the Cook Inlet Basin remain unex- gas plays in northern Alaska,in an area gested technically recoverable,undiscov-
plored.To the southwest of the Cook Inlet, extending from the southern Brooks Range ered oil in the range of 2.6 to 5.9 billion
the prospective Bristol Bay Basin,also to the coasts of the Beaufort and Chukchi barrels,with a mean of 4.0 billion barrels.
known as the North Aleutian Basin, seas.Seven of these plays had already yield- The equivalent estimates for nonassociated
extends from Bristol Bay along the north ed confirmed oil and gas at the time of the natural gas were 23.9 tcf to 44.9 tcf,with a
side of the Alaska Peninsula and out into USGS assessment. mean of 33.3 tcf.In addition USGS estimat-
the Bering Sea. The assessment estimated the following ed mean volumes of 4.2 tcf of gas associat-
The Gulf of Alaska Shelf along the quantities of technically recoverable oil ed with oil fields,387 million barrels of
northern perimeter of the Gulf of Alaska and gas in place:2.34 billion to 15.43 bil- NGL from gas fields and 91 millions of bar-
1.2 DISPELLING THE ALASKA FEAR FACTOR
alaska’s oil & gas potential 1.3
rels of NGL from oil fields.So,how much
of these hydrocarbons could be produced ULL
M
profitably and what are the risks involved GIL
in finding and developing them?
Clearly the existence of an oil produc-
tion infrastructure in and around Prudhoe
Bay,coupled with an oil export route
through the trans-Alaska oil pipeline,signif-
icantly helps the economics of new oil
development in the central North Slope.
However,development scenarios for sites
that are distant from Prudhoe Bay must
take into account the cost of new produc-
tion facilities and transportation pipelines.
This cost would drive a need to find sub-
stantial quantities of hydrocarbons in the
more remote locations before viable devel-
opment could commence there.
Prudhoe Bay State No. 1 well, gas flare, March 1968
In NPR-A USGS sees the possibility of
individual accumulations in the range 16
million to 1,024 million barrels of techni- foothills and from the entire North Slope lion barrels at $30 per barrel and 21.17 bil-
cally recoverable oil.However,most accu- depends on the construction of a gas lion barrels at $80 per barrel;the corre-
mulations would lie in the lower third of export pipeline to southern Alaska or sponding high-end figures for natural gas
this range,perhaps between 32 million and through Canada to the Lower 48 states,an are 2.39 tcf and 59.38 tcf.
256 million barrels.Most accumulations in idea that has been debated for many years MMS estimates oil accumulations under
ANWR’s 1002 area (coastal plain) would lie but that now seems likely to come to the Beaufort Sea with mean volumes rang-
within a similar range,although an individ- fruition (see chapter 12). ing from 0.7 million to 1.021 billion barrels
ual accumulation in ANWR could contain of oil.There is a possibility of an accumula-
Offshore northern Alaska
more than 2 billion barrels of oil. tion as large as 3.831 billion barrels of oil.
The USGS economic analysis for NPR-A With many of the geological characteris- The corresponding figures for gas accumu-
assumed various pipeline scenarios for tics of the prolific central North Slope,the lations are 0.8 tcf to 6.9 tcf,with the possi-
pumping oil into the existing transporta- Beaufort and Chukchi seas offer tantalizing bility of a 22 tcf accumulation (note that
tion infrastructure.The USGS analysis for possibilities for oil and gas exploration. these accumulation estimates come from
the federal lands within NPR-A suggests a In the Beaufort Sea the 200 million bar- an earlier resource assessment than the
threshold oil price of about $20 per barrel, rel Northstar oil field began production in total resource estimates came from).
with a very high probability of an econom- 2001.Three other fields,Liberty,Sivulliq With huge geologic structures and an
ic find at around $23 per barrel. (formerly Hammerhead),and Kuvlum,may abundance of potential source and reser-
Economically recoverable oil would proba- each contain more than 100 million barrels voir rocks,the continental shelf under the
bly top out at 6 billion to 7 billion barrels if of recoverable oil reserves. Chukchi Sea offers great promise as a
the oil price was to exceed $30 per barrel, The U.S.Minerals Management Service major oil and gas area.However,the daunt-
although there is an outside chance that has identified 14 possible oil and gas plays ing challenges of operating in this remote
more than 10 billion barrels could be in the Beaufort Sea.MMS estimates techni- region have deterred extensive explo-
recovered at a profit. cally recoverable oil in the range 0.41 bil- ration.Only five exploration wells have
The corresponding figures for ANWR lion to 23.24 billion barrels,with a mean been drilled in the area — one of these
indicate a threshold oil price of around estimate of 8.22 billion barrels.Technically wells found a substantial gas reservoir in
$13 per barrel for viable exploration and recoverable gas estimates range from 0.65 the Burger structure.
development.It is more likely that a price tcf to 72.18 tcf,with a mean of 27.65 tcf. MMS estimates that there are some-
of $15 per barrel would be needed,with The economics of developing these where between 2.32 billion and 40.08 bil-
virtual certainty of an economic find at resources depends heavily on distances lion barrels of technically recoverable oil
around $20 per barrel.With prices in from onshore infrastructure.MMS thinks under the Chukchi,with a mean estimate
excess of $30 per barrel,the potential eco- that just 0.47 billion barrels of oil and 0.59 of 15.38 billion barrels.The corresponding
nomically recoverable oil in the area tops tcf of gas could be recovered economically figures for technically recoverable gas are
out at around 6.5 billion barrels.As in NPR- from the Beaufort offshore continental 10.32 tcf to 209.53 tcf,with a mean of
A,it is just possible that more than 10 bil- shelf at an oil price of $30 per barrel and a 76.77 tcf.
lion barrels could be recovered economi- gas price of $4.54 per mcf.With an oil Economically recoverable oil ranges
cally. price of $80 per barrel and a gas price of from 0 barrels at $30 per barrel to 12 bil-
Most people consider the Brooks Range $12.10 per mcf economically recoverable lion barrels at $80 per barrel.But,given the
Foothills belt along the south side of the oil and natural gas increase to 6.92 billion issues of sea ice cover and huge distances
North Slope to be largely a gas province, barrels and 19.97 tcf.If exploration were to from the existing oil and gas infrastructure,
with the possibility of finding substantial prove particularly successful,economically oil prices would need to be fairly high to
gas reserves. recoverable oil could be as high as 1.79 bil- justify development in the region.Note,
But the marketing of gas from the however,that because there is known gas