Tuesday, October 26, 2010

[Geology2] USGS: Less Oil in Alaska Reserve Than Once Thought

USGS: Less oil in Alaska reserve than once thought

(10-26) 20:36 PDT Anchorage, Alaska (AP)

A sprawling federal energy reserve on Alaska's North Slope contains less than one-tenth the amount of oil previously estimated, federal scientists said Tuesday.

The National Petroleum Reserve-Alaska, which covers an area slightly smaller than Indiana, has for years held much development promise for the oil industry. It was believed to contain billions of barrels of oil, prompting major energy players to put down stakes there.

But the U.S. Geological Survey said new data puts the amended estimate at just 896 million barrels of undiscovered oil. That's down from the agency's 2002 mean estimate of 10.6 billion barrels for the 23 million-acre reserve established in 1923 for energy development.

"This is both an abrupt — and for someone who does resource assessment — a disquieting change," said USGS research geologist Dave Houseknecht.

Industry watchers say it's too early to say what the new estimate's effect will be. But the extreme reduction could further discourage investment from producers, who already are sharply curtailing their NPR-A spending.

Natural gas is much more plentiful at the reserve. But without a way to transport it from Alaska's North Slope — a gas pipeline has been the dream of Alaskans for decades — it is far less attractive than oil to developers that hold leases there. Some have relinquished their NPR-A leases, while at least one company is trying to sell all its reserve assets, Houseknecht said.

The USGS also has cut its earlier estimates of NPR-A natural gas, from a mean estimate of 61 trillion cubic feet to 53 trillion cubic feet. The agency's 2002 estimates ranged from 5.9 billion to 13.2 billion barrels for oil, and 39 trillion to 83 trillion cubic feet for natural gas.

The new numbers are based on factors including seismic surveys and drilling of more than 30 exploration wells, according to the USGS. In fact, the estimates reinforce what the industry has found over a decade of exploration, leading to a substantial slowdown in development, Houseknecht said.

"Drilling slowed down for the same reason our estimate dropped like a rock," he said. "They're finding gas instead of oil."


View entire article here: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/10/26/financial/f152402D25.DTL&tsp=1

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