Oil in Alaska

Synopsis: The first overall Arctic assessment, finds "only a quarter of the oil volumes previously estimated in key Arctic basins in North America," and suggest these are not "a strategic energy cache for the US." Instead it finds Alaska is a "niche province" for the established players, which should earn more than a 20% return. This is purely an oil-industry study with no political motivation.

Special Report: Artic has less oil than earlier estimated
Nov. 13, 2006. Oil & Gas Journal.

The entire international Arctic region contains "much less" potential pretroleum resources, with a mix of more natural gas, than previously estimated [according to a Nov. 1 study by Wood Mackenzie Ltd.]. Using detailed geoscience analysis of individual basins, the study indicates only a quarter of the oil volumes previously estimated in key Arctic basins in North America and Greenland. Moreover, it concludes that the Arctic is primarily a gas province, with natural gas accounting for 85% of the discovered resources and 74% of the exploration potential in that northernmost region of the globe. The Arctic is projected at its peak in 20 years to produce 8 million boe/d, split 40:60 of oil and gas, with the proportion of production from US basins lower than previously anticipated.

"This assessment basically calls into question the long-considered view that the Arctic represents one of the last great oil and gas frontiers and a strategic energy supply cache for the US," said Andrew Latham, vice president of energy consulting for Wood Mackenzie and lead author of the study. "These findings are disappointing from a world oil resource base perspective," he said. "The oil-gas mix is not ideal because remote gas is often much harder to transport to markets."

As a result, the study said the US "must look elsewhere to meet rising demand."

The study is the first overall assessment of the Arctic's total oil and gas potential by Wood Mackenzie or anyone else, Latham said. "Nobody has done it all, not even the US Geological Survey."

"While these results are disappointing to the US as a whole, the Arctic still holds great potential for individual oil and gas companies with the advanced technology, money and time to develop the challenging resources and build the infrastructure required to transport it," Latham said.

It [the report] said there are attractive niche opportunities in many basins. Two basins--North Slope in Alaska and Russia's Pechora Sea--achieve exploration full-cycle returns greater than 20%.

Competition in that region [the Arctic] "is lower than in other resource plays of comparable scale," and no preeminent "pan-Arctic champion" has yet emerged, said Latham.

World's Arctic basins pose array of unique work opportunities
Nov. 13, 2006. Oil & Gas Journal, p. 31. by Murray & Latham.

In this article, we consider three strategies for upstream growth in the Arctic: Major Resource Capture, Niche Operations, and Frontier Exploration. ... Niche Operations are focused more on generating high returns as opposed to achieving a large scale of production. A niche strategy is successful when a company identifies a competitive advantage in a particular area and successfully exploits this to generate higher returns than its competitors.

Niche provinces
The North Slope [1st in the list of Niche provinces] has continued to deliver new discoveries for the last 40 years. ... All of these basins provide opportunities for exploration success, and the players who are already established in these areas will have a competitive advantage in the exploiting new discoveries with higher rates of return.

http://zfacts.com/p/621.html | 01/18/12 07:17 GMT
Modified: Fri, 19 Jan 2007 18:28:57 GMT