Blessed Alaska? Moving more oil through pipeline critical priority.

• Author: Bradner, Mike
• Position: OIL & GAS SPECIAL SECTION

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Are the North Slope oil fields running dry? Is the trans-Alaska oil pipeline about to shut down? One hears a lot about these things recently. There are problems, indeed, but they are caused by humans. In other words, they are fixable.

To begin with, there is lots of oil and gas on the North Slope and elsewhere in Alaska. The Slope is considered by geologists to be one of the most prospective regions in the U.S. in terms of potential for new oil and gas discoveries.

But while major discoveries have been made in northern Alaska, and large oilfields are now producing, high costs and inhibitions from exploring the more prospective areas, such as the offshore, the Arctic National Wildlife Refuge coastal plain and the National Petroleum Reserve-Alaska, have kept exploration focused on areas of the central North Slope, which have been explored and that have only modest prospects now.

The State's high production tax rate is also now seen as a key obstacle to new development on lands available to the industry. Gov. Sean Parnell has a bill in the Legislature that would lower taxes, but its prospects are uncertain.

The fact that the trans-Alaska oil pipeline is now moving about 630,000 barrels per day, operating at one-third of its original capacity of 2 million barrels per day, is a concern. With North Slope production declining at rates of 6 percent per year, on average, the declining flow of oil has become a problem for Alyeska Pipeline Service Co., the pipeline operator.

The "low flow" conditions will soon present operations and technical challenges if the decline continues. Getting more oil moving through the pipeline is now a critical priority for the industry and the State.

It can be done. There is potential for new discoveries in the areas now open to development, particularly unconventional oil. However, much of this is technically challenged and will be costly to develop. But, the resource that is in place is large. Producing it is a matter of technology, cost and changes in the State's tax system.

There are other parts of Alaska that have oil and gas potential besides the North Slope. There are the large sedimentary basins of Interior Alaska that are generally unexplored, and which are considered to have potential mostly for natural gas. There is also, in some places, potential for oil. Cook Inlet, Alaska's oldest producing region, is now experiencing some new exploration for natural gas, but the there are concerns there is yet not enough drilling to deter shortfalls in gas supplies that are expected in a few years.

HISTORICAL PERSPECTIVE

Geologists have known...