Insights on filling the pipeline: better technology, techniques, and public policy.

Author:Swann, Kirsten
Position:OIL & GAS
 
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Since 2002, the amount of oil flowing through the trans-Alaska oil pipeline has decreased by millions of barrels per year without even the slightest annual uptick in production.

The downward trend began long before that. From a high of more than 744 million barrels produced in 1988, the year 2013 saw around 195 million barrels of oil travel through the pipeline. According to data maintained by Alyeska Pipeline Service Company, the pipeline's operator, the average daily throughput also continues to decline.

When it comes to boosting the number of barrels flowing down the pipeline, Alaska petroleum businesses and industry groups alike say it takes both geological and political science.

More Production

On its face, it seems simple. Alaska Oil and Gas Association President Kara Moriarty says filling the pipeline requires more production-there's no two ways about it.

"It sounds simplistic, but it really is that basic," Moriarty says. "Of course, companies need the right framework to spend the additional money required to bring more oil online, so the investment climate in Alaska needs to be competitive and attractive in order to keep limited investment dollars in Alaska instead of other places across the globe."

But if pipeline throughput is any indication, creating the right framework has been a daunting task.

Between 1990 and 2000, according to Alyeska Pipeline Service Company data, annual pipeline throughput decreased by nearly 45 percent. Between 2000 and 2010, it decreased by another 38 percent. The pipeline's operator says throughput continues to decline by about 5 percent annually, and, today, it's about two-thirds empty.

New Technologies and Techniques

Alaska's producers and industry insiders are turning to a handful of solutions in a bid to ramp up pipeline flow.

Some companies, like BP, are working to produce more oil from existing fields via specially developed systems. A trade-marked polymer injection technology known as BrightWater helps BP improve on reserve recovery rates. The company says directional technology and horizontal drilling also improve production at existing sites:

New technologies and techniques are paying off.

When Prudhoe Bay was first discovered in 1968, it was estimated to hold about 9.6 billion barrels of recoverable oil. In 2012, the fields produced their 12 billionth barrel, and they didn't stop there.

But as the oil left in existing North Slope wells becomes increasingly difficult to reach, a boost in pipeline throughput requires new developments altogether.

That's where the political science comes into play, Moriarty says.

"When companies evaluate where to invest their dollars, they tend to avoid oil regions that arbitrarily change the rules on a regular basis. In just the last eight years, Alaska has made four changes to its oil tax structure. This sends a negative signal to the industry that long-range planning, which...

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