Missing links leave oil untapped.

• Author: Tyson, Ray
• Position: North Slope Borough, Alaska - Includes related article

Oil producers continue to search for ways to tap North Slope resources outside Prudhoe Bay before the trans-Alaska pipeline must be closed because of declining oil volumes.

The North Slope is peppered with small, undeveloped oil-fields that by Lower 48 standards contain huge crude reserves, perhaps a billion barrels or more of recoverable oil. Because of low oil prices and high development costs in the Alaska Arctic, however, the fields lie dormant with little immediate hope of bringing them to life.

Fields such as Seal Island/North Star, Gwydyr Bay, Sandpiper, Point Thomson, Niakuk, Badami and West Sak could play a vital role in extending Alaska's oil future. But time is running short: Shrinking oil volumes handled by the trans-Alaska pipeline will lead to its inevitable shutdown, perhaps by the year 2010.

Barring the discovery of another large reservoir, these undeveloped fields, plus any similar discoveries in the future, represent the only practical means of averting an earlier shutdown of the pipeline, as the supergiant Prudhoe Bay field slips deeper into natural decline. Recovery from Prudhoe Bay makes up about three-quarters of North Slope oil production.

While the smaller fields could never produce enough oil to offset Prudhoe Bay's decline rate, they could serve to extend the production life of North America's two largest oilfields -- Prudhoe Bay and Kuparuk River -- by keeping the daily North Slope flow rate above 300,000 barrels, roughly the level at which it would become unprofitable and mechanically difficult to operate the 800-mile pipeline.

The North Slope currently produces about 1.8 million barrels of oil a day, representing 25 percent of the U.S. domestic oil supply and 85 percent of the state's revenue base. About one-third of the undiscovered oil in the United States is believed to exist in onshore and offshore areas of Alaska.

But if the pipeline spigot were to close when the oil flow rate reached 300,000 barrels, that would leave more than 1 billion barrels of recoverable oil in the ground. Over a 10-year period, at $20 a barrel, that resource equates to a whopping $5 billion loss to the state alone.

"When the time comes to shut down, nobody is going to want to leave that much oil behind. That's just too much oil to walk away from. (So) anything that extends the life of TAPS (Trans-Alaska Pipeline System) extends the life of Prudhoe and Kuparuk," says Bill Van Dyke, petroleum manager for the state Division of Oil and Gas.

Though projected closure of the pipeline is some 18 years away, the long lead time required to bring a field into production and then to recover its oil has surfaced as a key factor in company...