NPR-A.

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

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Alaskans have always looked at the vast National Petroleum Reserve-Alaska (NPR-A) on the western North Slope as a kind of fall-back after being unable to get the coastal plain of the Arctic National Wildlife Refuge opened for exploration.

The central North Slope area, where the major oil fields are now producing, is pretty well picked over in terms of major new discoveries. ANWR's coastal plain, the NPR-A and the Beaufort Sea offshore are seen as unexplored areas that could supply new oil to sustain the trans-Alaska oil pipeline.

But ANWR is blocked, as is, for now at least, to offshore exploration.

NPRoA DISAPPOINTMENT As a fallback, however, NPR-A has been a disappointment so far. The Aug. 11 federal lease sale in the reserve was a bust. Only five tracts were sold by the U.S. Bureau of Land Management, all to ConocoPhillips and all along the edges of lease blocks already held by the company and its partner in those tracts, Anadarko Petroleum Corp.

That ConocoPhillips did not bid aggressively in the sale was no surprise. The company has said it has reduced its onshore Alaska exploration and will emphasize offshore exploration in the Chukchi Sea because prospects are better and the offshore doesn't suffer the high State of Alaska taxes that apply onshore, even in NPR-A.

Also, a dispute over federal permits for a Colville River bridge that would provide access to the CD-5 drill site west of the river has delayed access to the new drill site and to prospects further west in the petroleum reserve.

CD-5 is a satellite to the Alpine oil field in the Colville River delta. But where the main field is on State lands, the new drill site is west of the river channel and is within NPR-A. The project is important symbolically because it would be the first truly commercial oil development within the reserve.

However, the bridge and road to CD-5 would establish initial infrastructure that would be extended incrementally to several small, known oil deposits farther west.

The ebb of industry interest can't all be laid on the CD-5 dispute, however. High costs of exploring remote areas in the reserve, the lack of infrastructure, the modest size of targets identified by geologists so far, and the State's high taxes on oil (Alaska taxes apply in NPR-A, although royalties will be paid to the federal government) also have had discouraging effects.

What was surprising in the lease sale, however, was that Anadarko didn't bid even in partnership on the five tracts ConocoPhillips did acquire. This tells us that Anadarko...