Rich prospects; difficult circumstances: Alaska's offshore developments are full of promise.

• Author: Liles, Patricia

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Alaska's oil production future, while typically described as rapidly declining by many in industry, could receive a substantial kick in the pants from planned and potential offshore developments in the Arctic.

Ranging from a substantial, multiwell exploration program in the Sivulliq offshore prospect planned this year by Shell, to Pioneer's construction of its near-shore Oooguruk project, to continued advancement of BP's Liberty project--all are active offshore projects contributing to advancement of Alaska's offshore potential.

Other offshore exploration prospects include Eni's Tuvaaq and the Kerr-McGee-Eni partnership on Nikaitchuq, both located north of the Kuparuk field.

Current North Slope production from offshore fields includes BP's Endicott and its satellites, Milne Point, Point McIntyre, Niakuk and Northstar, the first Arctic offshore oilfield connected to shore only by a 6-mile pipeline.

"A lot of people are looking at the decline on TAPS and timing out the replacement of production volumes from onshore (development)," said Rick Fox, Shell's asset manager for Alaska. "I think the thing that really helps TAPS is offshore, in particular Beaufort Sea oil and gas."

The recent increased activity in the Arctic offshore projects, while already contributing a substantial amount of work and economic impact to Alaska's North Slope oil and gas industry, could be the tip of the iceberg, if access and environmental concerns can be resolved.

Geological estimates by the U.S. Minerals Management Service for the offshore swath ranging from 3 miles from shoreline out to about 200 nautical miles from shore, place the oil and gas potential as substantial.

According to the 2006 assessment for the Alaska's offshore Outer Continental Shelf, the Arctic subregion that includes the Beaufort Shelf, the Chukchi Shelf and the Hope Basin contains an estimated range of 6 billion to 53 billion barrels of undiscovered, technically recoverable oil, and 27.8 trillion to 247 trillion cubic feet of gas.

Technology and market prices currently support efforts to tap Alaska's offshore natural resources. Environmental objections remain the main force in curtailing advancement in Alaska's developing offshore oil and gas industry, evidenced by Shell's failed attempt to conduct a substantial exploration drilling program in the Beaufort this fall.

MULTI-YEAR EXPLORATION PROGRAM ADVANCED BY SHELL

Shell's planned two to three well-drilling program for its Sivulliq prospect, located about 14 miles offshore in 98 feet of water, was scuttled this year, due to objections from local government, whalers and environmental groups who appealed the company's federally approved exploration permits.

Whether the company will be allowed to resume its work and start drilling on Sivulliq next year now lies in the hands of the 9th Circuit Court of...