**REPORT TITLE:** Beaufort Sea Region Petroleum Development Scenarios
for the State - Federal and Federal Outer Continental Shelf. Final
Report.

**STUDY TITLE:** Beaufort Sea, Petroleum Development Scenarios for
State-Federal Outer Continental Shelf (TR-06).

CONTRACT NUMBER(S): BLM: CT6-61; MMS: 14-12-0001-29002

SPONSORING OCS REGION: Alaska.

APPLICABLE PLANNING AREA(S): Beaufort Sea.

FISCAL YEAR(S) OF PROJECT FUNDING: 1978.

COMPLETION DATE OF REPORT: April 1978.

COST(S): FY 1978: \$123,636; CUMULATIVE PROJECT COST: \$123,636.

PROJECT MANAGER(S): W. Pyle.

AFFILIATION: Dames & Moore.

ADDRESS: 576 Silverado Way, Suite P, Anchorage, Alaska 99518.

PRINCIPAL INVESTIGATOR(S)\*: W. Pyle.

KEY WORDS: Beaufort Sea; Alaska; development scenarios; lease sale;
resource estimates; exploratory drilling; ice; transportation; pipeline;
employment; impacts; Prudhoe Bay; Alaska Region.

ACCESS NUMBER: 29002

**BACKGROUND:** In order to analyze socioeconomic and environmental
impacts of Beaufort Sea petroleum exploration, development, and
production, it is necessary to make reasonable predictions of the nature
of that development. This report, one in a series of studies conducted
through the Alaska Outer Continental Shelf (OCS) Socioeconomic Studies
Program, provides petroleum development scenarios which contain a
reasonable range of feasible technological, economic, and geographic
options based upon available estimates of oil and gas resources of the
Beaufort Sea.

**OBJECTIVES:** (1) To describe in detail a set of petroleum development
scenarios that are the most economically and technically feasible, based
upon available estimates of oil and gas resources of the Beaufort Sea.

**DESCRIPTION:** Petroleum development scenarios formulated in this
report were for the proposed joint State-Federal lease area and
subsequent Federal OCS lease sale area in the Beaufort Sea. These areas
are located within that portion of the Beaufort Sea between Barter
Island (144?W Long) and Point Barrow (156?W Long) from the shoreline to
about the 20-m (66-ft) isobath. Scenarios were based on U.S. Geological
Survey (USGS) resource probability levels allocated into four regions
covering the Beaufort Sea OCS. An initial set of 24 scenarios was
constructed for selection purposes utilizing petroleum reservoir
parameters based on U.S. averages and Prudhoe Bay experience. These
scenarios provided geologic reality and geographic specificity to the
location of hypothetical oil and gas fields. Each of these scenarios
were subjected to a parametric economic analysis to establish
approximate capital recovery after several combinations of parametric
values for investment costs, tax status, transport costs, and market
levels. Five scenarios, selected as representative of the range of
geographic locations and resource levels, were selected for detailing of
scheduling, manpower, and facilities requirements. The five scenarios
which represented cumulative petroleum development, as anticipated in
the Beaufort Sea and within the confines of the USGS estimates and lease
sale areas, included: (1) Camden-Canning, a joint State/Federal lease
sale area containing 1.3 billion barrels (Bbbl) of oil reserves; (2)
Prudhoe Bay Offshore, a joint State/Federal lease sale area containing
0.8 Bbbl of oil reserves; (3) Prudhoe Bay Offshore, a joint
State/Federal lease sale area containing 1.9 Bbbl of oil reserves; (4)
Cape Halkett, a Federal lease sale area containing 0.8 Bbbl of oil
reserves; and (5) Smith‑Dease, a Federal lease sale area containing 0.4
Bbbl of oil reserves.

**SIGNIFICANT CONCLUSIONS:** Exploration activity within the Beaufort
Sea landfast ice zone in water depths less than 20 m (66 ft) was
predicted to occur primarily from artificial soil islands, barges, and,
to a lesser extent, artificial ice islands. Production was expected to
be conducted primarily from artificial soil islands, reinforced with
caissons or sheet piling, and to a lesser extent, from gravity
structures such as monopod or cone constructed offsite and towed to the
site of activity. Based on USGS estimates, it was deemed likely that at
least 1.0 Bbbl of oil and 2.5 trillion cubic feet (Tcf) of natural gas
will be discovered in the central and eastern Alaskan Beaufort Sea. The
analysis projected a small likelihood (probability: \<1%) that more than
3.0 Bbbl of oil and 8.0 Tcf of natural gas will be discovered in this
area. New discoveries in the Beaufort Sea will rely upon existing North
Slope transport systems. In spite of existing transport infrastructure
on the North Slope, the costs of product transport product to existing
transport centers necessarily affects (i.e., increases) the minimum
exploitable field size necessary for economic viability.

**STUDY RESULTS:** Based on the results of the present study effort,
exploration activity within the Beaufort Sea landfast ice zone in water
depths less than 20 m (66 ft) will be primarily conducted from
artificial soil islands, barges, and, to a lesser extent, artificial ice
islands. No role in exploration is anticipated for drillships other than
serving as floating rigs or gravity platforms. Exploration will
represent an extension of dry land technology using dry land drilling
rigs. Production will be conducted primarily from artificial soil
islands, reinforced with caissons or sheet piling, and to a lesser
extent, from gravity structures such as monopod or cone constructed
offsite and towed to the site of activity.

Based on USGS estimates developed for the study area, it is likely that
at least 1.0 Bbbl of oil and 2.5 Tcf of natural gas will be discovered
in the central and eastern Alaskan Beaufort Sea. The analysis projected
a small likelihood (probability: \<1%) that more than 3.0 Bbbl of oil
and 8.0 Tcf of natural gas will be discovered in this area. The
Smith-Dease scenario was deemed uneconomic with only exploration
expected to occur.

New discoveries in the Beaufort Sea will rely upon existing North Slope
transport systems. The transport costs for Beaufort Sea resource
production (i.e., movement of oil and natural gas to existing transport
centers, assuming availability of North Slope routes) will place an
increasing resource size limitation on any project\'s economic
feasibility. In the case of Prudhoe Bay Offshore, the practical minimum
oil field size (i.e., minimum field size required for economic
feasibility) was established at 400 million bbl (MMbbl). In the eastern
Beaufort Sea, located up to 90 km (54 mi) from Prudhoe Bay, 700 MMbbl to
1.0 Bbbl of oil were deemed reasonable minimum producible deposits,
depending on the productivity of an average well. In the Cape Halkett
area, located approximately 150 km (90 mi) from Prudhoe Bay, 700 MMbbl
to 1.0 Bbbl were deemed necessary to justify production provided that
pipelines can be constructed within the projected costs. In the western
Beaufort Sea, located 200 km (120 mi) or more from Prudhoe Bay, at least
1.0 Bbbl of reserves may be necessary to justify production.
Economically producible resource discoveries sufficient to support a new
trans-Alaskan oil pipeline system, in addition to 3.6 Bbbl which can be
accommodated in the present system surplus, would have to total about
3.0 Bbbl. Natural gas reserves (in addition to the 34 Tcf which can be
accommodated in the proposed Alcan system) would have to total at least
10 Tcf. These minimum levels were predicated upon small tariff premiums
over those currently envisioned for the transport systems. Western
Beaufort Sea production would support a Nome oil pipeline route from the
National Petroleum Reserve-Alaska (NPR-A). However, the present analysis
indicated that it was unlikely that the estimated economically feasible
level of 3.0 Bbbl of oil was present in the NPR-A. Current estimates of
1.0 Bbbl of oil within the NPR-A could be supported by fortunate levels
of discovery in the western Beaufort Sea, leading to the establishment
of a pipeline route to the Alyeska line. The most likely discovery
levels for the eastern Beaufort Sea are marginally producible under the
projected economic costs. Factors which favor development projections
include: (1) cost effectiveness demonstrated by the industry in North
Slope production well drilling; and (2) potential for reducing offshore
pipeline costs relative to those incurred onshore. Beaufort Sea
discoveries cannot be projected to be stimulating to Alaskan
petrochemical development because they will not alter (but would follow)
patterns set by present Prudhoe Bay production.

Actual manpower requirements necessary for production of offshore
petroleum reserves in the Arctic will hinge on the technology employed,
especially the type of platforms used, development schedule, and field
number and size. All of these factors will interact to determine the
number of platforms and the scale of production equipment that must be
installed. In scenarios described in this study, manpower requirements
were modest in comparison to manpower requirements necessary for
developing the Prudhoe Bay field; highest peak employment was
approximately 2,750 people for the Prudhoe Bay Offshore (1.9 Bbbl)
scenario; the smallest peak employment was approximately 1,326 people
for the Cape Halkett (0.8 Bbbl) scenario. It was assumed in this
analysis that new offshore production would be shipped via the existing
Alyeska pipeline as capacity became available. Construction of a second
Alyeska pipeline would require substantial employment, estimated at 50
to 60% of that required to build the first Alyeska pipeline. Under the
current analysis, pipeline construction was limited to the installation
of connecting lines routed to Alyeska Pump Station No. 1.

Development of new offshore fields in the Prudhoe Bay area will benefit
from existing infrastructure at the Prudhoe Bay field, such as
airfields, construction camps and roads; however, the other fields will
benefit only marginally from Prudhoe Bay facilities and duplication of
this infrastructure will be required.

**STUDY PRODUCT(S):** Dames & Moore. 1978. Beaufort Sea Region Petroleum
Development Scenarios for the State - Federal and Federal Outer
Continental Shelf. Final Report. A final report for the U.S. Department
of the Interior, Bureau of Land Management Alaska OCS Office, Anchorage,
AK. NTIS No. PB‑283236. Social and Economic Studies Program Technical
Report No. 6. Contract No. 14-12-0001-29002. xxiv + 387 pp. + app.

\*P.I.\'s affiliation may be different than that listed for Project
Manager(s).