U.S. Department of the Interior

U.S. Geological Survey

USGS Fact Sheet 2005–3120

November 2005

Economic Analysis of Undiscovered Oil and Gas of 

the Central North Slope of Alaska, 2005

T he U.S. Geological Survey

(USGS) has completed an economic

analysis of a recent assessment of

undiscovered oil and gas resources

of the central North Slope of Alaska.

This economic analysis indicates that

at market prices of $55 per barrel of

oil and $6 per thousand cubic feet of

gas, a relatively high proportion of the

oil and significant volumes of the gas

can be commercially developed.

National Assessment of Oil and Gas Fact Sheet

Introduction

In 2005, the U.S. Geological Survey 

(USGS) completed a new assessment of undiscovered, technically recoverable oil and 

gas resources of the central North Slope of 

Alaska. The assessment area, which lies 

east of the National Petroleum Reserve in 

Alaska and west of the Arctic National 

Wildlife Refuge, extends from the StateFederal offshore boundary southward to 

the Brooks Range and includes all onshore 

lands and lands underlying adjacent Alaska 

State waters. Past petroleum discoveries in 

this area have already yielded a production 

of about 15 billion barrels of hydrocarbon 

liquids, and a recoverable resource of more 

than 35 trillion cubic feet (TCF) of gas has 

been identifi ed to date. 

Recently, USGS scientists prepared an 

economic analysis of this new resource assessment, based on the general location, 

size-frequency distribution, and estimated 

volume and depth of undiscovered but technically recoverable oil and nonassociated 

gas accumulations. The assessment predicted that most undiscovered oil would occur in 

the northern and central parts of the assessment area in accumulations smaller than 128 

million barrels—smaller than most current 

standalone oil fi elds on the North Slope. 

Commercial development of such small 

fi elds will almost certainly require strategies 

that include sharing of processing facilities with existing oil fi elds. The assessment 

further predicted that most undiscovered 

gas would occur in the central and southern 

parts of the assessment area in accumulations smaller than about 1.5 TCF, located at 

some distance from existing infrastructure. 

In the economic analysis, calculations 

of the probable cost of gas production 

were based on an industry evaluation of 

the proposed route for the Alaska Natural 

Gas Transportation System (ANGTS) 

pipeline. Starting at a gas-processing 

U.S. Geological Survey scientists have completed an economic analysis of 

a recent assessment of undiscovered oil and gas resources in the central 

North Slope and adjacent offshore area belonging to the State of Alaska, 

a region of about 23,000 square miles (59,600 km2). This economic analysis 

indicates that at market prices of $55 per barrel of oil and $6 per thousand 

cubic feet of gas, a relatively high proportion of the oil and significant 

volumes of the gas can be commercially developed.

Summary of the 2005 U.S. Geological Survey assessment of undiscovered oil and gas resources of the 

central North Slope of Alaska, showing volumes of technically recoverable oil, associated gas, and naturalgas liquids (NGLs) in undiscovered oil accumulations and technically recoverable nonassociated gas and 

natural-gas liquids in undiscovered gas accumulations at 95% (95th fractile) probability, mean (expected 

value), and 5% (5th fractile) probability of occurrence of at least that amount. BBO, billion barrels of oil; TCF, 

trillion cubic feet; BBL, billion barrels of liquids.

Resources 95th fractile Mean 5th fractile

Oil accumulations:

Oil (BBO) 2.57 3.98 5.85

Associated gas (TCF) 2.68 4.20 6.09

NGLs (BBL) 0.05 0.09 0.14

Gas accumulations:

Nonassociated gas (TCF) 23.9 33.3 44.9

NGLs (BBL) 0.28 0.39 0.52
Printed on recycled paper

Emil D. Attanasi, Kenneth J. Bird, 

and Philip A. Freeman

Edited by George A. Havach

Graphic design by Susan Mayfi eld

plant near Pump Station 1 in the TransAlaska Pipeline System (TAPS), this 

route would follow the TAPS right-ofway southward to Fairbanks and then 

trend southeastward to Caroline, Alberta, Canada. The ANGTS pipeline is 

expected to take 10 years to construct. 

Because of uncertainties in the timing, 

development cost, and transportation of 

newly discovered gas, the analysis was 

based on two scenarios which assume 

that pipeline access will be obtained 

either 10 or 20 years after initial discovery. The net present value of commercial gas discoveries was discounted 

for the timelag between discovery and 

startup in each of these scenarios.

Economic Analysis

The USGS economic analysis estimated the amounts of undiscovered oil and 

nonassociated gas that could be commer- The plot for economically recoverable 

gas refl ects the results of analyzing the 

two scenarios of pipeline access and discounting to net present value. Even though 

the proportion of economically to technically recoverable gas is low, signifi cant 

amounts of economically recoverable gas 

would still be present. However, more than 

25 TCF of stranded gas is currently ready 

to market from existing oil fi elds on the 

North Slope at much lower cost than what 

it would take to discover and develop new 

gas accumulations.

Summary

An economic analysis of the new USGS 

assessment of undiscovered, technically 

recoverable oil and non-associated gas reFor Further Information

Supporting geologic studies of total petroleum systems, 

assessment units, and the methodology used in the central North Slope resource assessment are in progress. 

Assessment results, including economic analysis, are 

posted on the USGS Energy Resource Program’s Web 

site at URL

http://energy.usgs.gov/

or contact

Emil D. Attanasi (attanasi@usgs.gov)

Kenneth J. Bird (kbird@usgs.gov)

Philip A. Freeman (pfreeman@usgs.gov)

This Fact Sheet and any updates to it are available 

online at

http://pubs.usgs.gov/fs/2005/3120/

Size-frequency distributions of the estimated 

number of accumulations 

of undiscovered oil (A) and 

gas (B) associated with 

95% (F95, 95th fractile), 

mean, and 5% (F5, 5th 

fractile) probabilities of 

occurrence of at least 

that amount in the central 

North Slope assessment 

area of Alaska.

Summary of undiscovered economic oil resources 

in the central North Slope assessment area of 

Alaska. Each red curve relates the market price 

(in 2003 U.S. dollars) to the estimated volume of 

economic resources, while the green dashed 

vertical bars represent the volumes of technically 

recoverable oil, providing upper limits to the volume 

of economically recoverable oil. Thus, at a market 

price of $40 per barrel, at the 95th-fractile resource 

estimate representing a 95% occurrence probability 

of at least 2.57 billion barrels of oil (BBO), 1.6 BBO 

is economic. Similarly, at the 5th-fractile estimate 

representing a 5% occurrence probability of at least 

5.85 BBO, 4.6 BBO is economic; and at the mean 

estimate of 3.98 BBO, 2.9 BBO is economic.

Summary of undiscovered economic nonassociated gas 

resources in the central North Slope assessment area 

of Alaska. The economic analysis assumed that gas is 

valued (in 2003 U.S. dollars) at two-thirds that of oil, and 

the present value of gas was discounted for delays in 

pipeline availability of 10 years (red curves) and 20 years 

(blue curves), while the green dashed vertical bars represent volumes of technically recoverable gas, providing 

upper limits to the volume of economically recoverable 

gas. Thus, at a market price of $6 per thousand cubic feet 

with a 10-year delay in pipeline availability, at the 95thfractile resource estimate representing a 95% occurrence probability of at least 23.9 trillion cubic feet (TCF) 

of gas, 12 TCF is economic. Similarly, at the 5th-fractile 

estimate representing a 5% occurrence probability of at 

least 44.9 TCF of gas, 34.5 TCF is economic; and at the 

mean estimate of 33.3 TCF of gas, 24 TCF is economic. 











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cially developed at particular market prices 

based on the incremental costs of fi nding, 

developing, and transporting the oil and gas 

to market, including an aftertax 12% rate 

of return. All calculations and costs were in 

constant 2003 U.S. dollars.

The plot for economically recoverable oil 

shown here considers that at relatively high 

market prices, an increase in the commercial value of natural gas has a small but positive effect on the volume of economically 

recoverable oil. Note that if gas is assigned 

no commercial value, above a market price 

for oil of $40 per barrel the curves are shifted by about 2% to 4% to lower volumes. 

This plot assumes sharing of processing facilities with adjacent oil fi elds, thus permitsources of the central North Slope of Alaska indicates that with modern production 

techniques (for example, horizontal development wells and sharing of processing 

facilities), a relatively high proportion of 

the undiscovered oil can be commercially 

developed. The gas analysis showed that 

signifi cant volumes of the undiscovered 

gas are likely to be economic, in spite of 

moderate accumulation sizes, distance 

from infrastructure, and uncertainties 

about transportation.

This research refl ects ongoing efforts by 

USGS scientists to provide the Nation and 

its decisionmakers with reliable data as a 

basis for formulating future energy policy.

















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ting development of 

smaller oil accumulations. At a market 

price for oil of $55 

per barrel, economically recoverable oil 

thus represents 79% 

to 88% of technically 

recoverable oil.