Options for Alaska North Slope Natural Gas Utilization
Authors: Avellanet R.A. , Thomas C.P. , Robertson E.P. 
Published: December 2007

The technically recoverable conventional natural gas resources in the developed and known undeveloped fields on the Alaska North Slope (ANS) total about 37 trillion cubic feet (Tcf). No significant commercial use has yet been made of this large natural gas resource because the economics have not yet been favorable to support development of a gas transportation system.

Two gas utilization options were evaluated, a gas-to-liquids (GTL) conversion option and a liquefied natural gas (LNG) option that involves a gas pipeline from Prudhoe Bay to Valdez Alaska. Both options are profitable and can provide a 10% rate of return on investment for the gas project developers using the Energy Information Administration (EIA) 1995 Reference Oil Price forecast, which assumes real growth in oil prices. The two fields evaluated for major gas sales to the gas projects, Prudhoe Bay and Point Thomson, receive a better return than they do without major gas sales. Of the two options, development of a 300 thousand barrel per day (MBPD) GTL facility for conversion of gas to a liquid hydrocarbon product, compatible with North Slope crude oil and transportable in the Trans Alaska Pipeline System (TAPS), provides a significant economic advantage over the LNG option. The GTL option would provide sufficient hydrocarbon liquids to keep TAPS operational for an additional 10 to 15 years beyond its potential shut down point in about 2015 as conventional North Slope oil production dwindles with depletion and pipeline operating costs per barrel transported soar.

Introduction

The technically recoverable conventional natural gas resources in the developed and known undeveloped oil and gas fields on the Alaska North Slope (ANS) total about 37 Tcf. No significant commercial use has yet been made of this large natural gas resource because there are no facilities in place to transport this gas to current markets, which are outside of the North Slope. To date the economics have not been favorable to support development of a gas transportation system. In addition to the known gas resources, the U.S. Geological Survey's (USGS) most recently published estimate of technically recoverable conventional natural gas resources in undiscovered fields in Northern Alaska has a mean value of 64 Tcf.

Figure 1 is a map showing the known oil and gas accumulations and selected dry holes and suspended wells on the North Slope. Although discoveries of oil and gas have been made across Northern Alaska, the only development that has occurred is around the Prudhoe Bay field. This also points to the significance of the infrastructure developed because of the super giant Prudhoe Bay field It is unlikely that any of the other North Slope fields would have been developed without facility cost-sharing made possible by the development of the Prudhoe Bay infrastructure, including TAPS.

About 25 Tcf of the 37 Tcf technically recoverable gas is estimated to be available for sale. The balance will be consumed in oil and gas production operations on the North Slope. These known gas resources coupled with the potential for large additional gas discoveries in Northern Alaska, make it important for the U.S. Department of Energy (DOE), industry, and the state of Alaska to evaluate and assess the options for development of this vast gas resource to obtain the maximum benefit for the nation, and to determine the impact that development would have on U.S. domestic energy supply. jobs, and balance of payments.

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