Alaskan first oil remains far away

Alaska’s hydrocarbons need $90 oil

Latest US government estimates on Alaska’s oil and gas reserves indicate two-thirds of its oil is recoverable at a minimum cost of $90/barrel.

A new economic analysis released Wednesday by the US Geological Survey estimated 273 million barrels of oil is economically recoverable using current technology if oil is $72/barrel. A further 500 million barrels of undiscovered oil are recoverable at $90/barrel.

Oil prices have since slipped more than 6% to close near $101/barrel due to bearish economic data from Europe and elsewhere casting doubt over the strength of the global economic recovery.

According to a media statement by the USGS, these estimates do not include discovered oil accumulations in the north-eastern National Petroleum Reserve Alaska that remain undeveloped.

Crucially the USGS stated that oil production would be dependent on gas exploration in the first instance and the market price for gas would need to be between $8 and $10 per thousand cubic feet of gas.

The USGS estimated 18 trillion cubic feet of undiscovered gas is economically recoverable at a market price is $8 or more per thousand cubic feet while 32 trillion cubic feet of undiscovered gas would be recoverable at $10 or more per thousand cubic feet.

As yet there is no pipeline to transport gas from the North Slope of Alaska therefore the USGS predicts a delay of up to 20 years before first oil and gas could be produced.