BP is about to start a new oil production effort on the North Slope that company officials say could eventually put billions more barrels of oil into the trans-Alaska pipeline.
The pilot project is slated to kick off on March 26. It seeks to tap "heavy oil" believed to be in the Ugnu reservoir that lies above the more easily flowing "light oil" pools of Prudhoe Bay.
Lawmakers were given an hour-long presentation Thursday on the project by BP geologist and renewal team manager Eric West, who brought with him samples of all different kinds of oil from several places in the world to show legislators as they munched down sandwiches at lunch.
West held up a jar of heavy oil from Venezuela and opened the top, turning it upside down. Nothing came out. That's to show how hard it is to get some of this oil to flow into wells and up to the surface, and yet it is being done all over the world, he said.
Ugnu oil more molasses than honey
The Ugnu oil isn't quite that thick, West said, likening it more to molasses. "Viscous" oil on the North Slope, which is what oil companies believe lies in the West Sak reservoir, is more the consistency of honey, he said.
More than 16 billion barrels of oil have been produced from North Slope fields since 1977 and West said Thursday scientists think there are about 30 billion barrels of viscous and heavy oil on the North Slope.
Additionally, there are thought to be billions more in lighter oil remaining in the Prudhoe Bay area and recently lawmakers heard from a company that wants to do oil fracking that said there could be another 100 billion barrels left in the original source rocks that fueled Prudhoe Bay.
BP has built a conglomeration of four wells and other production equipment at its Milne Point field and plans to drill horizontally into Ugnu using a technology called CHOPS -- Cold Heavy Oil Production with Sand. Wells are drilled into the heavy oil sands, the sand is drawn up and the oil with it, then the slurry is heated and the oil separated out. West told lawmakers a well might produce as much as 500 barrels of oil a day in the pilot project.
The company will need to mix light oil into the heavy oil to help it flow through pipelines and down TAPS to Valdez, and that means heavy oil production would need to be done soon -- while there is still light oil left on the Slope to mix it with, West said. He estimated the mix would be at least 50-50 and maybe significantly higher percentages of the lighter oil would be needed to make it work, something the company hopes to figure out in the pilot project.
"At some point, the (light oil) supply will be so low it will cut into heavy oil production levels," West said.
'Restoration of Alaska North Slope'
BP has already invested two years and about $100 million into the heavy oil project, West said, adding that it would be another two to three years before the company will have determined whether a bigger operation is viable and what that would look like.
West said he believes heavy oil production could be the "restoration and rejuvenation of the Alaska North Slope fluid business."
The amount of oil that could be recoverable is so large that "someone's going to get it," West said. "It's too big to leave there."
West's presentation comes as other oil companies also are expressing more and more interest in Alaska oil and gas resources. Last month, Great Bear Petroleum of Texas wowed lawmakers with its plans to use hydraulic fracturing technology to crack open what could be billions of barrels of oil and trillions of cubic feet of gas that are stuck in the rocks deep beneath the surface.
Last week, Spanish energy giant Repsol announced it would invest about $768 million in a joint venture with two other smaller companies on the North Slope. Repsol executives said Alaska offered a more stable political and investment climate than other places overseas it has worked.
Now, the BP presentation has encouraged lawmakers even more.
"I think (heavy oil) holds tremendous promise for Alaska's future," Sen. Joe Paskvan, who sat in on the presentation, said, "meaning decades worth of oil to be pumped through the trans-Alaska pipeline."
New tech plus major projects under ACES
Paskvan said Alaska appears to be benefitting from technological advances that are now available to producers big and small that likely will lead to more production on the North Slope and more oil in the pipeline.
"And certainly that is an issue of the highest importance to all of Alaska," he said.
Paskvan, who co-chairs the Senate Resources Committee that is just beginning to work through a bill that would reduce taxes on oil producers, said it's too early in the process for him to say whether the fact that several oil companies are willing to launch big projects under the current tax regime means there's no need to revamp the existing law.
Gov. Sean Parnell and some lawmakers want to reduce the amount of taxes oil companies pay to the state in order to encourage more investment. Critics of the proposal say the tax break would cost the state about $2 billion a year and that oil companies are not giving any guarantees that tax cuts would result in increased development.
BP's West did not make a pitch for lower taxes in his presentation or suggest the company would need a better tax climate to move forward with a heavy oil project. In fact, he said, the pilot project is focused on proving technological viability. "If you can't do that then the issues around taxes and costs are moot," he said.
Contact Patti Epler at patti(at)alaskadispatch.com
CORRECTION: This story has been updated to make clear the mix of heavy and light oil is necessary to help the oil flow through pipelines, not as a way to get it out of the ground.