MARCH 2013 

The Vision of the Chugiak-Eagle River Chamber is to create

"The Most Unique Community in Alaska." 

Prudhoe Bay oil production

passes 12 billion barrels

When valves were opened to allow the first Prudhoe Bay crude oil to flow into the 800-mile-long trans Alaska pipeline on the morning of June 20, 1977, everyone, including industry experts, didn't expect that North America's largest oil field would yield more than 9.6 billion barrels. Today, 35 years after startup, more than 12 billion barrels have been produced. This is about 53 percent of the estimated 22.6 billion barrels in place--and it's believed up to two billion more barrels are recoverable.

In cumulative production, the Prudhoe Bay field is now ranked number one in the U.S. and 20^th in the world.

In technical terms, the 12-billion-barrel figure includes only the Prudhoe Bay Ivishak production from the Initial Participating Area (IPA), and includes all liquids such as black oil, separator liquids, and natural gas liquids (NGLs).

"The 12-billion barrels figure that we reached in October 2012 is consistent with the figures used initially to describe the original Prudhoe discovery and development," says Scott Digert, BP Alaska's reservoir management team lead . "It does not include the West End satellites (Aurora, Borealis, Orion, and Polaris), nor does it include the GPB fields that come in through the Lisburne Production Center (LPC) such as Lisburne, Greater Point McIntyre Area, (GPMA) and Niakuk"  

Boosting production: Digert says that during the last three decades Prudhoe Bay has been a proving ground for oil field technology that has helped BP Alaska and other companies go beyond what was ever thought possible in maximizing production from the super-giant field.

"Advances in enhanced oil recovery (EOR) techniques boosted our overall oil recovery by about three billion barrels," says Digert. "Large-scale gas cycling, water flooding around the periphery of the field, miscible gas injection (MI) and a technique called water-alternating gas (WAG) were effectively used. Improved reservoir analysis and delineation; advanced drilling techniques, such as horizontal and multi-lateral drilling; and advanced well completion methods, also made significant contributions."

To date, more than 1,000 wells and sidetracks have been drilled in the IPA, and with seven drilling rigs currently operating, BP Alaska plans to sustain its active drilling and sidetrack program in upcoming years.

"We're now aggressively going after light oil in known accumulations," says Digert. "We are using advance seismic imaging, reservoir simulation, and extensive surveillance and analysis of our current wells to identify further drilling targets. We are continuing to deploy innovative methods such as Gas Cap Water Injection to support the reservoir pressure. We are applying new technologies such as BrightWater to improve the sweep efficiency of our water injection, and pursuing new technologies that could similarly improve MI sweep."

Digert adds that BP Alaska has increased its rig fleet capacity in 2013 to add more drilling and workover capability to refresh and maintain well stock. He says the company is also working with other working interest owners, contractors, suppliers and with the State to sustain the financial health of BP Alaska's base oil business.

"This will be needed to either maximize oil recovery as we head into the next 35 years of production, or to underpin future major gas sales," he says.

Some fast facts about the Prudhoe Bay field:

• Accounted for about 15-20 percent of America's oil production for almost three decades; but is less 12% today;
• Because of Prudhoe Bay, there are now 24 separate oil fields producing on the North Slope;
• Mostly because of Prudhoe Bay, Alaska's Permanent Fund Savings Account balance is more than $42 billion;
• According to the University of Alaska's Institute for Social and Economic Research (ISER), Alaska's petroleum wealth (money in the bank and petroleum in the ground) is valued at $160 billion;
• Has accounted for about 126,000 jobs;
• Continues to provide about 85-90% of the state's annual revenues;
• Imported technology to other BP assets across the world.

Alaska Standalone Pipeline

Is it good for us?

It's hard to escape the knowledge that South-central is running out of natural gas with shortfalls anticipated to begin soon and importation of natural gas expected by 2016. Lots of exploration activity is happening in Cook Inlet but building the infrastructure to meet our energy requirement needs lead time. The good news is that the Cook Inlet Natural Gas Storage Facility is now operational and can relieve some of the peak demand issues during mid-winter but will not solve our long-term problems. While importation of natural gas will likely be an interim solution, if the above scenario goes unchecked, an even bigger issue of affordability is already impacting much of the State.

Your Chamber has always looked outside its own immediate community at the bigger issues of resource development in Alaska. As such, we invited the folks from the Alaska Gasline Development Corporation (AGDC) to talk to us about the stand alone pipeline project (ASAP.) While no project is perfect, the arguments for this one were compelling. ASAP does not preclude the development of Susitna-Watana hydroelectric project nor does it preclude a large diameter gas pipeline to tidewater (AGIA's current iteration).

So... who is AGDC. The Alaska Gasline Development Corporation was created through State legislation (HB369) in 2010 as a subsidiary of the Alaska Housing Finance Corporation. AGDC was tasked with developing the design, financing and construction of an in-state natural gas pipeline to serve as many Alaskans as possible on a 737 mile route. The proposed line is 36 inches in diameter and is estimated to cost $7.7 billion.  

We explored the current cost of energy in Fairbanks. At present, Fairbanks relies primarily on very expensive heating oil to heat their homes and many folks supplement with old wood stoves. These stoves generate heavy pollutants during the winter inversions in the valley and create an unhealthy environment. While there are energy programs available, the immediate question is what does a homeowner do when faced with a choice between paying a heating bill that is more than their mortgage payment in order to keep a family warm at 40 to 50 degrees below zero.

With respect to natural gas availability, today we pay $9.45 per million BTU's but Fairbanks is paying $30 per million BTU's and has very limited delivery system. There is forward movement in this legislative session debating the approval of trucking natural gas to Fairbanks. While that is a great benefit to the trucking industry and will ease costs, the question of putting 40 to 60 trucks a day on the Haul Road just to serve Fairbanks creates its own set of problems.

On a state level, the military presence in Fairbanks has been a long-term economic engine. As the Federal government is examining ways to streamline their budgets, expensive military locations easily go on the chopping block as was the recent Pentagon proposal to move the F16 Aggressor Squadron from Eielson to JBER. Only with intervention from Senator's Begich and Murkowski, has this decision been delayed.

It is estimated that with the availability of North Slope natural gas in Fairbanks, and the completion of delivery systems throughout that area, the cost for gas could drop to as low as $10 per million BTU's - a huge savings in energy with the collateral benefit of major reductions in air pollutants.

The project needs to continue to move forward as natural gas via this project would not be online until 2020 at the earliest. Before the Legislature is HB 4 In-State Gasline Development Corporation. Passage is essential to provide multi-year funding, provide confidentiality necessary for commercial and proprietary discussions, and establish the appropriate ownership model for the ASAP. The Chamber has not yet taken a position but will be reviewing the legislation at our next Board meeting. We invite you to let us know how you think the State should proceed on this project. The link to the legislation is http://www.legis.state.ak.us/basis/start.asp then enter HB 4 in the search field.

Representative Bill Stoltze - District 11

600 E. Railroad Avenue

Wasilla, AK 99654

Session Phone:907-465-4958  Interim Phone:907-376-4958

Session Fax:  907-465-4928   Interim Fax:                907-376-4928

Email Address: Rep.Bill.Stoltze@akleg.gov

Representative Dan Saddler - District 12

12641 Old Glenn Hwy., Suite 201

Eagle River, AK 99577

Session Phone: 907-465-3783  Interim Phone:   907-622-3783

Session Fax:  907-465-2293Interim Fax: 907-694-1015

Email Address: Rep.Dan.Saddler@akleg.gov

Representative Lora Reinbold - District 26

12641 Old Glenn Hwy., Suite 201

Eagle River, AK 99577

Session Phone:  907-465-3822Interim Phone:  907-622-8950

Session Fax: 907-465-3756  Interim Fax:907-694-1015

Email Address: Rep.Lora.Reinbold@akleg.gov

Senator Fred Dyson - District F

12641 Old Glenn Hwy., Suite 201

Eagle River, AK 99577

Session Phone:  907-465-2199Interim Phone:  907-694-6683

Session Fax: 907-465-4587  Interim Fax:  907-694-1015

Email Address: Sen.Fred.Dyson@akleg.gov

Senator Anna Fairclough - District M

12641 Old Glenn Hwy., Suite 201

Eagle River, AK 99577

Session Phone:907-465-3777  Interim Phone:  907-694-8944

Session Fax:907-465-2819  Interim Fax: 907-694-1015

Email Address: Sen.Anna.Fairclough@akleg.gov

IT PAYS TO COME TO CHAMBER!

Recommitment of Members

 One of your best chamber benefits is "Networking"

CHAMBER LUNCHEON FORUMS Your Chamber meets the 1st & 3rd Wednesday of each month at the ER Ale House. at 12 noon. Distinguished guest speakers present programs at each forum.

April Forums sponsors by  

Pregnancy Resource Center 

To make reservations please email info@cer.org 

OR to  pre-pay for lunch, please call the office at 694-4702.