Heavy Oil: A Possible Alaska Pipeline Fix

Oil companies have pumped 16 billion barrels of crude from the North Slope. Analysts say it holds roughly another 5 billion barrels of conventional, lightweight oil.

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By Fairbanks Daily News-Miner

Story Created: Mar 15, 2011 at 11:01 AM AKDT

Story Updated: Mar 15, 2011 at 11:07 AM AKDT

Gov. Sean Parnell has proposed reducing taxes to spur oil production in Alaska, but critics say he has offered the industry too much. Understanding the issues can be tough. To help, the Daily News-Miner has prepared “Oil & You,” a bite-sized series.  

FAIRBANKS — Oil companies have pumped 16 billion barrels of crude from the North Slope. Analysts say it holds roughly another 5 billion barrels of conventional, lightweight oil. 

That’s peanuts compared to what else is still there. Huge deposits of heavy oil are left, as is a world-class amount of offshore conventional oil. That fuel, if produced soon, could extend the oil pipeline’s life significantly. One of three major North Slope companies, BP, will open a $100 million pilot heavy oil project at Milne Point on March 26.

Fields of heavy oil blanket the North Slope, more shallow than the conventional but largely tapped Prudhoe Bay and Kuparuk fields. The giant Ugnu heavy oil field alone could hold an estimated 20 billion barrels. Ugnu is exceptionally cold and thick and won’t be produced without major technological investment. But even a 10 percent recovery rate would fill the pipeline for years, and it’s not the only heavy field. Also, the marginal production cost of heavy oil production shrinks in importance as oil prices rise — as they have. 

Analysts say the easiest way to produce and transport heavy oil is to combine it with thinner, conventionally produced light oil. “The time to look at heavy oil is now,” Eric West, a geologist with BP, told lawmakers March 10. 

The tax plan would arguably make heavy oil a more attractive resource, first through lower taxes at high oil prices and, for areas currently without drilling rigs, through lower basic tax rates in general.

Contact staff writer Christopher Eshleman at 459-7582. 

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Anonymous said on Sunday, Mar 20 at 2:31 AM

OL` Charlie Chan the detective used to say don`t ask any question you don`t already know the answer to. Can C5 gas condensates from Pt. Thomson be used to thin Ugnu oil for shipment down the pipeline? Pt. Thomson is only sixty miles from Prudhoe Bay. That would allow an even MORE valuable commodity (gas liquids) to be added to the TAPS volume, which would probably be able to run as full as possible considering it`s age, with a successful project such as what Big Bear Petroleum presented in front of the legislature. Why in the heck isn`t anybody talking about connecting that sixty miles to Pt Thomson from the processing facilities at Prudhoe Bay that SHOULD have been built and ready by now in another world. We`d better not be giving away three billion dollars a year for nothing until the Alaskan people know the outcome of that little problem, which I would guess is at the very apex of debate across "the table" our representatives should be at.

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