Big Oil May Finally Get to Drill in the Arctic, But Is It Worth It? {ANWR Anyone?}

[thackney]

Big Oil May Finally Get to Drill in the Arctic, But Is It Worth It?
https://www.bloomberg.com/news/articles/2017-01-20/republicans-step-up-push-for-arctic-drilling-in-wildlife-refuge
by Alex Nussbaum January 20, 2017

ar above the Arctic Circle, one of the longest-running controversies in U.S. oil drilling is about to reignite.

Bouyed by Donald Trump’s election, Republicans are pushing to allow oil exploration in the Arctic National Wildlife Refuge, the frigid wilderness in northern Alaska that’s been a political battleground for drillers and conservationists for decades. The prospects for industry look better than they have in years, with Republicans in control of Congress and Trump vowing to boost U.S. energy production.

There’s just one catch. No one really knows how much oil actually lies beneath the refuge, or how much producers like Exxon Mobil Corp. and ConocoPhillips care about it in a world awash in cheap oil, from Texas shale to offshore Africa. While the government estimates the area could hold 12 billion barrels of crude, making it one of the biggest untapped reserves in the U.S., no one’s sunk a well there since the 1980s.



“Its value is hard to gauge because it’s always been a bit theoretical,” said Andrew Slaughter, executive director of the Deloitte Center for Energy Solutions in Houston. “No administration has really wanted to take on the challenge of going for ANWR.”

That may be about to change. The aging Trans Alaska Pipeline, once the symbol of energy independence for an oil-strapped nation, is now on the verge of obsolescence. The 800-mile system links northern Alaska to the rest of the world, but its output has been falling as fields outside the refuge fade out and supplies from shale oil in the lower states grow.

While it may take a decade for ANWR to start producing oil, the new supply would go a long way toward ensuring the survival of the pipeline and the jobs that go with it, according to U.S. senators Lisa Murkowski and Dan Sullivan. The two Alaska Republicans introduced legislation this month to allow development of as many as 2,000 acres in the refuge....

[thackney]

The expansion of the refuge in 1980 designated 1.5 million acres of the coastal plain as the 1002 area and mandated studies of the natural resources of this area, especially petroleum. Congressional authorization is required before oil drilling may proceed in this area. The remaining 10.1 million acres  of the refuge are designated as "minimal management," a category intended to maintain existing natural conditions and resource values. These areas are suitable for wilderness designation, although there are presently no proposals to designate them as wilderness.

Liberals agreed to the coastal plain for oil in order to get the massive expansion of protection.  Then after the expansion, reneged on the agreement.

[thackney]

http://alyeska-pipeline.com/TAPS/PipelineOperations/Throughput

Declining throughput
http://alyeska-pipeline.com/TAPS/PipelineOperations/LowFlowOperations

...More than 2 million barrels a day (BPD) once surged through the TAPS. Since that peak flow in the late 1980s, TAPS throughput has dropped. Today it is declining more than 5 percent per year. Less oil means slower-moving oil. Slower oil means colder oil. And the slower and colder the oil, the more complicated the challenges for Alyeska Pipeline Service Company, the pipeline’s operator.
The best long-term solution is more oil. In the meantime, daily throughput is already lower than it was at pipeline startup in 1977.

Crude oil naturally contains small amounts of water. As crude slows and cools, water will begin to separate out from the oil and accumulate at the bottom of the pipeline, increasing the risk of corrosion. This happens today during shutdowns, when water accumulates at low points. As water drops out and everything cools, the risk of ice-related problems also increases.

ANS Crude oil naturally contains up to 2 percent wax by volume. There are two issues with wax: First, when the pipe walls are colder than 70 degrees and colder than the oil, wax crystals gravitate to the pipe wall and stick to it. Second, wax precipitates out of the crude oil. Less turbulence, cooler crude temperature and slower flow all may result in more wax sticking to pipe walls and more wax dropping out of the oil and settling in the pipeline.  Wax deposits must be removed by running cleaning pigs.

Less oil → slower flow → crude spends more time in pipe, and less turbulence

Slower flow/less turbulence → more wax may accumulate in the pipe, requiring more frequent ‘pig’ cleaning

More time in pipe → Crude loses heat → higher risk of ice problems, more wax forms

TAPS is currently moving an average of 513,000 BPD (2014 daily average)

Challenges are immediate

No hard and fast thresholds; a continuum of challenges requires corresponding actions to address them

Ultimately may need shift to intermittent flow...

[IsailedawayfromFR]

this should be a tough time for the pipeline.  shift to intermittent flow?  Not the design of that p/l for sure.

the environmental issues and the tough luck of some of the companies there ( e.g. -Mukluk) have pushed back the time which any potentially new large resources can come on into the longer term, which really impacts that p/l.

Could be gas blowdown occurring, but I doubt it, just too much oil remaining that is produced only via pressure maintenance.

That cold world up there can only be saved by finding some other large fields, which is a tough proposition.  The less risky bet is to stay in lower 48 and find the many little ones.