Vanishing Act: Alaska’s Oil Disappears in Blink of Eye
by S. Lord
Oil no longer dominates the headlines quite like it did a few years ago. But a recent statement by the U.S. Geological Survey (USGS) says the vaunted oil reserves in Alaska (NPRA) are not what we thought. In fact, they’re not even close:
The U.S. Geological Survey estimates 896 million barrels of conventional, undiscovered oil and 53 trillion cubic feet of conventional, undiscovered non-associated gas within NPRA and adjacent state waters. The estimated volume of undiscovered oil is significantly lower than in 2002, when the USGS estimated there was 10.6 billion barrels of oil.
Yes, you read that correctly. A whopping 90% reduction, from a we’re-fine-forever sounding 10.6 billion barrels to a good-not-great 896 million. Considering the United States consumes roughly 21 million barrels of oil per day, the “reserve” now represents a mere 42 days of supply even assuming the whole amount is actually there (a reasonable caveat considering the size of this revision) and that it is technically recoverable at an acceptable cost.
Whether someone royally screwed up back in 2002, or it is just very difficult to predict actual reserves in large, remote areas, the fact remains that Alaska just got a lot less important in terms of energy. The recurring debate about drilling in Alaska — likely to re-ignite should control of the U.S. House of Representatives shift next week — is probably now less of an issue.
For what it is worth, the USGS did say that much of the area it thought contained oil now appears to hold natural gas. But even there, the total amount of gas estimated to exist within the NPRA was lowered by 8 trillion cubic feet, to 61 trillion feet.
Oil prices didn’t move much on the news, preferring to focus on fears of weaker economic activity and overhangs in short-term inventory. But the news begs a larger question: if the USGS was off by 90% in Alaska, what do the true reserves in Saudi Arabia, Iraq and Brazil look like?
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