'Heavy oil' may be future for North Slope

Senators say difficult-to-extract oil should be included in a review of Alaska energy policies

Posted: Tuesday, December 15, 2009

FAIRBANKS - Heavy oil is thick as honey and hard to pump out of the ground. That's where most of it has stayed while lighter crude is available.

But the Fairbanks Daily News-Miner reports heavy oil may be the future of Alaska's petroleum development, despite higher costs and more environmental concerns. It's likely to be part of state lawmakers' discussions about the oil business when they meet in Juneau.

State Sens. John Coghill and Joe Paskvan say heavy oil should be included in a review of energy policies.

"Oil is still precious up there," said John Coghill, R-North Pole. "Heavy oil needs to be included in the discussion."

Lawmakers will be interested in knowing whether some of the North Slope's vast natural gas resources would be best used helping to reach heavy oil fields.

"If we want to develop new sources within known fields, then you have to talk about heavy oil," said Paskvan, D-Fairbanks.

The Alaska Division of Oil and Gas reports heavy oil production accounts for about 6.5 percent of this year's production on the North Slope, up from 5 percent in 2005.

ConocoPhillips and BP increased investment in heavy oil five years ago, and Italian firm Eni's new Nikaitchuq project focuses partly on heavy oil production, according to the division.

Alaska's North Slope has an estimated 30 billion barrels of "in place" heavy oil, up to one-fifth of which could be recoverable, said Kurt Gibson, division deputy director.

Heavy oil production, however, takes a lot of work. Companies need special submersible pumps or other equipment to draw it through thousands of feet of rock and toward production facilities.

"Heavy oil is traditionally more expensive to extract and refine than light oil," said Robert Dillon, an energy spokesman for Sen. Lisa Murkowski. Dillon said much of the environmental community objects to the prospect of developing heavy oil deposits because doing so creates more greenhouse gases than many other energy processes.

"There are a number in Congress, mainly Democrats, who oppose heavy oil production and would like to combine climate legislation with a low carbon fuel standard."

But since development of heavy oil can often use existing drilling sites, the environmental footprint might be smaller than expanding for more light oil, said Pam Miller, an Arctic specialist at the Northern Alaska Environmental Center.

"It may be better environmentally to extract more oil from the existing developmental footprint than to reach into riskier offshore areas or into some environmentally sensitive areas on the North Slope," Miller said. "And it is on state lands, so that is generally better for Alaskans from the revenue standpoint."

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